U.S. authorities seized nine failed banks on Friday, the most in a single day since the financial crisis began and the latest stark sign that substantial parts of the nation's banking industry are being crippled by bad loans.
The move brought the total number of failed banks in 2009 to 115 -- their highest annual level since 1992 -- with analysts expecting more to come. Among the lenders seized Friday was Los Angeles -based California National Bank , in what was the fourth-largest U.S. bank failure this year, reports Reuters.
The banks closed on Friday by the Federal Deposit Insurance Corporation were in California , Illinois, Texas and Arizona. They were divisions of privately held FBOP Corp., a bank holding company based in Oak Park., Ill.
U.S. Bank in Minneapolis, a division of US Bancorp, agreed to assume the deposits and most of the assets of the banks. The banks had combined assets of $19.4 billion and deposits of $15.4 billion at the end of September, the FDIC said.
The closing of nine banks in one day was the most the FDIC has shut since the financial crisis began taking down banks last year. The closings boost the number of failed U.S. banks this year to 115. In 1989, during the savings-and-loan crisis, the FDIC closed 534 banks, or about 10 a week, The Associated Press reports.
The nine banks are Bank USA N.A. of Phoenix, California National Bank of Los Angeles, San Diego National Bank of San Diego, Pacific National Bank of San Francisco, Park National Bank of Chicago, Community Bank of Lemont in Lemont, Ill., North Houston Bank in Houston, Madisonville State Bank in Madisonville, Texas, and Citizens National Bank of Teague, Texas. Together, the nine banks had 153 offices.
Customers of failed banks are protected, however. The Federal Deposit Insurance Corp., which has insured bank deposits since the Great Depression, currently covers customer accounts up to $250,000.
Customers of the failed bank can access their money over the weekend by writing checks or using ATMs or debit cards. Checks will continue to be processed, and borrowers should make mortgage and loan payments as usual.
"This transaction is consistent with the growth strategy that we have outlined many times in the past, which includes enhancing our existing franchise through low-risk, in-market acquisitions," said Rick Hartnack, vice chairman of consumer banking for U.S. Bancorp, in a statement, according to CNNMoney.com