FBOP Corp., Chicago's second-largest bank holding company, says it will write down a big investment in Fannie Mae and Freddie Mac as the federal takeover of the mortgage giants exacts a heavy toll on some local lenders.
Privately held FBOP, owned and run by billionaire Michael Kelly and based in Oak Park, has $650 million to $800 million in Fannie and Freddie preferred shares spread among its eight banks in California, Texas and Arizona, as well as Chicago flagship Park National Bank, according to an analysis of regulatory filings and a person familiar with the matter.
"FBOP Corp. has significant investments in equity securities, including preferred stock in government-sponsored entities Fannie Mae and Freddie Mac. The corporation will recognize losses on these preferred securities during the third quarter of this year based upon the current market values for these securities," FBOP Chief Financial Officer Michael Dunning said in an e-mail to Crain's. "After recognition of these losses, FBOP Corp.'s banks will continue to meet or exceed all 'well-capitalized' benchmarks established for financial institutions. Earnings generated by each bank in the group continue to remain strong."