NEW YORK — Regulators shut nine banks Friday, including Los Angeles-based California National, as the still-weak economy produces a stream of loan defaults.
The banks were units of privately held FBOP Corp., a Chicago-based bank holding company.
The Federal Deposit Insurance Corporation said U.S. Bank in Minneapolis agreed to assume the deposits and most of the assets of the banks.
The banks are mostly in the West and had combined assets of $19.4 billion at the end of September.
The closings boost the number of failed U.S. banks this year to 115. The nine banks closed Friday were the most the agency has shut in one day since the financial crisis began taking down banks last year. In 1989, at the height of the savings-and-loan crisis, the FDIC closed 534 banks, or about 10 a week.
Besides California National Bank, the banks involved in the latest round were Bank USA, NA, in Phoenix; San Diego National Bank; Pacific National Bank in San Francisco; Park National Bank in Chicago; Community Bank of Lemont in Illinois; North Houston Bank, Madisonville State Bank, and Citizens National Bank in Teague, all in Texas.
Deposits as of Sept. 30, totaled $15.4 billion. The nine banks had 153 offices, which will reopen as U.S. Bank branches Saturday.
FDIC spokesman David Barr said that because U.S. Bank assumed all the deposits, the plan will feel like a merger for customers.
"It's not a merger, but it walks like a merger and quacks like a merger," he said.
Failures have been especially concentrated in California, Georgia and Illinois. While the pounding from losses on home mortgages may be nearing an end, delinquencies on commercial real estate loans remain a hot spot of potential trouble, regulators say. If the recession deepens, defaults on the high-risk loans could spike. Many regional banks, especially, hold large concentrations of these loans.