U.S. Bancorp (NYSE: USB) announced today that, effective immediately,
its lead bank, U.S. Bank National Association, has acquired the banking
operations of two separate California financial institutions from the
Federal Deposit Insurance Corporation. The two acquired institutions are
Downey Savings & Loan Association, F.A., the primary subsidiary of
Downey Financial Corp. (NYSE: DSL), headquartered in Newport Beach,
Calif. and PFF Bank & Trust, a subsidiary of PFF Bancorp Inc. (OTC
Bulletin Board: PFFB), headquartered in Rancho Cucamonga, Calif.
Under the terms of these transactions, U.S. Bank will receive
approximately $12.8 billion of assets and assume approximately $11.3
billion of liabilities, including $9.7 billion of deposits, of Downey
Savings & Loan and will receive approximately $3.7 billion in assets and
assume approximately $3.5 billion of liabilities, including $2.4 billion
of deposits, of PFF Bank & Trust. As part of the transactions, U.S. Bank
has agreed to assume the first $1.5 billion and $0.1 billion of expected
losses on the assets of Downey Savings & Loan and PFF Bank & Trust,
respectively. Any losses in excess of these amounts will be subject to a
loss sharing agreement with the FDIC. U.S. Bank will not acquire any
assets or liabilities of the banks’ parent holding companies, Downey
Financial Corp. or PFF Bancorp Inc. These acquisitions are expected to
meet or exceed the company’s internal financial hurdles for internal
rate of return and earnings per share accretion.
“The timing of this transaction could not be better, as we have just
completed the highly successful integration of our Mellon 1st
Business Bank acquisition in Los Angeles and Orange County. With the
addition of the Downey Savings & Loan and PFF Bank & Trust branch
locations, we continue to widen our distribution network in our growing
California and Arizona markets,” commented Joseph M. Otting, vice
chairman of commercial banking and U.S. Bancorp’s Western U.S. senior
executive. “Once the conversions and integrations are completed, both
current and new customers of U.S. Bank will have the increased
convenience of 561 branches in California and 75 branches in Arizona to
serve their banking needs. This also presents a great opportunity for us
to deepen customer relationships by offering U.S. Bank’s extensive mix
of products and services to our new customers.”
As part of these transactions, U.S. Bank will modify the terms of
certain acquired residential mortgage loans in accordance with the FDIC
Mortgage Loan Modification Program. The objectives of this program are
to improve affordability, increase the probability of performance, and
allow borrowers to remain in their homes.
“The strategic acquisition of the banking operations of Downey Savings &
Loan and PFF Bank & Trust will strengthen our geographic footprint in
the Western region of our franchise with the addition of approximately
500,000 new loan and deposit customers,” noted Richard K. Davis,
chairman, president and chief executive officer of U.S. Bancorp. “We
believe that acquisitions like these are an efficient means of
leveraging U.S. Bank’s strong capital base and investing in our company.
These are very positive transactions for our shareholders and are
consistent with our growth strategy, especially in key California
markets. Importantly, this transaction will also allow us to work
closely with approximately 35,000 homeowners through the FDIC loan
modification program in an effort to provide solutions for these
potentially troubled borrowers to stay in their homes.”
The Downey Savings & Loan and PFF Bank & Trust branch locations will
continue to operate under their current names and will be re-branded as
U.S. Bank branches in the near future.
