Federal authorities seized Newport Beach-based Downey Savings and Loan as the thrift fell below capital requirements to stay in business, authorities said late Friday.
The Federal Deposit Insurance Corp. announced it was turning over management of the 51-year-old thrift to Minneapolis-based U.S. Bank. As part of the same action, the FDIC also turned over Pomona-based PFF Bank & Trust to U.S. Bank.
The combined 213 branches of the two failed banks will operate under normal hours Saturday.
“Depositors will automatically become depositors of U.S. Bank. Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship to retain their deposit insurance coverage,” the announcement said.
Under the takeover deal, U.S. Bank will be responsible for the first $1.6 billion in losses. Customers with mortgages will be eligible for loan modifications similar to plans offered to clients of IndyMac Bank, which the FDIC seized in July.
Downey Financial Corp., which opened its first branch in Downey in 1957, grew into a regional bank with $13.9 billion in assets, 170 branches in California and Arizona and more than 1,800 employees.
Downey is the largest Orange County-based federally-insured bank to face a takeover in the current crisis. Also Friday, the FDIC seized the Community Bank in Loganville, Ga., which had total assets of $681 million.
Downey’s demise had long been anticipated. The stock closed Friday at 18 cents, down from $40.93 on Nov. 30, 2007.
Wow. Their headquarters building has been a fixture for years by South Coast Plaza in Costa Mesa.
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