U.S. Bank takes control of 9 banks closed by FDIC; Eight state financial institutions receive a total of $420 million in new market tax credits; Stock offering provides $863 million cushion for M&I
U.S. Bank takes control of 9 banks closed by FDIC
Late last week, U.S. Bank, NA, of Minneapolis, a wholly-owned subsidiary of U.S. Bancorp, assumed all of the deposits and most assets of nine more failed banks through a purchase and assumption agreement with the Federal Deposit Insurance Corp. (FDIC).
The nine banks were closed late Friday night by federal and state bank regulators, which appointed the FDIC as receiver.
The nine banks involved in the transaction are: Bank USA, National Association, Phoenix, Ariz.; California National Bank, Los Angeles; San Diego National Bank, San Diego; Pacific National Bank, San Francisco; Park National Bank, Chicago; Community Bank of Lemont, Lemont, Ill.; North Houston Bank, Houston; Madisonville State Bank, Madisonville, Texas; and Citizens National Bank, Teague, Texas.
"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. "This transaction adds scale to our current California, Illinois and Arizona footprints and key markets within these states. We also view this type of acquisition as an efficient means of leveraging U.S. Bank’s strong capital base, as we further invest in our company and expand opportunities to bring our great products and services to a new, larger customer base."
As of Sept. 30, 2009, the banks had combined assets of $19.4 billion and deposits of $15.4 billion.
The nine banks had 153 offices, which reopened as U.S. Bank branches on Saturday. Depositors of the nine banks will automatically become depositors of U.S. Bank.
The FDIC and U.S. Bank entered into a loss-share transaction on approximately $14.4 billion of the combined purchased assets of $18.2 billion. U.S. Bank will share in the losses on the asset pools covered under the loss-share agreement. The loss-sharing arrangement is projected to maximize returns on the assets covered by keeping them in the private sector. The agreement also is expected to minimize disruptions for loan customers.
Eight state financial institutions receive a total of $420 million in new market tax credits
The U.S. Department of Treasury announced last week that eight Wisconsin-based financial institutions were receiving $420 million in New Markets Tax Credits, part of a $5 billion national package unveiled by U.S. Treasury Secretary Paul Geithner. New Markets Tax Credits are intended to help promote investment in distressed areas, including historic preservation, affordable housing, brownfields and commercial development.
The eight state firms sharing the $420 million in credits are: First Ring Industrial Redevelopment Enterprise ($70 million), Johnson Community Development Company ($50 million), M&I New Markets Fund ($40 million), Milwaukee Economic Development Corporation ($25 million), Urban Revitalization and Brownfield Redevelopment Fund ($15 million), Waveland Community Development, LLC ($100 million), Wisconsin Business Growth Fund, Inc ($35 million), and the Wisconsin Community Development Legacy Fund ($85 million).
Most of the credits – about $320 million – were made to Milwaukee-area firms and will be used for redevelopment in southeastern Wisconsin.
“Many abandoned and rundown industrial sites sit idle because there’s a lack of affordable financing to help get rehabilitation projects off the ground,” said U.S. Rep. Gwen Moore, D-Milwaukee. “The New Market Tax Credit allocations will help create a critical pool of capital enabling institutions to provide low-interest loans to minority-owned businesses and to make investments in economically-distressed areas and blighted industrial sites, including those in Milwaukee.”
The New Markets Tax Credit Program was originated by Congress in 2000 as a way to promote economic development in low-income urban and rural communities. The program provides tax incentives to investors who make equity investments in rural and urban low-income communities.
Stock offering provides $863 million cushion for M&I
Marshall & Ilsley Corp. generated $863 million in its latest public stock offering of 156.4 million shares, selling at $5.75 per share.
The Milwaukee-based parent company of M&I Bank closed its offering last week.
The proceeds from the stock offering can help buffer Marshall & Ilsley’s bottom line, which has been stressed by foreclosures of mortgages in Arizona and Florida. The proceeds also will provide the company with a cushion for any impending defaults in its commercial real estate loan portfolio.
Morgan Stanley and BofA Merrill Lynch acted as joint book-runners for the offering.
Marshall & Ilslley has yet to repay the $1.7 billion it received from the U.S. Treasury through the Troubled Asset Relief Program (TARP).
