21st & 22nd Bank Failures of 2008 - Downey Savings and PFF Bank & Trust

Federal regulators closed two California-based banks Downey Savings and Loan Associations and PFF Bank & Trust. The FDIC was named receiver and arranged for US Bank to acquire all deposits of both banks. Here's the FDIC's press release link, and here's a summary of the closure:

• Closed Banks: Downey Savings & Loan Association, Newport Beach and PFF Bank & Trust, Pomona
• Location: California
• Downey's Size: 175 branches, $12.8 billion assets, $9.7 billion deposits
• PFF's Size: 38 branches, $3.7 billion assets, $2.4 billion deposits
• Possible Uninsured Deposits: ALL deposits transferred to acquiring bank
• Acquiring Bank: US Bank
• Cost to Deposit Insurance Fund: No specific amounts provided. FDIC arranged for a loss share transaction with US Bank
• 2008 closures: 21st and 22nd banks to be closed this year
• Downey's Financial Ratings: 0 star at BauerFinancial, 1 star at Bankrate.com
• PFF's Financial Ratings: 0 star at BauerFinancial, 1 star at Bankrate.com

This is the first Friday in many years in which there were 3 bank closures. Earlier today, a Georgia bank was closed (see post). Both of these California banks were closed by the Office of Thrift Supervision. The OTS has its own press release on the closure with some additional details.

These two closures continue the trend of having all deposits, even those uninsured, being transferred to the acquiring bank. So no depositors should lose any money. Even brokered deposits at both banks were assumed by US Bank.

US Bank will be honoring all existing CD rates from these two banks. Also, customers will be allowed to withdraw the funds without an early withdrawal penalty. Customers of the Georgia bank failure earlier today weren't this fortunate. For that case, the new bank decided not to honor the existing CD rates.

I've done several posts on both of these banks in the last year. In addition to high CD rates, PFF Bank & Trust had been offering an online savings account. It had been very competitive in 2007, but its rates have lagged for much of this year.

Here's the FDIC list of all the recent bank failures. For more info on FDIC coverage, please refer to my Facts about FDIC and NCUA post and my recent post on FDIC News, Resources and History. For the recent changes to FDIC coverage, please refer to this post

Thanks to the readers who sent me news of these closures.

Update 11/23/08: A reader sent me the following links to the OTS website which documents the reasons behind the closures: Downey's closure and PFF's closure.