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OneWest takes over First Federal, six other banks shut

FIRST Federal Bank of California was one of seven U.S. lenders closed on Friday by regulators and its $6.1 billion in assets were assumed by OneWest Bank.

The closures bring the total number of U.S. bank failures this year to 140. This year has marked the highest annual level of bank failures since 1992, when the industry was still cleaning up from the savings and loan crisis.

The 39 branches of First Federal -- formerly controlled by FirstFed Financial -- reopen on Saturday as OneWest Bank FSB.

In addition to assuming $4.5 billion in total deposits, OneWest, of Pasadena, Calif., agreed to buy essentially all of First Federal's assets, the Federal Deposit Insurance Corp said.

OneWest, now backed by the likes of billionaire investor George Soros and J.C. Flowers & Co, turned a profit in its first full quarter under new ownership.

The acquisition is the first for OneWest since it completed its takeover of IndyMac in March.

FirstFed posted a $244.8 million net loss in its fourth quarter, hit by declining California home prices and a 10-fold leap in bad-loan provisions.

First Federal of California, Santa Monica, Calif., was among seven banks, with total assets of more than $14 billion, that were closed by regulators on Friday, as the rapid pace of failures continues for small institutions across the United States.

First Federal declined to comment. OneWest was not immediately available for comment.

The Federal Deposit Insurance Corp said regulators also closed Imperial Capital Bank of La Jolla, Calif. with assets of $4 billion; Peoples First Community Bank of Panama City Florida with assets of $1.8 billion; and New South Federal Savings Bank of Irondale, Alabama with assets of $1.5 billion.

Regulators also closed Independent Bankers' Bank of Springfield, Ill., with assets of $585.5 million; RockBridge Commercial Bank of Atlanta with assets of $294 million; and Citizens State Bank in New Baltimore, Mich., with assets of $168.6 million.

Smaller institutions have been collapsing at a rapid clip because of deteriorating loan portfolios and related liquidity and capital issues. The FDIC has said the pace of failures will likely peak next year.

This week, the agency boosted its operating budget for 2010 by 55 percent to $4 billion to handle the cost of failures, which is expect to total $100 billion from 2009 through 2013.

"It will ensure that we are prepared to handle an even-larger number of bank failures next year, if that becomes necessary, and to provide regulatory oversight for an even larger number of troubled institutions," FDIC Chairman Sheila Bair said in a statement.

Failures have spiked this year compared to last year when 25 banks failed and 2007 when only three were shuttered.


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