U.S. Bancorp's weekend takeovers of failed Downey Savings & Loan and PFF Bank appear to have gone smoothly for customers and bank employees, a contrast to July's collapse of IndyMac Bank.
Federal regulators, who seized the two Southern California thrifts Friday night, already had lined up U.S. Bancorp as the new owner. U.S. Bancorp pledged to honor all deposits, including uninsured funds, and said it would not close any branches. On Monday, the branches opened for business as usual, and customers took the change in stride.
"All the banks are merging. That's just the way the economy is these days," said Bernadette Hingle, 56, who opened a checking account at Downey recently because it seemed "old-fashioned." She said she'd be a "little leery" if she had $200,000 on deposit.
The lack of panic Monday was a reversal from the chaos that reigned when the Federal Deposit Insurance Corp. took over IndyMac without finding a buyer first. Depositors queued up for hours in the summer sun to pull deposits out of the Pasadena thrift.
U.S. Bancorp, the parent company of U.S. Bank, also moved quickly to calm Downey employees, holding introductory sessions with the new bosses.
At one meeting in Ontario, employees "actually stood up and applauded," said U.S. Bancorp Vice Chairman Joseph Otting, the top California executive with the giant Minneapolis bank.
About the only difference customers and employees noted at a former Downey branch in Burbank were U.S. Bank leaflets promising: "The future looks brighter with US" and touting its "prudent approach to banking, strong balance sheet and solid capital position."
Retired aircraft worker Richard Lee McWilliams, 78, of Burbank, a 20-year Downey customer, said he used to regard the Newport Beach thrift as a "nice little place, where they used to know my name whenever I walked in."
"But then," he added, "they went cuckoo."
McWilliams said Downey offered him a new mortgage two years ago with a lower payment but demanded an upfront fee of $2,300. Offended, he moved more than $100,000 from his Downey accounts to a credit union, leaving less than 10% of the original sum in a checking account, he said.
"What Downey did is wrong, but everyone was doing it, so they joined in," McWilliams said. "And they got away with it for a while, but it jumped back and bit them in the ear."
For U.S. Bancorp, which with $247 billion in assets is nearly 20 times as large as Downey and more than 60 times PFF's size, the acquisitions are "an expansion, not a consolidation move," Otting said.
As a large commercial bank, it can offer a far wider range of personal and business banking services than Downey and PFF could as thrifts, he said.
In preparing for the takeover, the FDIC had conducted a confidential auction for the Southland thrifts but didn't notify U.S. Bancorp that it had won the bidding until Thursday.
As payment for the takeovers, U.S. Bancorp will absorb the first $1.6 billion in losses from the failed banks' loans, with the FDIC taking on the risk of an estimated $2.1 billion in additional losses afterward.
Investors in U.S. Bancorp appeared pleased Monday. On a day when the federal bailout of Citigroup Inc. buoyed investors in financial stocks, U.S. Bancorp shares rose $2.57, or 11.4%, to $25.10.
Shares of the failed thrifts' parent companies sank nearly out of sight Monday. Downey Financial Corp., which said it would file for bankruptcy protection, tumbled 13 cents to close at 5 cents; PFF Bancorp Inc. dropped 35 cents to 1 cent.