Downey and out

S&L seized by feds, turned over to U.S. Bank

KINGMAN - California-based Downey Savings & Loan is among the latest casualties brought on by the mortgage foreclosure crisis.

Downey was seized by federal regulators the evening of Nov. 21 following the S&L's loss of hundreds of millions of dollars due to the many adjustable-rate mortgages it made during the peak of the housing bubble through 2006.

The Federal Deposit Insurance Corporation has turned the bank's operations over to Minneapolis-based U.S. Bank, which has agreed to assume control of $12.8 billion in assets and $11.3 billion in liabilities, including $9.7 billion in deposits, according to a U.S. Bancorp news release.

U.S. Bank also agreed to assume the first $1.5 billion of Downey's losses, roughly half of the total $2.9 billion expected.

The remainder is to be shared with the FDIC under a loss-sharing agreement.

U.S. Bank has further indicated that it plans to modify the terms of some of Downey's residential mortgage loans to make them more affordable to borrowers so they can remain in their homes.

Based in Newport Beach, Downey has 170 locations throughout southern California, with another five strewn through Western Arizona.

The Arizona locations include Prescott, Lake Havasu and one in Kingman at 3240 Stockton Hill Road.

U.S. Bank has said Downey locations will continue operating in the same manner and under the same name, but will be rebranded as U.S. Bank branches "in the near future."

Calls to media specialists with U.S. Bank and Downey were not returned by press time, but Downey operators were already mentioning the new ownership when answering the phone Wednesday.

With U.S. Bank now backing the savings and loan, it would appear Downey customers can rest assured that their deposits remain secure.

The sixth largest commercial bank in the United States, U.S. Bank's parent company, U.S. Bancorp, has more than $247 billion in assets.

For the present time, U.S. Bank has asked that all Downey-related account questions go through the standard contacts, namely downeysavings.com and 1-800-9-DOWNEY.