RIP - Downey, PFF

It was at 6:06 p.m. that federal regulators rode the elevator to the fifth-floor executive offices of Downey Savings and took the place over. Also seized was PFF Bank & Trust (short for Pomona First Federal). The new owner of both Downey and PFF is Minneapolis-based US Bancorp, which suddenly becomes a much bigger player in California and Arizona. From the WSJ:

U.S. Bancorp has avoided large acquisitions in recent years while focusing on profitability and cost cutting. But top executives recently signaled their interest in being a consolidator during this financial crisis. The bank was a losing bidder in the contest for Cleveland-based National City, which went to Pittsburgh-based PNC Financial. Chief Executive Officer Richard Davis said during the bank's third-quarter conference call with analysts that "we are more active and more interested than we might have been before."

None of this was a big surprise to those who have been following the months-long deterioration of Newport Beach-based Downey and PFF. The LAT practically trumpeted Downey's pending takeover in a Friday story (here's the Saturday story). Downey, the bigger of the two, lost $547.7 million in the first nine months of 2008, largely because of risky option ARM mortgages. Those weee loans in which borrowers paid so little each month that their balances rose. Lots of foreclosures resulted. Actually, if you want to get a good picture of Downey's plight, check out its Web site for a list of bank-owned properties for sale. There are 527 statewide.