Oct. 31 (Bloomberg) -- U.S. Bancorp, the Minneapolis-based lender expanding amid the financial crisis, agreed to acquire nine failed banks owned by closely held FBOP Corp. and seized by regulators yesterday.

The nine banks will cost the Federal Deposit Insurance Corp. a combined $2.5 billion, the agency said. So far this year, 115 banks have failed, sending the insurance fund into a deficit in September and prompting the agency to propose that banks prepay three years of premiums to raise $45 billion.

U.S. Bancorp agreed to assume all the deposits and essentially all the assets of the banks, in California, Texas, Arizona and Illinois, that were seized yesterday by regulators, the FDIC said. The lender is adding branches, acquiring deposits and seeking to gain share in the mortgage market.

“This transaction is consistent with the growth strategy that we have outlined many times in the past,” Rick Hartnack, vice chairman of consumer banking for U.S. Bancorp, said yesterday in a statement. “We also view this type of acquisition as an efficient means of leveraging” the company’s capital base.

The company, which in June repaid $6.6 billion from the Treasury’s Troubled Asset Relief Program, said earlier this month that third-quarter profit rose 4.7 percent on higher net interest margins and fees from mortgage banking and transactions at automated teller machines.

U.S. Bancorp fell 99 cents, or 4 percent, to $23.22 yesterday in New York Stock Exchange composite trading, and has dropped 19 percent in the past 12 months.

Earlier this month, the lender purchased Nevada bank branches and $800 million in deposits from BB&T Corp.

One of the ‘Winners’

“U.S. Bancorp has clearly distinguished itself as one of the “winners” to emerge from the cycle -- managing to stay profitable in each quarter, repay TARP and add to its normalized earnings per-share power through small fill-in bank and non-bank acquisitions,” John McDonald, an analyst at Sanford C. Bernstein & Co., said in a note to investors this month.

In yesterday’s transactions, U.S. Bancorp picked up 153 branches with combined assets of $19.4 billion and deposits of $15.4 billion as of Sept. 30, according to the FDIC.

Almost three-quarters of Oak Park, Illinois-based FBOP’s total loans were for construction and land development or commercial real estate, FDIC data show. Since 2000, FBOP had tripled its assets, according to the agency. FBOP wasn’t closed, the FDIC said.

Closed Banks

The banks seized were: Bank USA, National Association of Phoenix; California National Bank of Los Angeles; San Diego National Bank; Pacific National Bank of San Francisco; Park National Bank of Chicago; Community Bank of Lemont, Illinois; North Houston Bank; Madisonville State Bank of Madisonville, Texas; and Citizens National Bank, of Teague, Texas.

The FDIC included 416 banks on its confidential list of problem institutions as of the second quarter.

The FDIC, the Federal Reserve and other bank regulators have released guidelines to banks on arranging modifications of commercial real estate loans with borrowers who show a willingness to repay the debt.

To contact the reporters on this story: Vivek Shankar at vshankar3@bloomberg.net; Dakin Campbell in San Francisco at dcampbell27@bloomberg.net.

Last Updated: October 31, 2009 12:58 EDT