U.S. Bancorp buys N.M. bank

U.S. Bancorp continued its buying binge of failed community banks and thrifts Friday, snatching up the largest bank based in New Mexico with $2.1 billion in assets.

Late Friday, the Minneapolis-based bank reached a deal to acquire First Community Bank of Taos, N.M., after it was shut down by regulators. The purchase marks U.S. Bancorp's first foray into New Mexico and is its 13th acquisition since the credit crisis began nearly three years ago.

The rash of deals fits U.S. Bancorp's strategy of making small-sized acquisitions that expand its branch network in select markets, while many of its larger rivals struggle to absorb bigger, more complicated transactions.

The deal Friday gives U.S. Bancorp 35 branches in New Mexico, three in Arizona, and immediately establishes it as one the top three banks in the state by deposit market share. "New Mexico is a state that we've always looked at and said, if the right opportunity presented itself, then we would certainly like to be in the state," said John Elmore, executive vice president of community banking at U.S. Bancorp.

The Federal Deposit Insurance Corp., which brokered the deal, said it had no information Friday on why First Community Bank failed.

However, like many community banks, the bank suffered severe losses from commercial real estate loans, including land loans in Utah and New Mexico. First Community's past-due loans, as a percentage of assets, shot up from 3.7 percent in 2008 to nearly 16 percent as of September, according to FDIC data. The bank also shrank dramatically, going from $3.5 billion to $2.3 billion in assets over the same period.

First Community is the third-largest bank in New Mexico by deposit market share, behind Bank of America and Wells Fargo. However, it is the largest of the banks with headquarters in the state.

Even so, U.S. Bancorp's buying spree is beginning to get noticed. It ranks among the most active acquirers of failed banks in the nation.

In 2008, U.S. Bancorp picked up more than 200 branches, mostly in California, when it bought the failed Downey Savings & Loan Association and PFF Bank & Trust. It also snatched up nine banks and 150 branches from the failed FBOP Corp. of Oak Park, Ill., in late 2009. All told, the bank has quietly bought banks and thrifts with combined assets of more than $37 billion since the financial crisis began.

At the same time, U.S. Bancorp CEO Richard Davis has insisted that mergers and acquisitions are not a core part of the bank's strategy, and the bank will not get into a price war. "We will not get greedy," Davis said in a recent conference call with analysts. "M&A doesn't change our future. It just has to be a deal that makes us stronger."

The pace of bank closures continues to accelerate, even as the banking sector as a whole has stabilized. The 157 bank closures nationwide last year surpassed the 140 shuttered in 2009. It was the most in a year since the savings-and-loan debacle of two decades ago. So far this year, regulators have closed 11 banks.

The closing of First Community of Taos will cost the federal deposit insurance fund $260 million. The FDIC declined to disclose how much U.S. Bancorp paid for the bank.