Banks Suing Other Banks?

Last Friday, six institutions, which included JPMorgan Chase (JPM - Analyst Report), Bank of America (BAC - Analyst Report), Associated (ASBC - Snapshot Report) and Marshall & Ilsley (MI - Snapshot Report), filed suit in U.S. District Court for the Northern District of Illinois seeking $247.8 million ($246 million in revolving loan principal that was payable May 28, 2009) from the privately-held bank holding company FBOP Corp. based in Oak Park, Illinois.

While the lawsuit alleges that the borrower did not pay the notes on the date prescribed (hence a breach of contract), FBOP asserts that it has been working with its lending group to reach and agreement on an extension of its credit line, which has been in place since 2001 and renewed annually by its lenders.

With $17.4 billion in assets, FBOP operations include the Community Bank of Lemont ($85.9 million) and the Chicago-based Park National Bank ($4.85 billion). The company also owns banks in Texas, Arizona and California. Its California National Bank -- with $6.49 billion in assets -- lost $509.9 million on securities in 2008.