* U.S. Bancorp filed a lawsuit against Bank of America alleging breach of contract related to mortgage-backed securities, the Charlotte Business Journal reports. U.S. Bancorp alleged that First Franklin Financial, which was acquired by Merrill Lynch, sold defective mortgages to a residential mortgage-backed securities trust in 2007, but failed to make disclosures to U.S. Bank, which was acting as trustee. Bank of America had acquired Merrill Lynch in 2008.
* Troy, Mich.-based Flagstar Bank filed a lawsuit against Live Well Financial CEO Michael Hild, seeking repayment of more than $82 million in outstanding loans and interest, the Richmond Times-Dispatch reports. Live Well Financial ceased operations May 3.
* Mitchell, S.D.-based CorTrust Bank is acquiring Minnetonka, Minn.-based First Minnesota Bank in a deal set to close by Sept. 30, the (Sioux Falls, S.D.) Argus Leader reports.
* A new round of funding is likely to push San Francisco-based startup Brex's valuation to more than $2 billion, sources told Bloomberg News. Brex offers corporate cards specifically tailored to tech companies.
* Servis One, doing business as BSI Financial Services, will pay a civil money penalty of $200,000 and restitution of at least $36,500 to settle the Consumer Financial Protection Bureau's allegations that it handled mortgage servicing transfers with incomplete or inaccurate loss mitigation information.
* Florida CFO Jimmy Patronis asked Ronald Rubin, commissioner of Florida's Office of Financial Regulation, to step down after a report by the Office of Inspector General's detailed sexual harassment allegations against him, American Banker reports. Rubin has denied the harassment claims and is not willing to resign, according to the report.
* Connecticut legislators are re-evaluating a bill that would create a public health-insurance option amid concerns from insurance carriers that the option's implementation would cause them to compete with the government for customers, The Wall Street Journal reports.
* Federal Deposit Insurance Corp. Chair Jelena McWilliams urged banks to be cognizant of how they manage their deposit portfolios as amplified competition for deposits pushes up interest rates on certificates of deposits, savings accounts and other products and services.