Regulators close 2 banks in Illinois, Wash. state

WASHINGTON - Regulators on Friday shut down two small banks, National Bank of Commerce in Illinois and Bank of Clark County in Washington state.

The Federal Deposit Insurance Corp. was appointed receiver of the banks. They were the first two federally insured banks to fail and be shuttered by regulators this year amid the pressures of tumbling home prices, rising mortgage foreclosures and tighter credit.

National Bank of Commerce, in Berkeley, Ill., had $430.9 million in assets and $402.1 million in deposits as of Jan. 7. Bank of Clark County, in Vancouver, Wash., had $446.5 million in assets and $366.5 million in deposits as of Jan. 13.

The FDIC said all of National Bank's deposits will be assumed by Republic Bank of Chicago, based in Oak Brook, Ill. Its two branches will reopen Saturday as offices of Republic Bank. That bank also will buy about $366.6 million of National Bank of Commerce's assets; the FDIC will retain the rest for eventual sale.

Umpqua Bank, based in Roseburg, Ore., will assume the insured deposits only of Bank of Clark County. As of Jan. 16, there were about $39.3 million in uninsured deposits that potentially exceeded the insurance limits, according to the FDIC.

Regular deposit accounts are now insured up to $250,000 as part of the financial rescue law enacted in October.

Bank of Clark County's branches will reopen Tuesday as offices of Umpqua Bank, which also will buy $30.4 million of Bank of Clark County's assets.

The FDIC estimated that the resolution of National Bank of Commerce will cost the federal deposit insurance fund $97.1 million while that of Bank of Clark County will cost between $120 million and $145 million.

The 25 U.S. banks that failed last year were far more than those that failed in the previous five years combined. Only three failed in 2007. It's expected that many more banks won't survive this year's continued economic tumult.

Acting on President-elect Barack Obama's behalf, President George W. Bush this week asked Congress for release of the second $350 billion in the federal financial rescue program, and the Senate voted 52-42 on Thursday to turn back an effort to block its release.

Seattle-based thrift Washington Mutual Inc. failed in late September, the biggest bank collapse in U.S. history. It had $307 billion in assets.

The FDIC estimates that through 2013, there will be about $40 billion in losses to the deposit insurance fund, including an $8.9 billion loss from the failure of IndyMac Bank last July. The agency has raised insurance premiums paid by banks and thrifts to replenish its fund, which now stands at around $34.6 billion, below the minimum target level set by Congress and the lowest level since 2003.

The FDIC has put in a program to guarantee as much as $1.4 trillion in U.S. banks' debt for more than three years as part of the government's financial rescue plan. Under the program, which is meant to thaw the freeze in bank-to-bank lending, the FDIC will provide temporary insurance for loans between banks — except for those for 30 days or less — guaranteeing the new debt in the event of payment default by the borrowing bank.

Of the roughly 8,500 federally insured banks and thrifts, the FDIC had 171 on its confidential list of troubled institutions as of Sept. 30 — a nearly 50 percent jump from the second quarter and the highest tally since late 1995.

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National Bank of Commerce customers with questions can call the FDIC at 1-800-760-3641. Bank of Clark County customers can call 1-800-822-9247.

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