Regulators Close Two Banks

With the holidays behind us, state and federal regulators have resumed closing banks, and the Federal Deposit Insurance Corp.'s recent streak of avoiding losses to depositors with uninsured balances has come to an end.

The Office of the Comptroller of the Currency closed National Bank of Commerce of Berkeley, Ill. late Friday, and the Federal Deposit Insurance Corporation was named receiver. All of the failed institution's deposits were acquired by Republic Bank of Chicago of Oak Brook, Ill.

Meanwhile, the Washington Department of Financial Institutions shuttered the Bank of Clark County of Vancouver, Wash. The FDIC was named receiver and announced that insured deposits were acquired by Umpqua Bank of Roseburg, Ore., which is held by Umpqua Holdings(UMPQ Quote).

National Bank of Commerce

During the first half of 2008, National Bank of Commerce appeared to be weathering the economic storm well. It remained profitable, suffered hardly any loan losses and exceeded regulatory requirements for a well-capitalized institution. As of June 30 it had a leverage ratio of 7.79% and a risk-based capital ratio of 12.70%. These ratios need to be at least 5% and 10%, respectively, for a bank or thrift to be considered well-capitalized under regulatory guidelines.

However, in the third quarter, the institution reported a net loss of $56 million, the result of $57 million in realized securities losses. These losses more than wiped out the bank's capital, which totaled $41 million as of June 30.

While regulators didn't state the reason for the bank's closing, the losses apparently were on preferred shares of Fannie Mae(FNM Quote) and Freddie Mac (FRE Quote), which were wiped out when the Treasury Department placed the mortgage giants in receivership.