THE BASIS POINT

First 2 Bank Failures of 2009, Following 25 Failed Banks in 2008

Two banks were seized by the FDIC Friday, continuing a trend that started last year with 25 bank failures. Click the FDIC tag below for more coverage of the FDIC’s strategy in an environment where so many bank failures threaten the viability of the FDIC. Under the leadership of Sheila Bair, the FDIC’s strategy is to play the role of investment banker, brokering deals for firms to take over failed banks immediately after or even before the FDIC seizes them. They did it successfully with WAMU (which was taken over by JP Morgan Chase the day after the FDIC seized it) and Wachovia (which was brokered to Citi first but then Wells won the bid and all before the FDIC took it over). This strategy was used with one of the banks seized Friday:

The Federal Deposit Insurance Corp said National Bank of Commerce of Berkeley, Illinois and Bank of Clark County of Vancouver, Washington were closing with other banks taking over their insured deposits.

National Bank had $430.9 million in assets and $402.1 million in deposits, with Republic Bank of Chicago assuming its insured deposits, the FDIC said. Republic Bank will also purchase $366.6 million in assets at a discount of $44.9 million, it added.

Umpqua Bank, a subsidiary of Umpqua Holdings Corp, agreed to assume insured deposits of the Bank of Clark County, which had $446.5 million in assets and $366.5 million in deposits, the FDIC said.

The FDIC insures up to $250,000 per account through 2009 and individual retirement accounts at insured banks.

But Bank of Clark County had about $39.3 million in uninsured deposits in 138 accounts that may exceed the insured limit, the FDIC said. It added that “is likely to change once the FDIC obtains additional information from these customers.”

Bank of Clark County will reopen on Tuesday as branches of Umpqua Bank. The FDIC said customers at National Bank should continue to use existing branches until Republic Bank can fully integrate National’s deposit records.

Customers at both National Bank and Bank of Clark County can access their money over the weekend by check, teller machine or debit card, the FDIC said.

National Bank’s failure will cost the FDIC Deposit Insurance Fund $97.1 million while Bank of Clark County’s failure will cost between $120 and $145 million, it said.