The Federal Deposit Insurance Corp. exercised its powers to appoint itself the receiver to circumvent a judge's ruling that barred Nevada regulators from closing a tiny bank belonging to Capitol Bancorp (CBCRQ).

On Thursday, the FDIC announced that its board had authorized it to close the $20.2 million-asset 1st Commerce Bank in North Las Vegas. Though a primary regulator, such as the state or the Office of the Comptroller of the Currency, typically closes a bank and appoints the FDIC as receiver, Congress gave the FDIC the power to shutter banks through the FDIC Improvement Act of 1991.

"The self-appointment powers are used when the FDIC feels that an institution needs to be closed, but the chartering authority is unable to do so," an FDIC spokeswoman said.

The FDIC entered into an agreement with Plaza Bank in Irvine, Calif., to assume 1st Commerce's $19.6 million in deposits. Plaza also agreed to buy all of the bank's assets and entered into a loss-share transaction of $12.2 million of the assets. The FDIC estimated that the failure — the 15th so far this year — will cost the Deposit Insurance Fund $9.4 million.

Capitol, based in Lansing, Mich., has spent the last four years trying to keep its far-flung banks from failing by selling banks and using the proceeds to prop up ailing ones. On May 10, regulators planned to close four of the banks. The North Carolina Office of the Commissioner of Banks closed the $21.9 million-asset Pisgah Community Bank in Asheville, and the Georgia Department of Banking and Finance closed the $60.8 million-asset Sunrise Bank in Valdosta.

Legal challenges halted the immediate closure of 1st Commerce and the $31.6 million-asset Central Arizona Bank in Scottsdale. Central Arizona failed on May 14.

That same week, the $1.4 billion-asset company said in a regulatory filing that the fourth unnamed bank — later identified by SNL Financial as 1st Commerce — had a pending agreement to be acquired. Capitol said it was also awaiting regulatory approval to immediately inject capital that was in escrow in the bank.

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