Minneapolis-based U.S. Bank has entered the New Mexico market-its 25th state-through the acquisition of First Community Bank, a failed bank with 38 branches.

State regulators closed First Community Bank on Friday and appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. The FDIC then entered into a purchase and assumption agreement with U.S. Bank.

U.S. Bank said that First Community's 38 branches-35 in New Mexico and three in Arizona-will continue to operate under their current name and will be re-branded as U.S. Bank branches in the near future.

Under the terms of the deal, U.S. Bank will acquire about $2.1 billion in assets and assume about $2.1 billion in liabilities, including $1.8 billion of insured and uninsured deposits. U.S. Bank will not acquire any assets or liabilities of First Community Bank's holding company, Albuquerque, New Mexico-based First State Bancorporation.

According to Steve Dale, a U.S. Bank spokesman, a “vast majority” of First Community Bank employees will retain their jobs. The bank had 494 employees as of September 30.

The FDIC said that the arrangement made with U.S. Bank was the government's least costly option. The FDIC estimates that the bank's failure will cost the government $260 million.

In August, the Federal Reserve Board issued a consent order that stated First Community Bank was “significantly undercapitalized” and ordered the bank to increase its equity and “take other necessary measures to make the bank adequately capitalized.”

As of September 30-the latest date for which data is available-the bank had a total risk-based capital ratio of 4.01 percent. A minimum total risk-based capital ratio of 10 percent is required to be considered “well-capitalized” by the FDIC.

First Community Bank is the 11th FDIC-insured institution to fail in the nation this year, and the first in New Mexico. So far in 2011, there have not been any bank failures in Minnesota. Eight Minnesota banks failed in 2010.

U.S. Bank is a subsidiary of Minnesota's largest bank-holding company, Minneapolis-based U.S. Bancorp, which had $308 billion in assets as of December 31, 2010.