Security officers positioned outside First Bank of the Tetons branches during the weekend served as public evidence of the federal government forcing the sale of the cash-strapped Idaho-based company to U.S. Bank.

On Friday, the U.S. Treasury Office of Thrift Supervision closed First Bank of Idaho, parent company of First Bank of the Tetons. The Federal Deposit Insurance Corp. took over the bank and announced Minnesota-based U.S. Bank would buy some of the Idaho deposits.

The move came just 10 days after First Bank of Idaho’s CEO stated the company would be able to raise capital to meet federal stipulations. In those days, the bank began to lose the capital it needed to operate.

“We didn’t have enough cash to meet our customers’ demands,” CEO Everett Covington said Sunday morning.

In mid-April, area media reported the bank was under a federal order limiting what business it could do and requiring it to build cash reserves.

Covington offered the following reasons for why the bank became short of cash so quickly.

Following reports of the bank being placed under federal restrictions, customers slowly began to remove their deposits. The April 15 tax deadline hit and customers wrote checks to the federal government, moving millions of dollars out of the bank.

Because of the federal restrictions, the bank was unable to seek brokered deposits to build its cash. Plus, other banks continued to close lines of credit.

“Things just kept getting worse,” Covington said.

Covington said that at the time of the FDIC action he was near a deal with a hedge fund to recapitalize the bank. He said he also was close to structuring a deal to move some bad loans off the bank’s books.

But it proved to be too little too late.

“The good news is that U.S. Bank has agreed to take all the deposits of our bank,” Covington said. “On Monday, we will open as U.S. Bank. Everyone’s deposits will be perfectly safe; U.S. Bank is an FDIC deposit insured institution.”

One of the downsides of the deal will be the termination of jobs at the bank. Many employees will continue at the bank as FDIC employees until the transition to full U.S. Bank control.

Some of the 110 employees will continue, but some won’t.

“Many people will be without work,” Covington said.

West bank resident and First Bank of Idaho shareholder Jim Eden was heartened by the fact that customers would keep their deposits, but he knew as an investor he might suffer.

“It may not be good for shareholders of the bank; it is good news for customers,” Eden said of the FDIC action.

The Office of Thrift Supervision blamed deteriorating market conditions and weakening investments in resort communities as factors in the bank’s closure. The bank made considerable loans in Teton Valley and Sun Valley, Idaho, communities with faltering real-estate markets.

“The bank … was in unsound condition and unable to continue operating due to severe liquidity strains, deteriorating asset quality, negative earnings and declining capital,” according to a statement from the federal agency. “The bank focused its business in resort communities where eroding economic conditions in the last year caused rising loan delinquencies and the need to significantly increase loan loss provisions.”

The federal government does not announce ahead of time any actions it plans to take.

“No advance notice is given to the public when a financial institution is closed,” according to an FDIC statement on the matter.

Bank and federal employees worked through the weekend to determine exact account and loan balances that would be used in the transaction. The FDIC hires local police or private security guards to monitor the branches as workers go in and out at all hours.

“We just want to have the security to protect our people and the failed-bank employees that are in and out of that bank throughout the weekend,” said David Barr, spokesman for the FDIC. “It is usually a pretty high-profile event. We want to make sure everybody that is working throughout the weekend is safe and secure.”

First Bank of the Tetons operated two branches in Jackson Hole and others in Teton Valley, Idaho. Through the weekend, customers were able to use their ATM cards, but some reported not being able to transfer money online between accounts.

As of Dec. 31, First Bank of Idaho had total assets such as loans of approximately $488.9 million and total deposits of $374 million.

Federal officials reported that the bank branches would open today for regular business under First Bank of the Tetons and First Bank of Idaho brands but they would later be renamed as U.S. Bank offices.

The following outline of the deal comes from FDIC and U.S. Treasury statements.

U.S. Bank will purchase the approximately $268 million in retail deposits for $1.47 million.

U.S. Bank will not assume $112.8 million in brokered deposits held by First Bank of Idaho. The FDIC will pay the brokers directly for the amount of their funds.

In addition to acquiring the failed bank’s retail deposits, U.S. Bank agreed to assume approximately $17.8 million in assets such as real-estate investments and loans. U.S. Bank may choose to assume other bank assets.

Because the asset fate of the asset portfolio remains in flux, the cost of that part of the deal has not been determined.

The FDIC will retain any assets U.S. Bank does not acquire for later disposition.

Customers who placed deposits with brokers should contact their brokers directly for more information about the status of their deposits, the FDIC stated.

Customers who have questions about the transaction can call the FDIC toll-free at 1-800-591-2845 from 8 a.m. to 8 p.m. For information, visit the FDIC’s Web site at www.fdic.gov/bank/individual/failed/firstbankidaho.html.

First Bank of Idaho is the 29th bank to fail in the nation this year and the first in the state of Idaho, according to an FDIC press release.

Before the announcement, U.S. Bank had 90 branch offices in Idaho and 14 in Wyoming.

U.S. Bancorp, with $264 billion in assets, is the parent company of U.S. Bank, the sixth largest commercial bank in the United States.

The company operates 2,847 banking offices and 5,183 ATMs in 24 states.