Federal regulators last night seized control of the National Bank of Washington (NBW), the District's oldest financial institution, after its parent, Washington Bancorporation, filed for bankruptcy protection from creditors.

The bank will be open for business today at all 18 of its area branches and deposits continue to be insured up to $100,000 per customer account, government officials said.

The Office of the Comptroller of the Currency (OCC) said it took control of NBW to "safeguard" the bank's $1.6 billion in assets and to provide for an orderly sale of the bank, after private efforts to find a buyer or attract investors failed. The demise of the bank follows a long struggle to overcome internal quarrels and a deteriorating local real estate market.

The government action marked the first time in modern history that a major District-based bank had been taken over by federal regulators. It also was the first time that regulators exercised new powers, granted last year, to take management control of a bank before it has been declared insolvent. Early intervention is meant to limit the cost to the government of dealing with troubled banks.

NBW is the second local financial institution in two days to face a financial crisis resulting from the end of the decade-long boom in the Washington real estate market. On Tuesday, federal savings and loan regulators took over United Savings Bank of Vienna after reports of heavy losses on real estate loans triggered a three-day run by jittery depositors that forced the government to step in.

The Office of the Comptroller appointed William S. Ogden, a 62-year-old retired Chase Manhattan Bank executive, to manage NBW's affairs. Ogden managed Continental Illinois National Bank and Trust Co. after the government propped it up in 1984.

"The OCC concluded that the appointment of a conservator was necessary to help safeguard the bank's assets and to provide for an orderly sale of the bank," the Office of the Comptroller said. The government action followed a statement by Washington Bancorp. that NBW could not "restore its capital to required levels," leaving it below federal minimum standards.

Federal regulators did not take over two small Washington Bancorp. subsidiaries, Washington Bank (Virginia) and Washington Bank (Maryland), which are state-chartered banks. Margie H. Muller, Maryland State Bank Commissioner, said Washington Bank (Maryland) "is capitalized and operating in a safe manner" and does not require intervention by state regulators. It was unclear last night whether Virginia state authorities would take any action.

Washington Bancorp. has been struggling financially for months and has been engaged in legal battles with some of its creditors. The creditors include owners of $25.8 million worth of commercial paper, a form of short-term borrowing, on which Washington Bancorp. defaulted in May.

That default, and the disclosure by Washington Bancorp. that it lost $80 million in the second quarter due to troubles with NBW's commercial real estate loans and other matters, battered Washington Bancorp.'s stock price. The stock, which has traded as high as $19 a share in the past year, closed yesterday at $1, down 12 1/2 cents.

The bankruptcy filing was not announced until after the stock market closed. Washington Bancorp. said in the announcement that its stockholders "will be unlikely to realize value" for their shares.

The biggest Washington Bancorp. shareholder is Middle Eastern financier Wafic Said, who owns about 27 percent. He also was the largest shareholder of Garfinckel's, the venerable Washington retailer that recently sought bankruptcy protection.

Washington Bancorp. Chairman John J. Mason also suffered millions of dollars in losses on Washington Bancorp. stock. He recently purchased a major stake in the bank company and became its chairman, vowing to save the institution by attracting new investors.

But Mason's efforts to attract investors failed after bank regulators discovered that NBW's losses on real estate loans were worse than previously anticipated. More than half of NBW's loans were for real estate.

NBW's problems go far beyond making bad real estate loans. The bank has been devastated by a long and bitter fight among competing groups of investors for control of the 181-year-old institution. That struggle has produced repeated turnover in management, driving away longtime borrowers and depositors who felt loyalty to one faction or another.

Founded in 1809, nine years after Washington itself was established, the bank has played a key role in the growth of the city. Its history is intertwined with that of such landmarks as the Washington Monument, which it helped finance.

In its early years, NBW mirrored the District's other large, establishment banks: upscale, swanky -- the bank for Washington's wealthy. But in the late 1940s, under the direction of the United Mine Workers, which secretly bought a 76 percent controlling interest in the bank, NBW went its own way. Luther H. Hodges Jr. took the helm at NBW in 1980 and launched an effort to clean up its by-then troubled finances. By 1985, he persuaded the United Mine Workers to sell control to his investment group.

While he had some success, Hodge's resignation earlier this year followed many months of board-room struggle for control. In March, the bank agreed to be acquired for $19.20 a share by an investor group headed by attorney Robert B. Washington Jr. But that fell through when financing could not be obtained after the bank's financial situation deteriorated. The struggle under private management ended yesterday with the bankruptcy filing.

While creditors will fight over the parent Washington Bancorp.'s remaining assets, federal regulators will look for someone, probably another financial institution, to take over NBW and rebuild its capital. With the government cleansing NBW of its legal liabilities, the bank may be attractive to potential investors interested in its branch network, which has many prime Washington locations.

Neither NBW nor the Virginia or Maryland bank subsidiaries was included in the Washington Bancorp. bankruptcy filing, which covered other bank company holdings. The filing said Washington Bancorp. had debts of $61.7 million; creditors likely will receive substantially less than they are owed.

In addition to its financial problems, NBW is the target of a federal criminal investigation involving a money laundering scheme. That investigation apparently has been put on hold because prosecutors did not want to complicate the bank's financial situation.

The Securities and Exchange Commission also is investigating possible securities law violations involving high-risk loans to members of the board of directors and the improper investment of customer funds in securities issued by the bank's holding company.

A month after Washington Bancorp. defaulted on the commercial paper, George Hyman Construction Co. sued the bank and its parent company for fraud, charging that bank officials used $4.8 million of Hyman's cash to buy the parent company's notes without authorization.

Hyman's cash was supposed to have been invested in low-risk securities, the lawsuit said. Instead, the bank used the cash to buy the holding company notes because no other investors could be found to buy the commercial paper.

About the same time that Washington Bancorp. went into bankruptcy court yesterday, a Hyman subsidiary filed a new lawsuit in U.S. District Court against three NBW officials who were allegedly responsible for the investment decision. Accused of fraud and breach of the legal duties were Donald J. Coleman, chief financial officer of NBW, W. Thomas Fleming III, president of the bank, and John M. Toups, former chairman of the board.

Staff writer Richard Tapscott contributed to this report.