Two Banks Fail; 2011 Tally at 28

WASHINGTON (TheStreet) - Two banks failed on Friday, bringing this year's total number of bank failures to 28.

Both failed banks had previously been included in TheStreet's Bank Watch List of undercapitalized institutions, based on fourth-quarter regulatory data provided by SNL Financial.

Western Springs National Bank and Trust

The Office of the Comptroller of the Currency closed Western Springs National Bank and Trust of Western Springs, Ill. The regulator said Western Springs National Bank and Trust had roughly $186.8 million in total assets and $181.9 million in total deposits when it failed.

The Federal Deposit Insurance Corp. was appointed receiver and sold the failed bank to Heartland Bank and Trust Co. of Bloomington, Ill.

The failed bank's two offices were set to reopen during normal business hours beginning Saturday, as branches of Heartland Bank and Trust.

The FDIC entered into a loss-sharing agreement with Heartland Bank and Trust, agreeing to cover 80% of losses on $100.8 million of the acquired assets. The agency estimated the failure of Western Springs National Bank and Trust would cost the deposit insurance fund $31 million.

Western Springs National Bank and Trust has been undercapitalized since March 31, 2010 after a $6 million net loss in the first quarter of 2010 left the institution's total risk-based capital below the 8% required for most institutions to be considered adequately capitalized by regulators. At that time, nonperforming assets -- including loans past due 90 days or more, nonaccrual loans and repossessed real estate -- made up nearly 17% of total assets.

The institution was operating under a November 2009 consent order from the OCC, agreeing to raise capital, improve credit administration and make various other improvements. A prompt corrective action order from the OCC followed in November 2010, requiring the bank's board of directors to submit plans to restore its capital and return to profitability, or if these plans weren't accepted by the regulator, to make plans to sell the bank.

Nevada Commerce Bank

The Nevada Financial Institutions Division closed Nevada Commerce Bank of Las Vegas. The FDIC was appointed receiver and sold the failed bank's $144.9 million in total assets and $136.4 million in total deposits to City National Bank of Los Angeles.

The acquiring bank is the main subsidiary of City National Corp.(CYN).