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) -- State regulators closed two banks Friday, bringing the total number of U.S. bank failures for 2010 to 127.

Both failed banks were previously included in


Bank Watch List



institutions, based on second-quarter regulatory data provided by SNL Financial.

Haven Trust Bank of Florida

State regulators shuttered

Haven Trust Bank of Florida

and appointed the

Federal Deposit Insurance Corporation

receiver. The FDIC arranged for

First Southern Bank

of Ponte Vedra Beach, Fla. to assume the failed institution's total assets of roughly $149 million, along with all of its deposits. Under a loss-sharing agreement, the FDIC agreed to cover 80% of Southern Bank's losses on $127.3 million of the acquired assets.

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First Southern Bank is the main subsidiary of

First Southern Bancorp



Haven Trust Bank of Florida was organized in August 2006 and never achieved a profit, quickly becoming heavily concentrated in construction loans and commercial mortgages. The total for these two loan types peaked at $122 million in June 2009, or 68% of total assets.

The bank was operating under a Jan. 27 consent order -- essentially a cease-and-desist order -- from the FDIC and the Florida Office of Financial Regulation requiring the bank's board of directors to take a more active role in managing the institution, to meet regularly following a formal agenda, to make sure that board members were properly trained and to "retain qualified management." This type of requirement implies that board oversight may have been lacking even before the credit crisis began, raising the question why this part of the order wasn't handed down years earlier.

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The order also required the bank to raise sufficient capital to increase its tier 1 capital to 8% of its total assets and its total risk-based capital ratio to 10% within 120 days. In order to be considered


, most banks and thrifts have to maintain a tier 1 leverage ratio of at least 5% and a total risk-based capital ratio of at least 10%.

Haven Trust Bank of Florida's two branches were set to reopen during normal business hours as branches of First Southern. The FDIC estimated the cost of the bank closure to its deposit insurance fund would be $31.9 million. As of June 30, the capital ratios were 2.04% and 3.75%, respectively.

North County Bank

State regulators closed

North County Bank

of Arlington, Wash. The FDIC was appointed receiver and sold the failed bank's $276 million in deposits for a 2% premium to

Whidbey Island Bank

, Coupeville, Wash., which is held by

Washington Banking Co.



Whidbey Island Bank also took on the failed bank's $289 million in total assets, with the FDIC agreeing to cover 80% of losses on $221.9 million.

The failed bank had been operating under an August 2009 cease and desist order from the FDIC and the Washington Department of Financial institutions, requiring North County Bank to retain qualified management and increase its tier 1 leverage ratio to 10% and its total risk-based capital ratio to 12.5% within 120 days. Four subsequent quarterly net losses left the capital ratios at 2.24% and 4.28%, respectively, as of June 30, and nonperforming assets -- including loans past due 90 days or more or in nonaccrual status, and repossessed real estate -- made up 22% of total assets.

The regulators ordered North County on June 24 to raise sufficient capital within 30 days to become adequately capitalized or arrange a merger with another institution. It's almost impossible in the current environment for a community bank with a high ratio of nonperforming assets to raise capital. That's because interested investors know it's better for them to wait for an institution to fail, given the generous terms the FDIC is offering to buyers of failed banks.

North County Bank's four branches were scheduled to reopen Monday as branches of Whidbey Island Bank. The FDIC estimated the cost of the failure to its deposit insurance fund would be $72.8 million.

Whidbey Island Bank also acquired the failed

City Bank

of Lynnwood Wash. in April.

Thorough Bank Failure Coverage





leads all states with 24 bank closures this year, followed by


with 15 and


with 14.

All bank and thrift failures since the beginning of 2008 are detailed in


interactive bank failure map:

Image placeholder title

The bank failure map is color-coded, with the states that have the greatest number of failures highlighted in dark gray, and states with no failures highlighted in light green. By moving your mouse over a state you can see its combined 2008-2010 totals. Clicking on the state will open a detailed map pinpointing the locations and providing additional information for each bank failure.


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Written by Philip van Doorn in Jupiter, Fla.

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Philip van Doorn


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Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.