Two more banks fail

Regulators closed two more banks Friday, bringing the number that have failed since the first of the year to 16.

The operations of both banks - Security Savings Bank of Henderson, Nev., and Heritage Community Bank of Glenwood, Ill,. were taken over by other institutions.

One of the acquirors was a bank whose own finances were strengthened by taxpayer capital from the Treasury Department's $700 billion Troubled Asset Relief Program.

Ten of the 16 banks that were seized by regulators this year have been absorbed by others that got TARP funds.

The Nevada Financial Institutions Division closed Security Savings and appointed the Federal Deposit Insurance Corp. as receiver. It arranged for Bank of Nevada, based in Las Vegas, to acquire its $175.2 million in deposits and its two branches.

Bank of Nevada also agreed to buy $111.3 million of the failed institution's $238.3 million in assets.

The Illinois Department of Professional Regulation seized Heritage Community and appointed the FDIC as receiver. It struck a deal with MB Financial Inc., which has headquarters in Chicago, to take over the bank's $218.6 million in deposits and its four branches.

MB Financial agreed to buy $230.5 million of the bank's $232.9 million at a discount of $14.5 million. In addition, the FDIC entered into a loss-sharing arrangement on $181 million of those assets.

MB Financial got $196 million in TARP money in December, selling preferred stock and warrants to the Treasury Department as part of its plan to inject capital into banks to shore up their balance sheets and help spur lending.

The FDIC estimated that the two latest bank closings would cost its deposit insurance fund about $100 million. It said in a report this week that 252 banks and savings institutions were on its "Problem List" at the end of 2008, up from 171 three months earlier. It noted that the number was the highest since the middle of 1995.