Two small Western banks owned by First National Bank Holding Co. of Scottsdale, Arizona, failed on Friday pushing the number of failed banks this year to 7.

After federal regulators closed the institutions, the two banks are now in the process of transferring their deposits and some assets to Mutual of Omaha Bank, the Federal Deposit Insurance Corp. (FDIC) said.

The two failed banks are: First National Bank of Nevada, based in Reno with $3.4 billion in assets, which also operates as First National Bank of Arizona; and Newport Beach, California-based First Heritage Bank which had $254 million in assets and mainly served firms.

The two banks are the first institutions to fail after federal regulators seized IndyMac Bancorp two weeks. First National Bank of Nevada and First Heritage Bank were undercapitalized, according to a statement released by the Office of the Comptroller of the Currency. Their deposits as well as their 28 offices in Arizona, California and Nevada were acquired by Mutual of Omaha Bank.

"All depositors, including those with deposits in excess of the FDIC's insurance limits, will automatically become depositors of Mutual of Omaha Bank for the full amount of their deposits," the FDIC said.

On July 11, regulators closed IndyMac Bancorp a California mortgage lender with more than $19 billion in deposits.

The number of lenders on the FDIC’s “problem list” is now 90, from 76 in the fourth quarter of fiscal year 2007. The FDIC insures deposits at 8,494 institutions with $13.4 trillion in assets. FDIC chairwoman Sheila Bair said the bank failures will increase on rising foreclosures and slumping home sales.

However, superintendent of Arizona Department of Financial Institutions Felecia Rotellini said that it is very important that Arizona residents know that their deposits are secure.

"They are well-managed and the First National Bank of Arizona issues should not cause any panic in Arizona," she added.