U.S. authorities closed the Bank of Commerce of Wood Dale, a small Illinois bank on Friday, bringing the total number of foreclosures in 2011 to 26.
The Illinois bank had about $163.1 million in assets, the FDIC said. Advantage National Bank Group of Elk Grove Village, Illinois, will assume the failed banks' deposits.
In 2010, 157 banks failed following 140 failures in 2009. The bulk of the failures have increasingly been smaller institutions, those with less than $1 billion in assets, as large banks have recovered more quickly from the 2007-2009 financial crisis.
FDIC Chairman Sheila Bair has said the agency expects the number of failures to drop in 2011.
Community banks continue to be hit hard by the weak economy and the amount of bad loans on their books, particularly in the commercial real estate sector.
In the FDIC's most recent quarterly report, released on February 23, the agency said the number of banks on the problem list grew to 884 from 860.
Most of these institutions will not fail but the list provides an indication of how many banks are struggling and it illustrates the problems facing small institutions.
When releasing the latest quarterly results, however, Bair said the outlook for the industry as a whole is improving including for small institutions.
In its quarterly update the FDIC reported that banks had combined earnings of $21.7 billion in the fourth quarter of 2010, marking the fourth profitable quarter in a row.
But statistics showed lending continued to contract, down 0.2 percent or $13.6 billion for the quarter, and Bair warned it would have to pick up for the industry to take the next step in its recovery from the 2007-2009 financial crisis.
(Reporting by Dave Clarke and Roberta Rampton; editing by Sofina Mirza-Reid)