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WASHINGTON — Regulators on Friday closed two small banks in Georgia, boosting to 70 the number of U.S. bank failures this year.
The pace of closures has eased in 2011 as the economy has slowly improved and banks work their way through the bad debt accumulated in the recession. By this time last year, regulators had shuttered 118 banks.
The Federal Deposit Insurance Corp. seized Patriot Bank of Georgia in Cumming, Ga., with $150.8 million in assets and $111.2 million in deposits, and CreekSide Bank in Woodstock, Ga., with $102.3 million in assets and $96.6 million in deposits. Atlanta-based Georgia Commerce Bank agreed to assume the assets and deposits of the two failed banks.
In addition, the FDIC and Georgia Commerce Bank agreed to share losses on $136.2 million of Patriot Bank of Georgia's loans and other assets, and on $69.2 million of CreekSide Bank's assets.
The failure of Patriot Bank of Georgia is expected to cost the deposit insurance fund $44.4 million. CreekSide Bank is expected to cost the fund $27.3 million.
Georgia has been one of the hardest-hit states for bank failures. Regulators closed 16 lenders in Georgia last year. The closures of Patriot Bank of Georgia and CreekSide Bank brought to 19 the number of banks shut down in the state this year.
California, Florida and Illinois also have seen large numbers of bank failures.
In all of 2010, regulators seized 157 banks, the most in any year since the savings-and-loan crisis two decades ago. Those failures cost around $21 billion. The FDIC has said 2010 likely marked the peak for bank failures from the Great Recession.
In 2009, there were 140 bank failures that cost the insurance fund about $36 billion, a higher price tag than in 2010 because the banks involved were bigger on average. Twenty-five banks failed in 2008, the year the financial crisis struck with force; only three were closed in 2007.
From 2008 through 2010, bank failures cost the fund $76.8 billion. The deposit insurance fund fell into the red in 2009. With failures slowing, the FDIC's fund balance turned positive in the second quarter of this year; it stood at $3.9 billion as of June 30.
Depositors' money — insured up to $250,000 per account — is not at risk, with the FDIC backed by the government. That insurance cap was made permanent in the financial overhaul law enacted in July 2010.
