79 US bank failures in 2011

Regulators on Friday closed small banks in Georgia, North Carolina and New Jersey, boosting to 79 the number of United States bank failures this year.

The number of closures has fallen sharply this year as banks have worked their way through the bad debt accumulated in the recession. By this time last year, regulators had shuttered 132 banks.

The Federal Deposit Insurance Corp (FDIC) seized Piedmont Community Bank of Gray, Georgia, with $201.7 million in assets and $181.4 million in deposits. It also shuttered Blue Ridge Savings Bank, based in Asheville, North Carolina, with $161 million in assets and $158.7 million in deposits. Also closed was First State Bank in Cranford, New Jersey, with $204.4 million in assets and $201.2 million in deposits.

State Bank and Trust Company, based in Macon, Georgia, agreed to assume the assets and deposits of Piedmont Community Bank.

Hardest-hit states

Georgia has been one of the hardest-hit states for bank failures. Regulators closed 16 lenders in Georgia last year. The closure of Piedmont Community Bank brought to 20 the number of banks shut down in the state this year.

California, Florida and Illinois also have seen large numbers of bank failures.

Bank of North Carolina, based in Thomasville, North Carolina, is acquiring the assets and deposits of Blue Ridge Savings Bank, and Northfield Bank, based in Staten Island, New York, is assuming those of First State Bank.

In addition, the FDIC and State Bank and Trust agreed to share losses on $163.2 million of Piedmont Community Bank's loans and other assets. The agency and Bank of North Carolina are sharing losses on $143.2 million of Blue Ridge Savings Bank's assets.

The failure of Piedmont Community Bank is expected to cost the deposit insurance fund $71.6 million. That of Blue Ridge Savings Bank is expected to cost $38 million, and that of First State Bank, $45.8 million.

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 $23 billion. The FDIC has said 2010 likely was the high-water mark 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 FDIC said this week it expects failures from 2011 through 2015 to cost $19 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.