Regulators shut banks in Georgia, N.J., Utah; 32 bank failures in 2009

Silverton was the 11th bank in Georgia to fail since the beginning of last year, more than in any other state. Last week American Southern Bank in Kennesaw, Ga., was seized. Most of the failures have involved banks in the Atlanta area, where the collapse of the real estate market brought economic dislocation.

"Bank performance, like that of other businesses, is a direct reflection of local economic conditions," Joe Brannen, president and chief executive of the Georgia Bankers Association, said in a statement Friday. "The economy remains weak, so some banks continue to struggle. ... However, a majority of banks operating in Georgia meet the criteria for being well capitalized by regulators and have adequate reserves to weather the current stresses to the economy."

As the economy nationwide has soured, amid rising unemployment, tumbling home prices and soaring loan defaults, bank failures have cascaded and sapped billions out of the deposit insurance fund. It now stands at its lowest level in nearly a quarter-century, $18.9 billion as of Dec. 31, compared with $52.4 billion at the end of 2007.

The FDIC expects that bank failures will cost the insurance fund around $65 billion through 2013.

Next week the Federal Reserve will release results of "stress tests" for the 19 large banks at the center of the nation's financial crisis. The results will shed light on which banks may need government support to withstand a more severe recession.

The biggest loss to the insurance fund, $10.7 billion, came from IndyMac Bank, the big California-based savings and loan that was closed by the government last July and operated under an FDIC conservatorship. The failures of Downey Savings & Loan in California and Franklin Bank in Texas, both in November, cost $1.37 billion and $1.36 billion, respectively.

Contributing: AP Business Writer Sara Lepro in New York.

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