Regulators shut down banks in Ala., Fla., Ga., Mich.; makes 137 US bank failures this year

Regulators shut banks in 4 states

WASHINGTON — Regulators have shut down banks in Alabama, Florida, Georgia and Michigan, bringing to 137 the number of U.S. banks that have failed this year amid the soured economy and mounting loan defaults.

The Federal Deposit Insurance Corp. took over the four. Atlanta-based RockBridge Commercial Bank, with $294 million in assets and $291.7 million in deposits was shuttered, as was New South Federal Savings Bank, based in Irondale, Ala., with $1.5 billion in assets and $1.2 billion in deposits.

Also closing their doors were Citizens State Bank of New Baltimore, Mich., with $168.6 million in assets and $157.1 million in deposits; and Peoples First Community Bank of Panama City, Fla., with $1.8 billion in assets and $1.7 billion in deposits.

THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP’s earlier story is below.

WASHINGTON (AP) — Regulators on Friday shut down a small Georgia bank, bringing to 134 the number of U.S. banks that have failed this year amid the soured economy and mounting loan defaults.

The Federal Deposit Insurance Corp. took over RockBridge Commercial Bank, based in Atlanta, with $294 million in assets and $291.7 million in deposits. The FDIC was unable to find a buyer for the failed bank, so checks covering insured accounts will be mailed to retail depositors, the agency said.

The FDIC estimates the failure of RockBridge Commercial Bank will cost the deposit insurance fund $124.2 million. The bank had about $2.1 million in deposits that exceeded the $250,000 per-account insured limit, an estimate likely to change after more information is gathered from customers, the agency said.

Depositors with funds that exceed the insured limits become essentially creditors of the failed bank. They will eventually recover some of their money, but the amount can range from 40 cents on the dollar up to the full amount. Recovery can take months.

RockBridge Commercial is the 25th Georgia-based bank to fail so far this year, more than in any other state. Failures also have been concentrated in California, Florida and Illinois.

As the economy has slumped, with unemployment rising, home prices tumbling and loan defaults soaring, bank failures have accelerated around the country.

The 134 bank failures are the most in a year since 1992 at the height of the savings-and-loan crisis. They have cost the government-backed deposit insurance fund — which has fallen into the red — more than $30 billion so far this year. The failures compare with 25 last year and three in 2007.

The FDIC expects the cost of bank failures to grow to about $100 billion over the next four years.

Banks have been hammered by failed real estate loans, both residential and commercial.

If the economic recovery falters, defaults on the high-risk loans could spike. Nearly $500 billion in commercial real estate loans are expected to come due annually over the next few years.

Last week, the Obama administration extended until next October the $700 billion financial bailout program, saying the fund was still needed to prevent further turmoil in the banking system. Treasury Secretary Timothy Geithner said extending the rescue program also will help homeowners struggling to avoid losing homes to foreclosure and small businesses having trouble getting loans.