Regional Banks in Georgia, Texas fail

State regulators closed local banks in Georgia and Texas Friday, bringing the total number of failed banks this year to 25.

The Federal Deposit Insurance Corp. said that the sole branch of Sanderson, Texas-based Sanderson State Bank will reopen Monday as a branch of The Pecos County State Bank.

Sanderson State Bank had total assets of $37 million and total deposits of $27.9 million.

The FDIC estimates that the cost to the Deposit Insurance Fund will be $12.5 million.

Meanwhile, Haven Trust Bank, which operates four branches in Georgia, will reopen as Branch Banking & Trust on Monday. It was the fifth bank in Georgia to fail this year.

Haven Trust had total assets of $572 million and total deposits of $515 million. Branch Banking & Trust, which is based in Winston-Salem, N.C., agreed to assume all of the deposits for $112,000.

Haven Trust's failure will cost the Deposit Insurance Fund an estimated $200 million, the FDIC said.

"Haven Trust Bank clients will benefit from the stability of a bank that is driven by values, [which] guide every decision we make and ensure everything we do is in the best interest of our clients," said BB&T in a statement on its Web site.

Bank failures have increased dramatically this year as a global financial crisis has unfolded. The 25 banks closed this year compares with only three bank failures last year, and none in 2006 and 2005.

In fact, the number has not been this high since 1993, when 42 banks failed, according to the FDIC.

While the majority of the failures have been at small, regional banks that were exposed to the downturn in the housing market, the financial crisis has also brought down a number of very large banks.

In September, Seattle-based thrift Washington Mutual became the largest bank failure in U.S. history. That followed the demise of IndyMac Bank, a Pasadena, Calf.-based bank that had $32 billion in assets when it was closed in July.

The spike in failures comes amid rising loan delinquencies and defaults as consumers and businesses struggle with the weak economy.

At the same time, credit has been extremely tight as banks hunker down in anticipation of more writedowns related to illiquid mortgage-backed securities.

Meanwhile, the federal government has pumped billions of dollars into the financial system in an effort to free up lending and revive the ailing economy. But banks remain reluctant to lend as the economic outlook grows darker.

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