California bank failure will cost FDIC $1.4 billion

SAN FRANCISCO (MarketWatch) -- Five more banks, including a California-based institution that reportedly received federal bailout funds in 2008, were closed Friday by regulators, bringing the 2009 total to 120 failed banks.

The latest banks to be taken over were United Security Bank of Sparta, Ga.; Home Federal Savings Bank of Detroit; United Commercial Bank of San Francisco; Gateway Bank of St. Louis and Prosperan Bank of Oakdale, Minn., according to the Federal Deposit Insurance Corp.

United Commercial, which had branches across the U.S. and also in Hong Kong and Shanghai, focused on the Chinese-American market in the U.S. and had obtained a very difficult to get banking license in China, the Los Angeles Times reported.

The Times said United Commercial received $299 million in federal bailout funds last year.

The FDIC estimated United Commercial's failure would cost its insurance deposit fund $1.4 billion.

It said United Commercial, whose U.S. and Chinese operations will be taken over by East West Bank of Pasadena, Calif., had assets of $11.2 billion and deposits of $7.5 billion as of Oct. 23.

The FDIC estimated the total impact on its deposit insurance fund from the four smaller banks would be $132.7 million.

The last time more than 100 banks failed in a single year was 1992. By number, banks in Georgia account for one-fifth of all U.S. institutions closing in 2009, with 21 failures, followed by Illinois with 209, California with 14 and Florida with nine.