Friday marked the failure of another bank, pushing the 2010 total to 42. The Federal Deposit Insurance Corporation took over Beach First National Bank in Myrtle Beach, South Carolina.

The bank had $585.1 million in assets and $516 in deposits. Bank of North Carolina, based in Thomasville, is taking over the failed bank's assets and deposits. The Beach First failure is expected to cost the FDIC $130.3 million.

A growing number of loan defaults, especially in the commercial real estate sector, have put considerable pressure on banks across the country. In fact, failures are expected to peak this year, exceeding the 140 that occurred in 2009, which was the worst year since 1992.

The bank failure rate slowed a bit last week, but the tally remains alarming. Two banks in Georgia and one in Florida hit the skids, bringing the 2010 total to 40.

The victims this time around were McIntosh Commercial Bank in Carrollton, Georgia, Unity National Bank in Cartersville, Georgia, and West Bank of Key West, Florida. Together the three bank failures are expected to cost the FDIC insurance fund approximately $213.6 million.

Another seven banks were shuttered last week, bringing the number of bank failures in 2010 to 37. The most recent casualties came from Alabama, Georgia, and Minnesota on Friday alone. Earlier in the week, banks in Utah and Ohio were added to the count.

Advanta Bank, in Draper Utah, wasn't able to attract a buyer. The FDIC stepped in and approved payouts for insured deposits, with checks to depositors expected to be mailed on Monday. Advanta had $1.6 million in assets and $1.5 million in deposits.

Four more banks bit the dust last week, bringing the total to 30 -- just shy of 75 days into 2010. Regulators closed banks in New York, Florida and Louisiana, representing in aggregate nearly $1.1 billion in assets and a little over a billion dollars in deposits.

Park Avenue Bank in New York was shut down by the FDIC this week. It had $520.1 million in assets and $494.5 million in deposits as of the end of last year. Its deposits will be assumed by Valley National Bank, which is based in Wayne, New Jersey, and it will pay a small premium for them. Valley National also agreed to pick up virtually all of the bank's assets.

Three more banks failed last week, bringing 2010's total to 25. Already, this year's bank failures have matched the 2008 full-year total and exceeded the 2007 amount by a factor of greater than eight. The three regional banks that failed last week were in Florida, Illinois and Maryland, with close to a billion dollars in aggregate assets. According to the FDIC, the pace of bank failures could be set to accelerate in the next few months.

Sun American Bank, in Boca Raton, was taken over by the FDIC, with First-Citizens Bank & Trust, based in Raleigh, N.C., assuming the Florida banks assets and almost all of its deposits. Sun American had assets of $535.7 million and $443.5 million in deposits. Since July, First-Citizens has acquired the assets of four failed banks, the others being First Regional Bank of Los Angeles, Venture Ban (Lacey, Wash.) and Temecula Valley Bank (Temecula, Calif.).

Not even two months into 2010, the number of banks closed this year has already reached 20, not far behind the full-year result of 25 in 2008 and ahead of the three in 2007. On Friday, four banks were shut down by regulators, carrying forward the momentum from 2009's 140 bank failures. In only one week, the number of bank failures this year spiked 25%.

La Jolla Bank FSB in California was taken over by the Federal Deposit Insurance Corp. It had 10 branches, $3.6 billion in assets and $2.8 billion in deposits. Its deposits and assets were taken over by OneWest Bank in Pasadena in a deal that is expected to cost the insurance fund $882.3 million. OneWest and the FDIC will share the losses on failed bank loans and other assets of approximately $3.3 billion.

The FDIC said this week that it expects distressed loans tied to mortgages and commercial real estate failures to result in many more bank failures this year. Last year 140 U.S. banks failed, the highest annual level since 1992. The FDIC has said the total bill for bank failures for the period of 2009 through 2013 could reach $100 billion.

Five more banks were seized by regulators on Friday, bringing this year's total to nine. The five failed banks are:

The bank bust tally is up to 131. Republic Federal Bank was the most recent to be shut down by regulators, which happened on Friday, making it the 13th in Florida to fall.

Boca Raton-based 1st United Bank (FUBC) has agreed to pick up its $352.7 million in deposits and $267.1 million of its $433 million in assets. The FDIC and 1st United are sharing $210.4 million in loans and other assets -- the stuff left over will be held by the FDIC until it is sold. According to the FDIC, this failure will cost the deposit insurance fund $122.6 million.

U.S. banking regulators took over six more banks on Friday, bringing the 2009 bank failure tally to 130. So, even with the post-financial crisis situation stabilizing a year later, the continued stream of bank failures serves as a stark reminder that we aren't out of the woods yet. Smaller banks are expected to continue to fail at an higher rate through next year, due in large part to the pressures of deteriorating loans.

Of course, unemployment will continue to be a problem, as it impairs the abilities of borrowers to repay their debts. The squeeze appears to be lightening, as job cuts slowed considerably in November, but the unemployment rate is nonetheless expected to peak next year.

Seven more banks failed late Friday, including institutions in Illinois, Minnesota, Wisconsin, Georgia, and three in Florida. The FDIC posted the liabilities it would assume and which banks would take on customers from the shutter institutions in detail on its website.

According to MarketWatch, "CreditSights, which tracks the dismal data, predicts that in the current cycle, from 2008 through 2011, as many as 1,100 banks will fail. That would wipe out 13.4% of all U.S. banks, representing 7% of U.S. banking assets."

What a way to go into the holiday weekend, eh? On Thursday, seven banks were shut down by authorities, which pushed the total of failed banks for 2009 to 52 -- which more than doubles the number of bank failures in 2008. Six of the seven banks seized were located in Illinois and the other was in Texas, according to the Federal Deposit Insurance Corporation (FDIC).

According to the federal group, the Illinois failures are interlinked, as all six banks were controlled by one family and used a similar business model. The FDIC noted that this model "created concentrated exposure in each institution." This model left the banks heavily exposed to collateralized debt obligations and other loan losses. The six banks brings the total of failed banks in Illinois to 12.

As for the Texas bank failure, it was the first in the state this year.

Last March, I posted on whether we were at the beginning of the Greatest Depression. Back then, my reasoning was that there was $6.1 trillion in financial toxic waste -- in the form of Collateralized Debt Obligations (CDOs) -- in our financial system resting on a sliver, a mere $340 billion, in capital.

Therefore, a 6% decline in the value of that toxic waste would wipe out the bank capital. (I should have added in another $6 trillion in mortgage-backed securities). When you consider that Merrill Lynch sold $31.6 billion of its CDOs last year for 22 cents on the dollar, you realize that toxic waste needed an 80% haircut rather than a 3% one -- and voila -- you've wiped out all the capital!

If you look at some basic statistics comparing the current economic situation with that of the Great Depression, you might think that we are in relatively great shape. Our unemployment rate now is 7.2% -- at its nadir, 25% of the population was unemployed in the Great Depression.

The year 2008 saw a slew of discount M & A (mergers and acquisitions) deals, most of them below book value. Among these were Wachovia and National City. Capital One Financial bought Chevy Chase Bank at .64 times book value.

If you look at the financial landscape for 2009, some names are already popping up for distressed sales, such as Citizens Republic Bancorp (NASDAQ:CRBC), Huntington Bancorp (NASDAQ:HBAN), Midwest South Financial (NASDAQ:TSFG) and Colonial Banc Group (NYSE:CNB).

It seems that we will see a continuation of the purging of bad bank assets in 2009. Banks use a practice of good/bad assets and move their worst assets to a separate company that absorbs the assets' future losses. Then the original bank emerges as a healthier, deleveraged institution.

All of this is taking place under the radar and it is difficult for investors and the public to know which banks are using this practice. When deleveraging becomes unmanageable, the federal government may need to step in and absorb a bank losses to avoid the bank's failure.

Do you believe the financials are a place to invest in 2009?

The FDIC took over two more banks yesterday -- Haven Trust Bank of Duluth, Ga., and Sanderson State Bank -- bringing the total number of bank failures so far this year to 25. As I posted, the FDIC likes to close banks on Friday after hours so they can reopen as branches of the acquiring bank on the following Monday morning. (Here's a post on last week's bank failure.)

BB&T (NYSE: BBT) will buy $55 million of Haven's $572 million in assets and pay $112,000 for its $515 million in deposits. The FDIC will retain Haven's remaining assets "for later disposition" -- paying $200 million. Pecos County State Bank of Fort Stockton, Tex., will buy $3.8 million of $37 million in Sanderson's assets and pay a premium of 0.55% to assume its $27.9 million in deposits -- costing the FDIC $12.5 million.

This week's bank failures were small potatoes for the FDIC which plans to double the insurance premiums it charges banks to cover these failures. With industry earnings down 94% to $1.73 billion from a year ago, the FDIC expects things to get worse -- yielding bank failures through 2013 that will cost it almost $40 billion.

And guess who will pay those higher premiums? You and me.

Peter Cohan is president of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in the securities mentioned.

The FDIC took over another bank yesterday -- First Georgia Community Bank -- bringing the total number of bank failures so far this year to 23. As I posted, the FDIC likes to close banks on Friday after hours so they can reopen as branches of the acquiring bank on the following Monday morning. (Here's a post on the previous three bank failures.)

The FDIC is receiver of Jackson, Ga.-based First Georgia, which had $237.5 million in assets and $197.4 million in deposits as of November 7. United Bank of Zebulon, Ga., will take over First Georgia's deposits, reopen Its four branches, and buy about $60.6 million of First Georgia's assets. The FDIC will retain the other $176.9 million worth of assets and try to sell them.

More banks will fail. The FDIC estimates that through 2013 there will be about $40 billion in losses to the deposit insurance fund. Since its current $34.6 billion fund is below the minimum target level set by Congress, the FDIC is raising insurance premiums paid by banks and thrifts to replenish its fund. Meanwhile the number of troubled banks on the FDIC's list spiked 50% to 171 as of September 30.

Looks like First Georgia won't be the last to fail.

Peter Cohan is president of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He and has no financial interest in the securities mentioned.