Four banks failed on Friday, soaking the FDIC's deposit fund for more than $1 billion. The biggest losses came from Southern California, as regulators finally ended what had become a slow-motion sink beneath the waves for two banks. The total number of bank failures for the year now stands at 57. 

Analysts recognized Vineyard National Bank's troubles as early as January 2008, when its parent holding company announced losses of $41.3 million for the previous quarter. By July of that year, the California-based bank had signed a consent decree with the Office of the Comptroller of the Currency requiring it to stop gorging on brokered deposits and to raise capital from other sources. Instead, its capital shrunk while its non-performing loans grew. This past April, the Nasdaq and the New York Stock Exchange delisted Vineyard National Bancorp, the holding company. Speculation then centered not on whether the bank would fail but why it hadn't already. Regulators finally pulled the plug on Friday evening entering into an agreement with California Bank & Trust of San Diego to take on Vineyard's deposits. The FDIC estimates the total cost to its insurance fund at $579 million.

Temecula Valley Bank followed a similar path. It reported in January that in the last quarter of 2008 its non-performing assets has grown nearly fivefold to $148 million. On February 12, it signed a Cease and Desist Order with the FDIC requiring it to raise more capital. Then a deal with a private equity group to inject $210 million into the bank's holding company fell apart. After the bank missed numerous deadlines, regulators on Friday brokered their own deal with First-Citizens Bank and Trust Company of Raleigh, North Carolina to take on the bank's deposits. Total cost to the FDIC -- $304 million.

The two other banks to fail yesterday were in South Dakota and Georgia. BankFirst of Sioux Falls was the first bank to fail in South Dakota since 1992. The FDIC entered into an agreement with Alerus Financial of Grand Forks, North Dakota to assume the deposits. In Georgia, banks have been falling like ripe peaches. The FDIC shuttered First Piedmont Bank of Winder, making it the tenth Georgia bank to fail this year. First American Bank and Trust Company of Athens, Georgia will assume the deposits.

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