The Federal Deposit Insurance Corp. took over all seven.
Regulators shuttered First Federal Bank of California, based in Santa Monica, with $6.1 billion in assets and $4.5 billion in deposits, as was as Imperial Capital Bank of La Jolla, Calif., with about $4 billion in assets and $2.8 billion in deposits.
California was one of the states hardest hit by the real estate market meltdown and many banks there have suffered under the weight of soured mortgage loans. First Federal and Imperial Capital bring to 17 the number of California banks to fail this year.
Also closing their doors Friday were Atlanta-based RockBridge Commercial Bank, with $294 million in assets and $291.7 million in deposits; and New South Federal Savings Bank, based in Irondale, Ala., with $1.5 billion in assets and $1.2 billion in deposits.
Citizens State Bank of New Baltimore, Mich., with $168.6 million in assets and $157.1 million in deposits, was shut down, along with Peoples First Community Bank of Panama City, Fla., with $1.8 billion in assets and $1.7 billion in deposits.
Regulators also closed Independent Bankers' Bank, based in Springfield, Ill. - a sort of wholesale bank that provided services to 450 client banks in four states - with $585.5 million in assets and $511.5 million in deposits.
OneWest Bank of Pasadena, Calif., agreed to buy all of the deposits and essentially all of the assets of First Federal Bank. All 39 of its branches will reopen on Saturday as branches of OneWest.
Los Angeles-based City National Bank agreed to assume all of Imperial Capital's deposits, as well as $3.3 billion of the failed bank's assets. The FDIC will retain the remaining assets for a later sale. All nine branches of Imperial Capital will reopen Monday as City National Bank branches.
Beal Bank, based in Plano, Texas, agreed to assume the assets and deposits of New South Federal Savings Bank, which only had one branch. Hancock Bank, based in Gulfport, Miss., agreed to assume the deposits and about $1.6 billion of the loans and other assets of Peoples First Community Bank. The FDIC will retain the rest for eventual sale.
The FDIC was unable to find a buyer for RockBridge Commercial Bank, so checks covering insured accounts will be mailed to retail depositors, the agency said.
For Independent Bankers' Bank, the FDIC set up a temporary "bridge bank," which the agency will operate as it continues to seek a buyer. The FDIC also set up a "bridge bank" for Citizens State Bank, which will continue to operate for about 45 days to allow customers access to their deposits and open accounts at other banks. It will be operated by Huntington National Bank of Columbus, Ohio, under a contract with the FDIC.
The FDIC estimates the failure of First Federal Bank of California will cost the deposit insurance fund $146.3 million and Imperial Capital's closing is expected to cost the fund $619.2 million.
The failure of Citizens State Bank will cost $76.6 million; the failure of New South Federal Savings Bank is expected to cost $212.3 million; that of Peoples First Community Bank $556.7 million; Independent Bankers' Bank, $68.4 million; and RockBridge Commercial Bank, $124.2 million.
RockBridge Commercial 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 this year, more than in any other state. Independent Bankers' Bank was the 21st bank in Illinois to fail and Peoples First Community Bank was the 14th bank in Florida.
As the economy has slumped, with unemployment rising, home prices tumbling and loan defaults soaring, bank failures have accelerated around the country.
The 140 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 especially hard hit 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.