Nov. 21 (Bloomberg) -- Community Bank of Loganville, Georgia, was closed by a state regulator today, the 20th U.S. bank seized this year as foreclosures rise and home prices extend declines in the worst housing slump since the Great Depression.

Bank of Essex in Tappahannock, Virginia, will take over all of the $611.4 million of deposits from Community Bank, the Federal Deposit Insurance Corp. said today in an e-mailed statement. Community Bank’s four offices will open Nov. 24 as Bank of Essex branches.

“Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship to retain their deposit insurance coverage,” the FDIC said.

Regulators this year have closed the most banks since 1993, including 15 since July, and the collapses of Washington Mutual Inc. and IndyMac Bancorp Inc. were among the biggest in history. The U.S. is seeking to boost bank capital and avert failures using $250 billion from a bank-rescue fund enacted after the housing slump and tightening credit froze markets.

Bank of Essex will buy about $84.4 million of the failed bank’s $681 million in assets, with the FDIC retaining the rest for later disposition. It paid a premium of $3.2 million to assume the deposits, the FDIC said. The transaction will cost the deposit insurance fund, supported by fees on insured banks, $200 million to $240 million, the agency said. Community Bank opened in 1946.

Cost of Failures

The FDIC oversees 8,451 institutions with $13.3 trillion in assets, and insures deposits of as much as $250,000 per depositor per bank and the same amount for retirement accounts. The agency has proposed doubling premiums charged to banks for coverage to replenish its reserves amid agency forecasts that bank failures through 2013 will cost almost $40 billion.

Washington Mutual, the biggest savings and loan, sold its assets to JPMorgan Chase & Co. Sept. 25 after customers drained $16.7 billion in deposits in less than two weeks. Wachovia Corp., the sixth-biggest bank, was pushed by regulators to sell itself to Wells Fargo & Co. for $11.7 billion or face collapse.

The Treasury bought preferred shares in nine banks: Wells Fargo, JPMorgan, Citigroup Inc., Bank of America Corp., Merrill Lynch & Co., Morgan Stanley, Goldman Sachs Group Inc., Bank of New York Mellon Corp. and State Street Corp.

Separately, Hartford Financial Services Group Inc. and Genworth Financial Inc., two of the world’s biggest life insurers, are planning to acquire savings and loans. Lincoln National Corp. and Aegon NV, owner of Transamerica Corp., are seeking status as saving-and-loan holding companies. The insurers are taking the step to improve their chances of tapping the U.S. rescue package.

‘Problem Banks’

The FDIC in August said 117 banks were classified as “problem” in the second quarter, a 30 percent jump from the first quarter. The agency, which doesn’t name “problem” lenders, will update its assessment on Nov. 25 while reporting on the industry’s third-quarter financial results.

“Earnings will again be substantially below the prior year,” FDIC Chairman Sheila Bair said yesterday in a Baltimore speech. “But despite the problems facing our economy, the vast majority of banks remain well-capitalized, profitable, and in sound condition.”

The U.S. closed 27 banks from October 2000 through the end of last year, according to a list at fdic.gov.

To contact the reporter on this story: Ari Levy in San Francisco at alevy5@bloomberg.net

Last Updated: November 21, 2008 18:42 EST