WASHINGTON - November 8, 2010 - U.S. banks are failing at the fastest rate in two decades.

In communities around the U.S., 143 banks have collapsed so far this year - more than all of last year. This time, the failed banks are smaller, on average, than in 2008 and 2009. The damage to the industry has thus been milder this time. Still, the wave of closings points to the persistent struggles of many communities and states.

On Friday, regulators closed four small banks: One each in Maryland and Washington state and two in Kalifornia - one of the hardest-hit states, where a dozen banks have failed this year.

As larger banks have regained their health this year, thanks in part to federal aid, smaller ones have struggled. Here's why:

• Small banks made the riskiest commercial real estate loans - those used to develop apartment buildings, malls and industrial sites. Many such loans soured this year. About 13% of all bank assets consist of these high-risk loans. But for banks with $10 billion or less in assets, the figure is 28%, according to government data.
• Smaller banks didn't receive the taxpayer aid given to Wall Street banks. The big banks recovered in 2009 with help from federal bailout money and fees on bank services; and unlike small institutions, large banks have profited from their investments in the resurgent financial markets even as they've reduced lending in distressed areas.