Updated from 4:03 p.m. EDT

Omni National Bank of Atlanta was closed by federal regulators on Friday, the twenty-first U.S. bank or thrift closed during 2009.

Omni National, held by Omni Financial Services, had "experienced substantial dissipation of assets and earnings due to unsafe and unsound practices," the Office of the Comptroller of the Currency said in a press release. The holding company's shares were trading on the pink sheets for 2.5 cents before the announcement.

The failed bank was the ninth Georgia institution to fail out of the 46 bank and thrift failures during 2008 and 2009. Georgia now has the most failures during this period, with California running a close second, with eight failures.

The Federal Deposit Insurance Corp. was appointed receiver, and appointed SunTrust Bank, held by SunTrust Banks Inc. ( STI) to act as paying agent on behalf of the receivership, running the former Omni National Bank's six branches until April 27.

This is the first arrangement of this type during the current crisis. Under the agency's agreement with SunTrust, Omni's insured depositors will have until April 27 to either move their money to a new account with SunTrust or withdraw their money.

The FDIC announced that uninsured deposits of approximately $2 million were not covered by arrangement with SunTrust. The agency also announced that $320 million in brokered deposits would be paid directly to brokers.

When a bank fails and brokered deposits aren't acquired, brokers are required to file paperwork with the FDIC, since the brokered deposit accounts are kept in the name of the broker. The FDIC then cross-checks the brokered account information against any retail deposits the customers may also have with the failed institution to see if the customers' total deposits exceed insurance limits.

It can take several weeks for brokered deposit customers to receive their money.

The OCC said that Omni National "depleted most of its capital, and there is no reasonable prospect that the bank will become adequately capitalized without federal assistance."

Omni National was considered significantly undercapitalized as of Dec. 31, per regulatory guidelines and was included in TheStreet.com's updated list of undercapitalized banks, the second list in our recent article focusing on undercapitalized savings and loans.

Omni National reported a tier-1 leverage ratio of 3.00% and a total risk-based capital ratio of 5.79% as of Dec. 31. These ratios need to be at least 5% and 10% for an institution to be considered well capitalized under the ordinary regulator guidelines.

The FDIC estimated the cost its deposit insurance fund from Omni National's failure would be $290 million.

TheStreet.com Ratings assigned Omni National Bank its lowest rating of E- (Very Weak) in December, based on Sep. 30 financial results. This was a downgrade from an E rating in September and a D- rating in June. The institution's capital ratios had slipped to below-well-capitalized back in March 2008, when it booked the second of five consecutive quarterly net losses as its construction and residential mortgage loan portfolios soured.

Most of the failed Georgia institutions made large bets on construction loans during the building boom in the Atlanta metropolitan area.

Omni was the second-largest Georgia bank to fail during 2008 and 2009. The largest was Integrity Bank of Alpharetta, which has $1.1 billion in total assets when it was shuttered by state regulators on Aug. 29. Integrity's deposits were acquired by Regions Financial ( RF).

Another significant Georgia failure was Haven Trust Bank of Duluth, which failed on Dec. 12, with deposits acquired by BB&T Corp. ( BBT).

The failure of Omni National Bank showed once again that risks remain for deposits, despite the good feeling about banks in the market over the past few weeks.

While the FDIC's arrangement with SunTrust was convenient for retail depositors, depositors with uninsured balances lost money. CD deposits made through brokers also will need to wait to receive their money and then find a new parking place for their cash, quite possibly at lower rates, since they lost any attractive rates they might have locked in with Omni.

While you might assume that there's no need to be concerned if your bank account balances weren't made through a broker or don't exceed the insurance limits, you or someone you know are probably associated with a business, organization or government entity (such as a school district) with large deposits of somebody else's money in a local bank. In this environment, it is a very good idea to look into the health of your bank.

The FDIC's basic individual deposit insurance limit has been temporarily increased to $250,000 and the agency has also waived its limit on insurance covering noninterest-bearing business checking accounts. But these measures are set to expire on Dec. 31, and there's no guarantee that they won't expire at the end of the year.

TheStreet.com Ratings issues independent and very conservative financial strength ratings on each of the nation's 8,500 banks and savings and loans which are available at no charge on the Banks & Thrifts Screener. In addition, the Financial Strength Ratings for 4,000 life, health, annuity, and property/casualty insurers are available on the Insurers & HMOs Screener.

Philip W. van Doorn joined TheStreet.com Ratings., Inc., in February 2007. He is the senior analyst responsible for assigning financial strength ratings to banks and savings and loan institutions. He also comments on industry and regulatory trends. Mr. van Doorn has fifteen years experience, having served as a loan operations officer at Riverside National Bank in Fort Pierce, Florida, and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a Bachelor of Science in business administration from Long Island University.

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