GIBSON, Ga. — The banner above FirstCity Bank still reads "Celebrating 100 Years of Service," but the 690 residents of this rural community aren't in the mood — not since government regulators locked the door, emptied the vault and closed the only bank within nearly 20 miles.

Georgia leads the nation in bank failures, with nine banks shut down in the past year. Still, few in tiny Glascock County suspected the financial meltdown driven by toxic real-estate loans would scuttle the place they deposited paychecks earned from sawmills and row-crop farming, their local lender for buying tractors and pickup trucks.

"We need a bank, definitely," says 70-year-old Charles Usry, who fits cars with new brakes and tires at his small auto parts store across Main Street from the now-empty FirstCity. "If you don't have a bank, eventually people are going to go somewhere else. The towns are going to die."

Eleven Georgia banks, most surrounding Atlanta, have been shuttered by regulators, followed by nine in California and four in Florida. Experts predict more could be closed in Georgia in the future. But what propelled Georgia to No. 1 in bank failures is complicated.

Experts say it's a combination of an antiquated state law that favored a plethora of smaller community banks over multi-branch giants; a population explosion in metro Atlanta that fueled massive suburban real estate development; and a crush of new banks formed to cash in on the Atlanta boom shortly before the market tanked.

First, Georgia is home to a huge number of state and federally chartered banks. At the end of 2008, Georgia had 334 banks. That's more than California, which has nearly four times Georgia's population, or Florida, which has twice as many people. Only five states — Texas, Illinois, Minnesota, Iowa and Kansas — have more banks than Georgia, according to the FDIC.

What these states had in common, until the mid-1990s, was some of the nation's most restrictive laws on branch banking. Georgia, for example, prohibited banks from opening branches across county lines until 1996.

The law shielded local banks from worrying about competition from out-of-town rivals. It also guaranteed that Georgia, with a whopping 159 counties, would have a correspondingly large number of banks.

"It was really a belief that local banking was the best banking and you did not want to have the big city banks dictating the amount of credit available to small town and rural America," said Steve Verdier, director of congressional relations for the Independent Community Bankers of America.

Even after interstate giants such as Bank of America, SunTrust and Wachovia could expand freely across Georgia, growth in Atlanta's suburbs spurred the opening of new banks looking to profit from loans to real-estate developers.

Metro Atlanta had three of the nation's 10 fastest-growing counties of the 1990s. Because of that growth, about half the state's banks ended up clustered around Atlanta, said Joe Brannen, president and CEO of the Georgia Bankers Association.

Faltering loans played a role in the demise of First-City, said Robert E. Maloney Jr., the bank's attorney. The bank had $24.6 million in nonperforming loans in 2008, meaning no payments had been made for 90 days or more, and a loss of $8.3 million last year.

"Smaller banks make loans to people that can't get loans at larger banks," Maloney said. "Did we put our eggs too much in the real estate development market? Obviously we did."

Anthony Griswell, chairman of the Glascock County Commission, said he's confident another bank will move into Gibson. Residents, meanwhile, are moving money to banks outside the county. Judy McDonald, a retired county employee, said she and her husband opened two accounts — with different banks.

"We weren't going to go through that mess again," McDonald said.