Number of closed banks by month

The number of U.S. national bank failures fell to five in May 2011 after a sharp jump to 13 in April but more closures are expected throughout 2011, according to a monthly bank failure report by
Trepp, released today. The May figure is the second-lowest count since July 2010, only outpacing three failures in March.

For the group of five failed banks, commercial real estate loans comprised $152 million, or 76 percent, of the total $201 million in nonperforming loans. Meanwhile, construction and land loans made up of $109 million or 54 percent of the total, while commercial mortgages comprised $44 million.

The residential real estate loan category was also a factor, with $31.4 million in non-performing loans, or 16 percent of the total non-performing balance. TRD [more]

One dozen U.S. banks failed last month, mostly in foreclosure hotspots like Florida and California and mostly because of soured commercial real estate loans, according to the latest data from Trepp. That puts the nation’s year-to-date total number of bank failures at 23, putting the U.S. on pace to exceed 100 failures once again this year. (Last year, there were 157 bank failures). Of the $320 million in non-performing loans reported by February’s failed banks, 37 percent were construction loans, 35 percent were commercial mortgages and 20 percent were residential real estate loans. Trepp said it doesn’t foresee bank failures easing up before 2012. TRD

The Federal Deposit Insurance Corp. is planning to sell $1.12 billion worth of commercial and residential real estate loans from failed banks in a sealed-bid auction, Bloomberg News reported. The agency plans to conduct separate residential and commercial sales, it said in a preliminary announcement yesterday. The $773 million residential portfolio, which includes acquisition, development and construction loans with collateral in 41 states and concentrated in Florida, Michigan, Utah, Arizona and Indiana, will be divided into northern, southeastern and western pools for the sale, the FDIC said. The $351 million commercial portfolio, of which 88 percent of the is backed by properties in Florida, Utah, Nevada, Michigan and Arizona, will be split into two pools: northern and western, and southeastern. Bids are due Nov. 16, and winning bidders will share ownership and proceeds of the debt with the FDIC. [Bloomberg]

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Two more U.S. banks failed last Friday, bringing the tally to 279 collapsed institutions since Sept. 25, 2008, when Washington Mutual went under in the largest bank failure ever recorded. During that time period, the financial industry’s assets have diminished by 4.5 percent. According to the Wall Street Journal, the effects of the wave of bank failures over the last two years — which Standard & Poor’s says is far from over — will have a lasting effect on credit, customers and the economy. In addition to lost jobs and tightened lending standards, fewer competitors means that the remaining banks have the freedom to offer lower interest rates on savings accounts, further squeezing struggling American consumers. “When we step back and look at this financial disaster 10 years from now, the destruction of capital in our economy as a result of what we’ve endured will be the single greatest lasting impact on recovery and how the economy performs in the future,” said Howard Headlee, president of the Utah Bankers Association. [WSJ]

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The number of banks in financial trouble is at an 18-year high, Colin Barr, senior writer for Fortune, says in the CNNMoney video above, with 118 recorded so far this year. That number will reach nearly 200 by the end of the year, he said, and around 1,000 by early- to mid-2011 — highs unseen since the 1980s.
“You get a slower economy, you get more unemployment, you get more bank failures,” he said.
With loans down 7 percent from a couple years ago, banks are not contributing to the nation’s recovery.
“Banks are kind of on the sidelines,” he said, adding, “We’re in this holding pattern.”

[more]

The number of banks in financial trouble is at an 18-year high, Colin Barr, senior writer for Fortune, says in the CNNMoney video above, with 118 recorded so far this year. That number will reach nearly 200 by the end of the year, he said, and around 1,000 by early- to mid-2011 — highs unseen since the 1980s.
“You get a slower economy, you get more unemployment, you get more bank failures,” he said.
With loans down 7 percent from a couple years ago, banks are not contributing to the nation’s recovery.
“Banks are kind of on the sidelines,” he said, adding, “We’re in this holding pattern.”

[more]

The number of banks in financial trouble is at an 18-year high, Colin Barr, senior writer for Fortune, says in the CNNMoney video above, with 118 recorded so far this year. That number will reach nearly 200 by the end of the year, he said, and around 1,000 by early- to mid-2011 — highs unseen since the 1980s.
“You get a slower economy, you get more unemployment, you get more bank failures,” he said.
With loans down 7 percent from a couple years ago, banks are not contributing to the nation’s recovery.
“Banks are kind of on the sidelines,” he said, adding, “We’re in this holding pattern.”

[more]

The Congressional Oversight Panel said in a report released today that it is “deeply concerned” that a pending wave of commercial real estate loan failures could threaten the nation’s fiscal stability, but that “no single cause” can be identified in the commercial mortgage crisis (see full report here). Loans made during the peak of the commercial market bear the highest risk of default, according to the report, while almost half of the commercial real estate loans expected to reach maturity between 2010 and 2014 are currently underwater. All told, about $1.4 trillion worth of commercial real estate mortgages will hit the end of their terms during that four-year period. Although 2010 may remain somewhat calm, the report claims, 2011 and the subsequent years could be brutal for commercial lenders with expected losses for banks ranging from $200 billion to $300 billion. TRD [more]

When you travel to Las Vegas you can make a bet on nearly every sporting event. Perhaps in 2010, the odds makers in Sin City will allow people to wager on the number of failed banks nationwide. Few would have expected a total of 140 United States banks to fail in 2009, up from 25 in 2008 and a mere three in 2007, according to Zacks Investment Research. The Federal Deposit Insurance Corporation Chairman Shelia Bair stated that the worst of the bank failures are not over yet and bank failures will accelerate this year. During the first 15 days of the year alone, four banks — in Utah, Minnesota, Illinois and the State of Washington — were closed by the FDIC. Last year, some of the biggest failures were banks which were involved extensively in providing real estate financing — Corus Bank, BankUnited, AmTrust Bank to just name a few. And today, many of the banks under review are financial institutions which were intimately involved in commercial real estate financing. Locally, a number of New York and New Jersey financial institutions are under cease-and-desist or formal agreement with the government to raise capital and discontinue commercial real estate lending. [more]