The Real Deal Miami

Commercial real estate loans drive U.S. bank failures in July

August 04, 2011 12:27PM

Commercial real estate exposure was the main driver behind problem
loans for the 13 U.S. banks that failed in July, according to data released
by Trepp today.Three of the failures occurred in Florida with the Landmark Bank of
Florida, the Southshore Community Bank, and the First People’s Bank.

Commercial real estate loans comprised 77 percent of the total $1.03
billion in nonperforming loans at the failed banks. Construction and
land loans made up 47 percent of the total, while commercial mortgages
comprised 31 percent of the total nonperforming pool.

The residential real estate loan category was second with 16 percent
of the total nonperforming balance.

So far there have been 61 bank failures in 2011, making it likely that
there will be around 100 failures by the end of the year, according to
the report. The pace of closures experienced a sharp increase in July,
after low failure counts in June and May, and matched the count in
April, Trepp states. There are still over 250 banks on the Trepp Watch
List that feature high Failure Risk scores, and 37 of those are in
Florida.

Other failures occurred in Arizona, Colorado, Georgia,, Illinois, Indiana and
Virginia. The remainder of the problem loans was comprised
of C&I loans at 6 percent of the total and consumer and other loans at
less than 1 percent of the total. — Miranda Neubauer