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More than 200 Banks Pose High Risk of Failure: Trepp

While the pace of bank closings has slowed this year compared to the year before, in its bank failure report, ""Trepp"":http://www.trepp.com/ noted that there are still more than 200 banks at high risk of failure as of the first quarter of 2012.


More specifically, 209 banks are considered to be at high risk of failure on the Trepp Watchlist, three of which failed in April, leaving 204.

The high-risk banks are more heavily concentrated in Georgia (41 banks), followed by Florida (32), Illinois (24), Minnesota (12), North Carolina (11), Tennessee (9) and Missouri (9).


Overall, the national tally for failed banks rose to 23 over this first weekend in May after regulators closed Security Bank, National Association in North Lauderdale, Florida.

When comparing closings until the end of April, there were 22 failures this year compared to 39 reported failures at the end of April in 2011.

Also, during the first four months in 2012, the pace of closings was 5.5 per month compared to 7.7 per month in 2011.

For the April closings, bad commercial real estate loans were cited as the main reason the failures occurred. Commercial real estate exposure comprised of 71.1 percent, or $141.2 million, of the total $198.4 million in nonperforming loans at the failed banks, according to Trepp.

Residential mortgages were next in line as a source of distress, accounting for 25 percent, or $49.6 million of the total nonperforming loans in April.

As for the reasons behind the slower pace of closures, Trepp said it is attributable to ailing banks being given more time, as well as progress banks are making when it comes to raising capital and improving performance.

With slower closings, Trepp added the slowdown could spillover into 2013, but ""much will depend on the strength of the economy in general, and real estate market conditions in particular.""

About Author: Esther Cho


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