The pace of bank failures has declined in 2012, with 31 failures during the first half of the year compared to 48 in the first half of 2011 and 86 in the same period in 2010, according to Trepp, a provider of information, analytics and technology to the commercial real estate and banking markets.
The Trepp Bank Failure Report, also indicated that commercial real estate exposure was the main source of problem loans for the banks that failed in June, comprising 76.4 percent of the total $185.3 million in nonperforming loans at the failed banks. Commercial mortgages accounted for 42.1 percent while construction & land loans were 34.3 percent of the non-performing loans.
Despite that, the pace of bank closures in the first half of 2012 has fallen to 5.5 per month, noticeably lower than the 2011 average of 7.7 per month. At the current pace, there would be 62 failures in 2012, in line with FDIC estimates in April of 50 to 60 for the full year, said Trepp.
According to the report, the greatest number of high-risk banks are in Georgia (39 banks), Florida (30), Illinois (24), Minnesota (11), North Carolina (10), Tennessee (8) and Missouri (8). These states are most likely to continue to experience bank failures in the months ahead, said Trepp.