Regulators closed two small banks in Nevada and Illinois bringing the total number of banking failures for 2011 to 28.
During 2010, there were a total of 157 banking failures, the most since 1992 when 181 banks failed. A total of 140 banking failures occurred during 2009 and 25 in 2008.
Although the pace of banking failures this year has slowed from 2010, the number of banks on the FDIC Problem Bank List increased to 884 at December 31, 2010, up from 860 in the previous quarter. Total assets of problem banks amount to $390 billion and almost 12% of all FDIC insured institutions are on the Problem Bank List.
The large number of banking failures since 2009 has cost the FDIC almost $60 billion and despite increased deposit insurance assessments on the banking industry, the Deposit Insurance Fund has a negative balance of $7.4 billion.
The financial system is no longer directly threatened by the collapse of “too big to fail banks” and, accordingly, the FDIC seems to have adopted a very leisurely pace on closing insolvent banks. Real estate values continue to deteriorate which only puts additional stress on bank balance sheets. If the economy does not recovery strongly and real estate prices continue to drop, many of the problem banks may be unable to recover and face closure by regulators.
The two failed banks this week had total assets of $331.7 million and the loss to the FDIC Deposit Insurance Fund was $62.9 million. Total losses on banking failures this year now total almost $2 billion. For further details on each banking failure, please click on the links below.
Bank Failure # 27 – Western Springs National Bank & Trust, West Springs, IL
Bank Failure #28 – Nevada Commerce Bank, Las Vegas, NV