July's 13 bank failures tied April’s count for the highest monthly figure since July 2010, bringing total bank failures this year to 61 as commercial real estate exposure continued to weigh heavily on troubled banks.
Bank failures to date put the annualized pace at about 100 for the full year, still well below the 157 banks that failed in 2010 and the 140 that failed in 2009.
Commercial real estate exposure was the main driver behind problem loans for the 13 banks that failed, Trepp
said. Commercial real estate loans comprised $797 million, or 77%, of the total $1.03 billion in nonperforming loans at the failed banks. Construction and land loans made up $480 million, or 47%, of the total, while commercial mortgages comprised $317 million, or 31%, of the total nonperforming pool.
The residential real estate loans were second, with $161 million in nonperforming loans, or 16% of the total nonperforming balance.
Three failures for July occurred in both Florida and Colorado. Florida ranks second for bank failures overall, with nine so far this year and 54 since the failure cycle began in late 2007.
Two failures occurred in Georgia, which continues to lead the country in bank failures, with 16 this year and 68 since the cycle started in 2007.
The largest failed bank was Integra Bank in Indiana, with $2.2 billion in assets. The closure was the first in Indiana this year and only the second since 2007.
All the banks that failed in July had been on the Trepp watch list for four to 11 quarters.
The loss severity eased in July with the estimated costs to resolve the failed banks falling to 19% of failed bank assets, in comparison to 25% in June and 26% in May. Most of the drop is attributable to a lower estimated cost attached to the closure of Integra Bank, with an estimated cost of $171 million, or 7.8%, of total assets.
Twenty-five percent of all U.S. banks do not meet the minimum risk-based 8% Tier 1 capital requirement, according to a recent two-year stress test
completed by financial risk management firm Invictus Group
The tests shows 1,983 out of 7,695 banks would be challenged capital-wise in times of stress.
Write to Kerry Curry
Follow her on Twitter @communicatorKLC