The 11 U.S. banks that failed in October cratered under the weight of commercial real estate exposure, Trepp LLC said Monday. In October, the bank failure rate rose from September and August when six and seven banks failed respectively. Trepp said commercial real estate loans made up $401 million, or 65.1%, of the total nonperforming loans at banks that failed in October. Construction and land loans represented 41.2% of the total, or $254 million, while commercial mortgages made up $147 million, or 23.9% of the nonperforming loan pool, according to Trepp. Residential nonperforming loans made up 22% of the total nonperforming balance, or $136 million. The remaining portfolio of troubled loans was comprised of commercial and industrial loans, with commercial loans making up 11.2%, or $69 million, of the portfolio. Consumer and other loans made up 1.7%, or $11 million, of the nonperforming pool. “Last week we noted that the slowing of the U.S. economy seems to have taken its toll on the U.S. banking system,” Trepp analysts wrote. “In prior quarters, the system had seen delinquency rates drop sharply and the volume of troubled commercial real estate loans fall.” So far this year, more than 100 banks have failed in the United States, following the roughly 300 that failed in 2009 and 2010 combined. In September and throughout the year, Trepp has tied bank failures to troubled CRE loans. Write to Kerri Panchuk.
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