Although only three banks failed last month, all three were weighed down with nonperforming commercial real estate (CRE) loans, according to new data from Trepp LLC.
All three of the failed banks were community-level institutions in states that have experienced bank failures this year: Bank of Commerce in Wood Dale, Ill.; Legacy Bank in Milwaukee; and First National Bank of Davis, Okla. Trepp reports that CRE loans constituted $44 million (or 55%) of the total $80 million in nonperforming loans. Within that group, commercial mortgages made up $27 million (or 34%) of the total, while construction and land loans constituted $16 million (or 21%) of the total nonperforming pool.
In comparison, the residential loan group constituted $29 million in nonperforming loans (or 36%) of the total nonperforming balance – while commercial and industrial loans, consumer loans and other lending activity made up the remaining 9%.
Trepp notes that 26 banks failed in the first quarter of 2011, which is the lowest quarterly count since the second quarter of 2009, but the company warned that the financial services industry remains shaky and that more failures are expected later this.
SOURCE: Trepp LLC
