Five more banks fail in November, CRE to blame

By Kyle Chezum Updated on 9/25/2013

Five bank failed in November due to their exposure to commercial real estate, according to the analytics firm Trepp LLC.

These developments continue the trend of 2011; bank failures after the end of a fiscal quarter, with a lull in the following two months. Eleven banks in total failed during October due to CRE exposure.

90 banks in all have failed this year alone, setting a pace of near 100 banks to fail in total by the end of the year. 300 banks were affected in 2009 and 2010 combined.

Commercial real estate loans comprised 80.8% of the total $160 million in nonperforming loans of the banks that failed this November. Construction and land loans accounted for 64.4% of the total, while commercial mortgages summed up to 16.5% of the nonperforming assets.

Residential real estate made up 10.1% of the nonperforming balance. The remaining nonperforming loans were industrial/commercial (5.4%) and consumer (3.7%).

Geographically, the bank failures were evenly distributed in states of Georgia, Louisiana, Iowa, Nebraska, and Utah.

Although less banks failed than the annual average of 7.5 this last month, the estimate is still predicted to be 100 by the end of the year.

"We expect closures to extend into 2012 and possibly beyond," Trepp stated. "Much will depend on the strength of the economy in general and real estate market conditions in particular."