Number of Bank Failures Plunge From Year Ago

Posted on October 5, 2011

Banking regulators closed First International Bank in Plano, TX, last week, the 26th bank failure in the third quarter — a nearly 56% decrease in bank failures compared to the same quarter a year ago.

While the number of bank closures is dwindling, one thing hasn’t changed: commercial real estate lending continues to make up the largest percentage of the failed banks’ activities. Two-thirds of the lending activity at the 26 failed banks was for CRE-related loans.

The banks had total distressed commercial real estate assets of $2.1 billion, which represented 21% of their total assets of $9.6 billion.

Of the distressed CRE totals, delinquent loans accounted for $1.15 billion of the assets, with nearly 87% of that seriously delinquent.

The banks had restructured $476 million of the commercial real estate loans on their books. Of that amount, nearly half was delinquent again.

Foreclosed property holdings accounted for $426 million of the total distressed assets.

Through the first two quarters of the years, the 26 banks had lost a collective $248 million.

First International Bank

The Texas Department of Banking closed First International bank and appointed the Federal Deposit Insurance Corp. (FDIC) as receiver.

The FDIC entered into a purchase and assumption agreement with American First National Bank in Houston to assume all of the deposits and seven branches.

As of June 30, First International Bank had $239.9 million in total assets, most of which American First National Bank agreed to purchase.

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $53.8 million. First International Bank was the first bank to fail in Texas this year.