WASHINGTON — U.S. banks considered troubled jumped to more than 700 last quarter, even as the industry squeezed out a small profit in a recovering economy.
Loan losses and bank failures are likely to continue to haunt the industry as regional banks succumb to soured commercial-real-estate loans.
The snapshot for October through December issued Tuesday by the Federal Deposit Insurance Corp. offered a tale of two banking sectors: Big banks have been gradually recovering, many of them with help from federal bailout money, but small and midsize institutions continue to suffer distress that will probably persist in the coming years.
Regional banks are especially vulnerable to losses on loans for commercial real estate, such as stores and office complexes. These loans make up a disproportionate share of their business. Losses are growing as buildings sit vacant and builders default on their loans.
Such defaults could escalate the wave of bank failures, which numbered 45 in the fourth quarter and totaled 140 last year. That was the highest annual total since 1992, at the peak of the savings-and-loan crisis. So far this year, 20 banks have failed.
FDIC Chairman Sheila Bair said that pace is likely to pick up this year. The Associated Press
