NOT A GOOD SIGN FOR OVER 750 BANKS

“Not a Good Sign for Over 750 Banks”

Banks continue to fail in this country. Most of these banks are smaller community banks. The asset of these banks are absorbed by larger banks, which I always get concerned about. I like to see as much competition as possible.

I’m sure you remember the bailouts that we did for many of the so called “BIG BANKS”, that were too big to fail.

In spite of me being a mortgage broker, I refer business to small community banks. So, when I read articles that all these banks could fail, it immediately gets my attention. How about you?

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Nearly 800 Banks at Risk of Failure: Invictus

After the evaluating hundreds of American banks with stress analysis and sustainability tests, the Invictus Consulting Group has found that 758 FDIC banks are at risk of failing.

Without corrective measures, these 758 vulnerable banks with assets totaling almost $440 billion are unlikely to remain viable in the long run, according to the organization. Invictus estimates that new failures may begin anywhere within the next two years.

According to the risk management firm, this is due to the weak financial recovery, which could also lead to a new wave of loan defaults.

“While any possibility of a bank failure is serious, what makes this situation even more dire is that the demise of any of these banks would adversely affect their local communities, especially smaller business people and those seeking to buy or improve their homes,” Kamal Mustafa, chairman and CEO for Invictus, said in a statement.

FDIC data shows that 389 banks and thrifts have failed over the past three years, including 92 last year.

At 72, Florida currently contains the largest number of vulnerable banks. The states that follow include Illinois (69), Georgia (66), Minnesota (37), Missouri (33), and Tennessee (31). Alaska, Hawaii, New Hampshire and South Dakota are the only states where the banks are not extremely at risk.

Said Mustafa, “Borrowers will simply run out of time and resources. The banks’ earnings will be insufficient to sustain capital and many banks will be unable to raise enough capital.

“We believe there needs to be significant capital-raising for those can, or they must engage in mergers and acquisitions,” he added.