Chart reflects 'FDIC problem banks' at the end of Q2. Update on the December numbers - released today - from the WSJ inside.
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WASHINGTON—More banks failed in 2010 than any year since the savings-and-loan crisis ended in 1992, but regulators said Wednesday that they believe failures have passed their peak.
So far this year, the 157 banks that failed had total assets of $92.1 billion compared to 140 bank failures with total assets of $169.7 billion in 2009.
"We believe that the number of failures peaked this year in 2010," said Jim Wigand, acting director of the Federal Deposit Insurance Corp.'s division of resolutions and receiverships.
Mr. Wigand said the banks that failed in 2010 were smaller, with lower asset values than the banks that failed in 2008 and 2009. "In terms of failed bank assets, that number peaked in 2008," he said.
As of Sept. 30, when the FDIC released its last quarterly report, there were 860 banks on the agency's "problem list."
Since 2008, 322 banks have failed with combined assets of $633.7 billion and total cost to the FDIC of $79.5 billion.
The FDIC insures deposits for banks that pay premiums to the agency and uses that money to cover the cost of dealing with troubled banks when they fail. The FDIC asked banks to pay three years of premiums at the beginning of 2010 to help pay for the expected onslaught of failures this year.
The biggest bank to fail this year was Westernbank Puerto Rico. About half of the banks that failed in 2010 were based in four states: California, Florida, Illinois or Georgia.
James Chessen, an economist at the American Bankers Association Economist, said the banks that failed in 2010 were smaller and more reflective of the local communities they served than the banks that failed earlier in the crisis.
"There has been a shift from institutions that failed because they took too great a risk on housing to institutions that fail because they serve local communities that have suffered greatly from the recession," Mr. Chessen said.
The lingering effects of the financial crisis and the increasing capital requirements from regulators could mean more mergers for small banks next year, said Chris Cole, senior vice president of the Independent Community Bankers of America.
"I think you'll see an increase in mergers between community banks because there's still a problem with capital out there," Mr. Cole said.
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