Commercial real estate makes up 77% of troubled loans at failed banks

Commercial real estate accounted for 77% of the non-performing loans at the most recently failed banks, according to analytics firm Trepp. Regulators closed six banks on April 15, accounting for a total of $4.8 billion in assets. So far in 2011, there have been 34 closings, but Federal Deposit Insurance Corp. Chairwoman Sheila Bair said bank failures peaked the year before when 156 were shuttered. According to commercial real estate analytics firm Trepp, the six most recent failed banks had a total of $394 million in nonperforming assets as the end of 2010. Of those, 77%, or $300 million in loans were in commercial real estate. Of those, nonperforming construction and land loans totaled $200 million, followed $104 million for commercial mortgages. By contrast nonperforming residential loans totaled $73 million at these banks. Five of the six closures occurred in the Southeast. Two came in Georgia. Since September 2007, 60 banks failed there, the most of any state over that period. Trepp analysts expect the rate of failures to pick up. In March, regulators closed three banks, followed by eight in the first half of April. “As reporting of first quarter 2011 results accelerate through the month, regulators will gain added clarity on bank loan portfolio performance and balance sheet health,” Trepp said. Write to Jon Prior. Follow him on Twitter @JonAPrior.