U.S Bank Failure hits 105 for the year 2009 closing 1992 record

Note: U.S Unemployment is 10% and it would take 2-3years for the situation to improve increasing the risk of more loan default, so more Banks are likely to fail in next few year creating more pressure on FDIC which has already asked Banks to prepay three years of insurance premiums which will be very high for big banks.

http://www.marketwatch.com/story/bank-failures-hit-100-for-year-2009-10-23

Bank failures hit 105 in U.S for the year 2009, Credit Sights, which tracks the dismal data, predicts that in the current cycle, from 2008 through 2011, as many as 1,100 banks will fail. That would wipe out 13.4% of all U.S. banks, representing 7% of U.S. banking assets.

http://www.fdic.gov/index.html

The last year in which the FDIC had that many banks to deal with was in 1992, at the tail end of the last real estate crisis. The FDIC rescued 122 in 1992, according to Keefe, Bruyette & Woods researchers. The increasing stream of bank failures is likely to run through 2011 according to some industry experts, as the fallout from the credit crisis continues.

FDIC-insured institutions have set aside just over $338 billion in provisions for loan losses during the past six quarters, an amount that is about four times larger than their provisions during the prior six quarter period, FDIC data show.

"While banks and thrifts are now well along in the process of loss recognition and balance sheet repair, the process will continue well into next year, especially for commercial real estate," FDIC chief Sheila Bair told Congress last week.

As a result, she said, the number of problem institutions increased significantly, to more than 400 during the second quarter.

Now, with unemployment near 10% and credit card default rates about the same, prime mortgage delinquencies are rising, stoking worries among the nation's banks that despite rising stock markets, fundamental banking industry health remains elusive.

The FDIC is facing its own money issues, as its Deposit Insurance Fund, which it uses to pay depositors' claims, fell to just $10.4 billion at the end of the second quarter. The FDIC estimates that its total cost for the 98 bank closings through Friday at $26.44 billion. the agency's board approved a proposal to have the nation's banks prepay 3 three years of insurance premiums, but that too is unlikely to fill the gap the fund faces under CreditSights worst-case scenario.

10% of U.S. banks could fail

Before Friday's bank failures, the year-to-date total assets of the failed banks was $107.14 billion.  By comparison, the nation's four largest banks, Goldman Sachs, Bank of America  J.P. Morgan, Citigroup  and Wells Fargo  have average annual revenue of about $100 billion.