Kudos to Bloomberg for continuing to hammer away at this story of all the ailing banks out there. Yesterday Jonathan Weil wrote about the big problems at Regions Financial, and today they put together numbers showing that at least 150 publicly-traded banks may have a deadly toxic asset problem.
Specifically, Bloomberg looked for banks that had non-performing assets equal to at least 5% or more of their assets, a leve seen as crucial
The number of banks exceeding the threshold more than doubled in the year through June, according to data compiled by Bloomberg, as real estate and credit-card defaults surged. Almost 300 reported 3 per cent or more of their loans were nonperforming, a term for commercial and consumer debt that has stopped collecting interest or will no longer be paid in full.
The biggest banks with nonperforming loans of at least 5 per cent include Wisconsin’s Marshall & Ilsley Corp. and Georgia’s Synovus Financial Corp., according to Bloomberg data. Among those exceeding 10 per cent, the biggest in the 50 U.S. states was Michigan’s Flagstar Bancorp. All said in second- quarter filings they’re “well-capitalised” by regulatory standards, which means they’re considered financially sound.
Altogether the 150 banks had assets of $193 billion, which as Bloomberg notes, is 15x the FDIC’s entire insurance fund.
“These numbers are off the charts,” said Blake Howells, an analyst at Becker Capital Management in Portland, Oregon, referring to the nonperforming loan levels at companies he follows. Banks are losing the “ability to try and earn their way through the cycle,” said Howells, who previously spent 13 years at Minneapolis-based U.S. Bancorp.
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