The four bank failures over the weekend take the 2010 total past the previous year as the industry struggles to recover from the beating it took during the financial crisis.
Regulators shuttered four new banks over the weekend — two in California, one each in Washington and Maryland — bringing the year’s total to 143 and past the 2009 mark of 140. The collapse of the subprime mortgage system and the ensuing fallout has claimed 311 institutions (not to mention the entire industry’s credibility) since 2007.
Banks with heavy concentrations in construction loans were the latest to go by the wayside. The most recent group had 43 percent of loans in that area, compared to an industry average of 7.2 percent, according to Keefe, Bruyette & Woods.
The industry continues to be ripe territory for takeovers as more and more banks fail, though M&A returns during the present crisis have been weak.
KBW has a slate of banks that it calls its “Roll-up Group,” consisting of those “with capable and willing management, sufficient capital, above-average credit quality and regional opportunities.”
However, the Roll-up Group, since its inception on July 6, 2009, has seen a return of just 11 percent, well below the 19 percent that the much broader KBW bank index has brought in.
But if failures keep up at this rate, there should be plenty of new opportunities in the future.
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