Even though five banks failed in March, the overall pace of closures has slowed since the end of 2011, according to Trepp.
There have been 16 bank failures through the first quarter this year. In the third quarter and fourth quarter last year, 26 and 18 banks were shut down, respectively.
The pace of closures in the first three months of 2012 has fallen to 5.3 per month, much lower than the 7.7 average failures a month experienced during 2011.
“We expect a ‘spike’ in April, followed by a pace of four to five failures per month in May and June, furthering the seasonal pattern exhibited during 2011,” Trepp said. “Despite the slowing pace, we continue to see a significant number of banks at high risk of failure and expect failures to continue for an extended period of time.”
In March, the banks that failed were Fidelity Bank in Michigan, Premier Bank and New City Bank in Illinois, and Global Commerce Bank and Covenant Bank & Trust in Georgia. The banks that failed in March were on the Trepp watchlist from anywhere between six to 14 quarters.
Commercial real estate exposure was the main reason why these banks failed last month, comprising of $167.6 million, or about 81%, of the total $205.4 million in nonperforming loans. Commercial mortgages accounted for $123.7 million, while construction and land loans were $43.9 million of the nonperforming total.
Residential mortgages were a distant second, with $19.6 million of the total nonperforming loans, while commercial and industrial loans made up $17.5 million of the total.
