Over 150 U.S. banks own nonperforming loans equaling 5 percent or more of their holdings. This is not good, because these toxic loan holdings can wipe out the bank's money and cause it to fail like the 77 banks which have failed to date. This is just further evidence that something is happening in the bank industry that could cause a potential bank holiday. Let's keep our eyes on Wisconsin’s Marshall & Ilsley Corp., Georgia’s Synovus Financial Corp. and Michigan’s Flagstar Bancorp. to see if one of them will be a future Friday Night Feast main course.
More than 150 publicly traded U.S. lenders own nonperforming loans that equal 5 percent or more of their holdings, a level that former regulators say can wipe out a bank’s equity and threaten its survival.
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 percent 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 percent include Wisconsin’s Marshall & Ilsley Corp. and Georgia’s Synovus Financial Corp., according to Bloomberg data. Among those exceeding 10 percent, the biggest in the 50 U.S. states was Michigan’s Flagstar Bancorp. All said in second- quarter filings they’re “well-capitalized” by regulatory standards, which means they’re considered financially sound.
Source: Bloomberg
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