Largest Bank To Date Fails, More Than 1,000 May Fail

Two bank failures recently in Florida raised the number of bank failures to nearly 80 for the year according to the Federal Deposit Insurance Corporation and the number apparently keeps growing.

The FDIC recently announced four other banks had been closed: Community Bank of Las Vegas and its Arizona subsidiary, Community Bank of Arizona; Union Bank, Gilbert, Ariz; and Dwelling House Savings and Loan, Pittsburgh.

The Colonial BancGroup had $25 billion in assets at the end of June. That makes it the largest bank failure this year, exceeding the collapse of Florida's BankUnited Financial. According to reports, BB&T agreed to buy about $22 billion of Colonial's assets. The FDIC said it will hold on to about $3 billion worth of assets and will try to sell them later.

In a separate report, more than 1,000 banks may fail during the next three to five years, RBC Capital Markets estimated in February. In 2008, the company forecast between 200 and 300 bank failures. Since then they note the environment has deteriorated.

In a note to their clients, the company stated that residential mortgage delinquencies remain at record levels, home-equity loan defaults are steadily rising and residential construction and land loan non-performing assets are skyrocketing for lenders with excess exposure to the weakest housing markets in the U.S. They expect most of the future bank that will collapse will be relatively small, with less than $2 billion in assets.