Bad Commercial Real Estate Loans Push Four More Banks into Failure

State and federal regulators seized control of four more community-based lenders over the weekend â€" in Colorado, New Mexico, Oklahoma, and Wisconsin. That brings the ""failed-bank tally"":http://www.fdic.gov/bank/individual/failed/banklist.html to 11 for the year.

[IMAGE] Commercial real estate (CRE) woes remain front and center for failed banks, according to the analysts at ""Trepp LLC's"":http://www.trepp.com ""Foresight Analytics"":http://www.foresightanalytics.com division, which tracks real estate market trends. In fact, for 10 of the 11 banks that have been shut down since the beginning of the year, the company says CRE loans contributed more than half of the banks' nonperforming loans.

Based on Foresight's analysis, for the group of 11, CRE loans comprised $600 million (or 82 percent) of the total $732 million in nonperforming loans. Of the CRE non-performers, construction loans made up more than half of the total, at $391 million, while commercial mortgages contributed $209 million.

The residential real estate loan category, on the other hand, was a distant second, with $90 million in nonperforming loans, the firm found. That's just 12 percent of the total nonperforming balance.

Foresight Analytics says the pace of closures during January is about on par with fourth quarter 2010, when 30 banks were closed. Regulators have indicated that they think the number of closures in 2011 will be less than the 157 that failed in 2010, but Foresight says, ""With distressed real estate still burning a hole in many balance sheets, we expect there to be 100 or more failures in 2011 and beyond.""

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In Louisville, Colorado, it was ""FirsTier Bank"":http://firstierbank.com/ that found regulators at its doors late Friday evening. The FDIC was unable to secure an acquiring institution. The federal agency created the Deposit Insurance National Bank of Louisville, which will remain open until February 28, to allow FirsTier customers time to transfer their accounts.

FirsTier operated three branch locations in Colorado. It had $781.5 million in deposits and assets totaling $722.8 million. This marks the ""second bank closing in the state"":http://dsnews.comarticles/regulators-seize-united-western-bank-and-three-others-2011-01-24 in as many weeks; no Colorado banks failed in 2010. FirsTier's closing is expected to cost the FDIC $242.6 million.

""First Community Bank"":https://fcbnm.com/first/personal/ in Taos, New Mexico, was also shut down by its state regulator. It operated 38 branches, with $1.94 billion in deposits and $2.31 billion in assets. It was the largest bank to be seized over the weekend and the first in New Mexico this year.

The FDIC brokered a deal with ""U.S. Bank"":http://www.usbank.com/welcomefirstcommunity, headquartered in Minneapolis, Minnesota, to assume all of the deposits of First Community Bank and purchase all of its assets. The federal agency says it will be out $260 million as a result of First Community's failure.

In Camargo, Oklahoma, the ""First State Bank"":http://www.fdic.gov/bank/individual/failed/firststatebank_ok.html has been shuttered. It had just a single branch office, with $40.3 million in deposits and assets of $43.5 million.

""Bank 7"":http://www.bank7.com/, in Oklahoma City agreed to take over the failed bank's operations and purchase all of its assets. The FDIC estimates that First State Bank's closing will cost its insurance fund $20.1 million. It's the first Oklahoma failure this year.

""Evergreen State Bank"":http://evergreenstatebank.com/ in Stoughton, Wisconsin, was also closed, marking the state's first failure of the year. Evergreen had four branches, $195.2 million in deposits, and $246.5 million in total assets.

""McFarland State Bank"":http://www.msbonline.com in McFarland, Wisconsin, agreed to take over the failed bank's deposits and purchase all of its assets. The FDIC says the Wisconsin bank's closing will cost the agency an estimated $22.8 million.

None of the acquisitions over the weekend included the FDIC's typical loss-share arrangement for the failed bank's loans.