Bangkok--22 Sep--Standard & Poor's
Large national and regional banks have garnered most of the headlines over the past two years, but problems among small regional and community banks have also had important implications for credit availability, said an article published by Standard & Poor's, titled "An Increasing Number Of Failed Small U.S. Banks Is Taking A Toll On Local Economies."
Although credit availability has improved since the end of 2009, overall credit conditions remain fairly tight in comparison with what we saw prior to the recession. According to the Federal Reserve's Senior Loan Officer Opinion Survey, credit conditions for both large and small commercial and industrial borrowers have eased somewhat since the end of 2009. However, both large and small banks are still tightening lending standards on commercial real estate loans.
"The problems that a number of small banks face have directly affected the availability of credit for CRE and construction and land development loans," said Diane Vazza, head of Standard & Poor's Global Fixed Income Research. "Large regional and national banks tend to have diverse loan portfolios, but many small banks have significant exposure to construction and CRE loans."
As the number of problem loans in these portfolios began to increase in 2008, small banks came under intense pressure. From the beginning of 2007 through Sept. 10, 2010, 293 commercial banks with deposit insurance from the FDIC failed.
"Over the past two years, bank failures have been concentrated among smaller, unrated banks that typically have less than $1 billion in assets," said Ms. Vazza. "Although the loan composition of small banks that have failed over the past two years has varied, one commonality is their relatively large exposure to CRE loans and to both commercial and residential construction loans."
The report is available to RatingsDirect subscribers on the Global Credit Portal at www.globalcreditportal.com and RatingsDirect subscribers at www.ratingsdirect.com. If you are not a RatingsDirect subscriber, you may purchase a copy of the report by calling (1) 212-438-7280 or sending an e-mail to
[email protected]. Ratings information can also be found on Standard & Poor's public Web site by using the Ratings search box located in the left column at www.standardandpoors.com. Members of the media may request a copy of this report by contacting the media representative provided.
Media Contact:
Mimi Barker, New York (1) 212-438-5054,
[email protected]
Analyst Contact:
Diane Vazza, New York (1) 212-438-2760