Banks continue to fail as they are still suffering from losses. A Minnesota bank has been closed recently taking the toll of failed banks over the 100 mark this year, says the Federal Deposit Insurance Corp (FDIC).
Local lenders across the country have seen lingering effects of the financial crisis. With the closing of The Community Security Bank of New Prague, Minn., the number of failed banks is now 101. The FDIC predicts this trend of failing banks that began in 2008 to peak this year. But for the nation’s largest banks, conditions have improved and lending in select areas have escalated. Many failing firms are also reported to have found new sources of capital.
Small banks are vulnerable to closing down and this is happening at a rapid pace. The FDIC has reported a rise of firms in its “problem bank list” in this year’s first quarter to 775 from 702 in 2009. In areas of commercial real estate, regional lenders continue to suffer from loan losses.
Andrew Gray, FDIC spokesman, says that failures this year will not approach historic levels but it is expected that failed banks would exceed last year’s total of 140. This is the reason that Biz2Credit is reaching out to grow our network of community and regional banks. These banks need to find qualified candidates to lend to while qualified candidates need access to loans.
Financial institutions that are insured by FDIC earned $18 billion in this quarter. This is a three-fold increase and is the highest profit since 2008. Though the fund has a deficit of $20.7 billion but it is inclusive of the money that the agency has saved anticipating future bank failures. The fund has grown by $145 million, the first increase in the last two years.
This article was submitted by Rohit Arora, co-founder of Biz2Credit. Biz2Credit is a small business marketplace that connects entrepreneurs with financing options and advice to grow their business. Send all questions to