Small U.S. Banks Facing $100 bln of Losses by the End of 2010

Commercial real-estate loans could generate losses of $100 billion by the end of 2010 at more than 900 small and midsize U.S. banks if the economy deteriorates, according to an analysis by the WSJ.

From the WSJ: Total losses at those banks could surpass $200 billion over that period…

The Journal using data contained in banks’ filings with the Federal Reserve, examined the financial health of 940 small and midsize banks. It applied the loan-loss criteria that the Fed used in its stress tests of the largest banks.
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The banks examined by the Journal had total assets of $2.8 trillion at year end…
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The findings are a stark reminder that the U.S. banking industry’s problems stretch far beyond the 19 giants scrutinized in the government stress tests.

Image: WSJ

Facing losses that could top $200 billion is unlikely to attract capital to shore up accounts. That will translate in fewer loans, more regulations, and a slew of bank failures. Let’s hope that won’t get to be the case.

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