Over 750 Banks at Risk of Failure over Next Two Years, Says Invictus - Feb 1st, 2012 11:54 by News 01-Feb (BUSINESS WIRE) —
Despite last year’s decline in US bank failures, at least 758 lending institutions are at risk of failure over the next two years, according to an analysis by Invictus Consulting Group, which conducts stress and sustainability tests on all FDIC-insured banks for regulators, banks and investors.
Based on all publicly available data on banks for the third quarter ended September 30, 2011, Invictus said that absent corrective action to raise capital or merge, the 758 banks are unlikely to remain viable. This is primarily due to the weak recovery, which could trigger a new wave of loan defaults. Approximately 200 of these banks are subsidiaries of publicly-traded bank holding companies.
Invictus arrives at these conclusions after stress testing all FDIC-insured banks, using its proprietary ICAMTM (Invictus Capital Assessment Model). The model produces an Invictus Sustainability Rating for the banks it stresses, rating them from 1 (strongest) to 5 (most vulnerable). There are 758 banks rated 5. These banks have total assets of around $440 billion, or roughly $580 million on average. Over the past three years, 389 banks and thrifts failed, including 90 in 2011, according to FDIC figures.
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