What is the future of small and medium-sized banks in the US? Which banks will survive the credit crisis and recession? The question is moot considering the most recent results of all commercial banks and savings institutions insured by the Federal Deposit Insurance Corporation (FDIC).
These results show that in the third quarter of 2008, the banks had new income of $1.7bn – a 94% decline from the $287bn the industry reported a year earlier – as financial institutions allocated more money for bad loans and sold securities and assets at a loss. One in four banks reported a net loss for the quarter. Furthermore, 22 banks – predominantly smaller ones – failed in the first nine months of 2008; and in the third quarter, the number of ‘problem’ banks – those deemed at risk of failure – grew from 117 to 171. FDIC chairman Sheila Bair warns that more bank failures are likely.
