NEW YORK (TheStreet) -- The FDIC Quarterly Banking Profile for the second quarter of 2012 shows that efforts to unwind toxic assets has shown slow but steady progress over the past 12 quarters. Even so, the exposures to toxic assets remain high by historical standards among the country's community banks and much deleveraging needs to be done to end the "Great Credit Crunch".
On Tuesday, I set the stage in my story, The Banking System's Slow, Stressful Recovery. Then Thursday morning, we posted 'Too Big to Fail' Money Center Banks Still Face Stress analyzing the continued exposures to mortgages on the books of banks, home equity loans, other real estate loans and notional amount of derivatives.
My third installment based on FDIC covers the stresses that community banks still face in 2012: nonfarm, nonresidential real estate loans, construction and development loans, with the sum of these called commercial real estate loans.
Overexposures to C&D and CRE Loans: There are 7,246 FDIC-Insured financial institutions in the banking system, down from 8,534 at the end of 2007, when the "Great Credit Crunch" began. The decline of FDIC-insured financial institutions thus totaled 1,288, down 15.1%, and "only" 454 were closed by the FDIC via their failure procedures. The remaining either dropped their banking licenses or merged with another institution.
FDIC Assets Where Community Banks Have Continued Stress: Nonfarm, nonresidential real estate loans are up $90.0 billion or 9.3% since 2007. This category of assets peaked at $1.091 trillion in the fourth quarter of 2009 as the real estate asset bubble continued to inflate. Since then this portion of CRE is down $33 billion.
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