More banks failed in the United States this year than in any year since 1992, during the savings-and-loan crisis, according to the Federal Deposit Insurance Corp.
Amid high unemployment, a struggling economy and a still devastated real estate market, the nation is closing out the year with 157 bank failures, up from 140 in 2009. As recently as 2006, before the bubble burst, there were none.
Now, there are more on the horizon.
The FDIC's list of "problem" banks — those whose weaknesses "threaten their continued financial viability"— stood at 860 as of Sept. 30, the highest since 1993. Historically, about a fifth of banks on the watch list end up failing.
Bank failures have left the FDIC insurance fund in the red, but the agency predicts that it will have more than enough money to meet the anticipated cost of failures through 2014.
As the financial crisis of recent years recedes, the FDIC has been predicting that 2010 will be the high-water mark for bank implosions.
"Going forward, the FDIC looks to see fewer failures," agency spokesman Greg Hernandez said.
Some industry observers agreed.
"I think we're over the hump of the problem but far from the end," banking consultant Bert Ely said.
Gary Townsend, owner of Hill-Townsend Capital, said the industry is not just out of the woods, "We are far beyond the woods."
By one measure, the trouble is already abating. On average, the banks that failed this year were much smaller than the banks that failed last year.
Altogether, banks that failed in 2010 had assets of $92.1 billion, down 45.7 percent from $169.7 billion for banks that failed in 2009.
"These are very small institutions," Townsend said. "The total assets that they represent is insignificant compared to the financial system as a whole. It's quite manageable."
Ordinarily, failed banks continue to operate virtually seamlessly. Typically, they are taken over by other banks in transactions arranged by regulators. Federal deposit insurance, for which the Federal Deposit Insurance Corp. was named, protects depositors from losses up to the insurance limits.
Since the closure of IndyMac Bank jolted the system in 2008, even uninsured deposits have been protected in more than 90 percent of failures, Ely said. Although depositors may be unaffected, borrowers can suffer disruptions to their credit lines, he said.
Bank failures are generally lagging indicators of economic trouble. The economy can be on the mend by the time struggling banks succumb.
Some of the nation's largest banks survived as a result of government assistance and are not included in the tally of failures. In 2009, for example, aid went to eight banks including Countrywide and Bank of America. Their combined assets totaled $1.9 trillion.
The list of failed institutions at the FDIC is filled with community banks that would not be considered "too big to fail."
The loans that brought them down were predominantly commercial loans, Hernandez said, which sets them apart from the banking giants whose problems were rooted in home mortgages.
About half of the 2010 failures involved banks based in four states: California, Florida, Georgia and Illinois. Only three were based in Kansas.
As of Sept. 30, the FDIC insurance fund for bank deposits had a balance of negative $8 billion. But that doesn't include reserves such as premiums collected in advance from the banking industry.
The agency is predicting that bank failures will cost $52 billion through 2014, and has enough money to cover that, Hernandez said.