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Report: 9.5 percent of Pa. banks fail stress test

By - Last modified: October 11, 2012 at 10:19 AM

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Nearly one in 10 Pennsylvania banks lacks the capital necessary to withstand a severe economic downturn, according to stress tests conducted by Trepp, a New York-based firm that analyzes the financial and real estate markets.

Nationally, one in eight banks failed Trepp's stress tests, which were based on data from the second quarter of 2012. Trepp released the results Wednesday.

In Pennsylvania, Trepp examined 169 banks, of which 16 failed, or 9.5 percent. Trepp did not identify the banks.

The results were strongly differentiated by size. Nationwide, only four of 74 banks with assets of more than $10 billion failed.

Florida had the worst results, with 30.8 percent of tested banks failing, Trepp said.

Losses from commercial real estate loans were the strongest predictor of failure, followed by commercial and industrial loan losses, Trepp said.

Trepp developed the stress tests in response to the Dodd Frank law, which says banks "should have the capacity to analyze the potential impact of adverse outcomes on their financial condition." Wednesday's results are Trepp's first; it plans to run the tests on a quarterly basis going forward.

Write to the Editorial Department at editorial@cpbj.com

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