by Calculated Risk on 7/01/2008 11:53:00 PM

From the WSJ: Small Banks' Reckoning Day Is Coming

According to the Federal Deposit Insurance Corp., $45.4 billion of the $631.8 billion in construction loans outstanding at the end of the first quarter were delinquent. When banks announce second-quarter results in coming weeks, they are expected to report sharp increases in loans that builders can't repay.
...
That will put additional pressure on an already stressed financial system. ... Some analysts even see a wave of bank failures as a possibility.

See the charts in the article - the one graph shows delinquency rates on construction loans for single family homes and condos have reached 10% and 12.5%, respectively. Delinquency rates for commercial and apartment construction are lower, but rising rapidly.

The WSJ also provides a sortable list of banks with notable delinquency rates (at the end of Q1) and a couple of companion articles: Commercial Loans: Behind the Next Hit (a primer on commercial loans) and BofA, LaSalle Pact Boosts Problem-Loan Load (a discussion of all the problem construction loans BofA inherited when they acquired LaSalle.

The long awaited CRE slump is here, and the bank failures will surely follow.