Analysts believe that another 150 banks in the U.S. could fail over the near-term. According to The New York Times, "as many as 150 out of the 7,500 banks nationwide could fail over the next 12 to 18 months, analysts say. " The failure of IndyMac (NYSE: IMB) puts more focus on the problem
That puts investors in region banks in a tough spot. Shareholders in firms like NCC (NYSE: NCC) have watched the value of their stock drop from $33.54 to $4.42 over the last year as the bank cut its dividend and raised money. These holders can get out now because they fear an event which could take shares down to pennies. Or, they can hang on and hope that, once the financial crisis has passed, they may make some of their money back.
In many cases, the stock price is an excellent indication of what stockholders might want to do. IndyMac shares are down 99%. NCC's are down 85%, and its viewed by most as a bank that will "make it" because it has raised more money.
It would appear that the banks that the market is most worried about are off 90% to 96%. The institutions in that category probably carry the greatest risk of failure, if the stock market is an accurate indicator. The "if" part is the hard part.
Douglas A. McIntyre is an editor at 247wallst.com.
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Reader Comments (Page 1 of 1)
7-15-2008 @ 12:23PM
Petes2cents said...
Now that IndyMac is the first of many banks to fail, I think we're going to see a lot more banks, not only close for the weekend, but close for good and go bankrupt. Rumors talk about 90+ banks, I think that's a little exaggerated, but very well possible. I would guesstimate around 30+ banks will close shop.
I'm an investor in the stock market and have started to build a position in Bank of America. One of the few 500 lb. gorillas left in the room. Every dip, I pick up more shares. I don't think there going anywhere, but you never know. Investments are all risky.
I never thought I would see this happen here in the USA, but here we are....let's all cross our fingers.
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