Trepp Sees Slight Drop in At-Risk Banks

NEW YORK CITY-Trepp LLC says its updated Trepp Capital Adequacy Stress Test results show a marginal quarter-to-quarter improvement in the percentage of banks that would be at risk of going under amid severely adverse economic conditions. The latest T-CAST analysis shows that based on third-quarter 2012 numbers, 747 banks out of 6,000, or 12%, would fail the stress test without raising additional capital, compared to 12.7% in Q2 of last year.

“While conditions in these states have improved, the high T-CAST failure rates indicate that more progress in capital raising and balance sheet healing is needed before these areas fully emerge from the recent failure cycle,” Matt Anderson, Trepp’s managing director, says in a statement.  The improvement can be attributed to a quarterly accrual of retained earnings and the fact that the official inputs that were formally released by the regulators in mid-November were not quite as onerous as Trepp had forecast.