Trepp senior managing director Manus Clancy has both good news and bad news for the commercial real estate finance markets. The good news is that the number of bank failures have clearly reached a plateau, he says. The bad news? That plateau is still too high for comfort.

In the first half of 2011, bank failures numbered 48, Trepp data shows. It is a significant drop from either the 86 failures in the same period of 2010 or the second half of that year, when 74 banks failed.

Still, the New York City-based Clancy doesn’t think the failure rate will trend significantly down for at least another year or two. There are still many problem banks, largely community lenders, currently under review with regulators. Then there’s the fact that the assets weighing down many of these banks are real estate holdings in secondary or tertiary markets: the very sort of asset that is likely to be underwater. “The trophy stuff tends to be with the CMBS lenders,” he says.

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