Why hundreds of US banks are at risk of bankruptcy

Hundreds of small and regional banks in the US are feeling stressed.

“You could see some banks going bankrupt or at least dipping below their minimum capital requirements,” Christopher Wolfe, managing director and head of North American banks at Fitch Ratings, told CNBC.

Consulting firm Klaros Group analyzed about 4,000 U.S. banks and found that 282 banks face the dual threat of commercial real estate lending and potential losses from higher interest rates.

The majority of these banks are smaller lenders with less than $10 billion in assets.

“Most of these banks are not insolvent or even close to insolvent. They’re just stressed,” Brian Graham, co-founder and partner at Klaros Group, told CNBC. “That means there will be fewer bank failures. But that doesn’t mean communities and customers won’t be harmed by that stress.”

Graham noted that communities would likely be affected in ways that are more subtle than closures or bankruptcies, but because banks choose not to invest in things like new branches, technological innovations or new staff.

For individuals, the consequences of small bank failures are more indirect.

‘There is no immediate impact if they are below the insured deposit limits, which are now quite high [at] $250,000,” Sheila Bair, former chairman of the U.S. Federal Deposit Insurance Corp., told CNBC.

If a failing bank is insured by the F.D.I.Call depositors will be paid “up to a minimum of $250,000 per depositor, per FDIC-insured bank, per property category.”

look at the videoa to learn more about commercial real estate risk, the role of interest rates on unrealized losses and what it may take to ease pressure on banks – from regulation to mergers and acquisitions.