30 Illinois banks and thrifts have high levels of delinquent loans and stand a greater risk of being closed by regulators in 2009 if they don't improve performance, raise capital or get acquired, according to a new report.

Foresight Analytics LLC, an Oakland-based financial research firm, said Illinois ranks third among states with the greatest number of problem banks, after Florida, with 35, and Georgia, with 49. Ranked fourth is California, with 14 on the firm's "watch list."

Foresight will identify only to clients the 32 Illinois institutions in its near-term outlook for bank failures. The findings are based on fourth-quarter data filed with regulators. Nationally, it has 275 banks on its watch list.
"We expect approximately 35 percent to 40 percent of the banks on our list to be closed within the year," said Matthew Anderson, a partner at Foresight. Other possible outcomes include getting acquired, raising capital or improving performance.Illinois saw only one bank failure last year: Eldred-based Meridian Bank was felled by bad commercial real estate loans, Foresight noted. Less than two months into 2009, two Illinois banks have already failed.
The Federal Deposit Insurance Corp. maintains a list of bank failures since Oct. 1, 2000. Visit www.fdic.gov, and click on "complete failed bank list" in the upper left of the home page.
Foresight shed no light on why it found a relatively high number of shaky banks in Illinois. But one reason could be that hundreds of banks call Illinois home due to the vagaries of past Illinois banking laws.Illinois banks were prohibited from having branches until 1967, when the law was changed to let them add a drive-in facility within 1,500 feet of the bank. Over the years, restrictions on the number of branches and where they could be located were loosened, and in 1993 they were dropped. But the longtime hurdles left a legacy: a highly fragmented market that resulted in an abundance of smaller community banks and a dearth of the banking behemoths dominant elsewhere.Last August, the Tribune reported that, as of June 30, 2007, the latest figures available at the time, Illinois had 592 banks, or 4.6 banks per 100,000 residents, with an average of $579 million in assets. Other states had on average 145 banks, or 2.4 banks per 100,000 residents, with an average of $1.4 billion in assets.