(CHICAGO, IL) -- Thirty-nine Chicago area banks dealing in real estate loans may shortly add to the total of 120 bank failures in the U.S. so far in 2009, according to the Chicago Tribune.

The Federal Deposit Insurance Corp. states the total bank failures this year is the highest since 1992 when 181 institutions folded due to the savings and loan crisis.

Using data from Chicago-based Loan Workout Advisers LLC, the Tribune reports the number of local banks with real estate-focused Texas ratios of at least 80 percent has grown to 39 as of Sept. 30, 2009, up from 19 at Dec. 31, 2008, and three as of Dec. 31, 2007.

A Texas ratio tallies up a bank's past-due loans and bank-owned real estate and compares them with the levels of a bank's core capital, typically shareholders' equity, and the money set aside for potential loan losses, according to Justin Barr, managing principal of the Northfield-based bank turnaround consulting firm.

A score of at least 80 percent is considered a cause for concern. A Texas ratio puts a bank's asset problems in the context of its capital and reserve levels, so it's considered a good predictor of difficulties, Barr says.

To lower it, banks need to lower their levels of souring loans, sell the real estate they have repossessed, raise capital or set aside more reserves for potential loan losses.

"The latest Texas ratio data tells the story of an accelerating crisis in the community banking sector in Chicago," Barr said. "If the trend continues, it will hurt the area's economic recovery."

Builders Bank of Chicago has a Texas ratio of 340 percent, but the $506.4 million-asset bank said the level of non-performing loans should start dropping significantly in the first quarter of 2010.

Builders typically lends to condominium developers in New York and Los Angeles.

But since the economy began to decline, the banks that loan money to the buyers of those condominium units have enforced stricter rules about closing loans secured by condos, the Tribune reports.

The lenders typically won't start closing on mortgages of the first buyers in the condominium project until at least half of the units are under contract, said the 12-year-old bank.

"The projects that have gone to market in the last couple of months are selling at a nice pace," says Builders President Charles Hall. "They're starting to hit that" 50 percent mark.

Other banks with high Texas ratios include: Citizens Bank & Trust Co. of Chicago, 292 percent; Wheatland Bank, 252 percent; and Lincoln Park Savings Bank, 250 percent.

Family Federal Savings of Illinois had a Texas ratio of 245 percent.

"We're working with borrowers as best as we can to work through the issues," said Frank Guerino, president of the Cicero based thrift with $64.5 million in assets. "When we're left with no alternative we're taking properties back and marketing them."

First Suburban National Bank's Texas ratio is 222 percent.

The Maywood-based bank, which has assets of $178.1 million, addresses some of its problems in a letter to customers on the home page of its Web site.

"We had three significant problem loans that have negatively impacted our capital," Chief Executive Joseph Hogan writes, noting that the bank is trying to protect its interests in court. "We expect recoveries but can't predict when or how much."

Ravenswood Bank of Chicago has a Texas ratio of 220 percent.

Baytree National Bank & Trust Co. has a Texas ratio of 205 percent.

Other banks with Texas ratios of at least 80 percent as of Sept. 30: Valley Community Bank, 204 percent; New Century Bank, 196 percent; First National Bank of Brookfield, 195 percent; Broadway Bank, 188 percent; George Washington Savings Bank, 184 percent; First Bank & Trust Co. of Illinois, 151 percent;

Centrust Bank, 146 percent; Oxford Bank & Trust, 138 percent; Peotone Bank & Trust Co., 137 percent; Community First Bank, Chicago, 135 percent; Brickyard Bank, 128 percent; Second Federal Savings & Loan Association of Chicago, 122 percent;

Palos Bank & Trust Co., 120 percent; American Metro Bank, 119 percent; ShoreBank, 118 percent; Bank of Commerce, 114 percent; First Choice Bank 107 percent; Allegiance Community Bank, 105 percent; Western Springs National Bank & Trust, 104 percent;

Family Bank & Trust, 104 percent; First Security Bank & Trust, 101 percent; Parkway Bank & Trust Co., 97 percent; First Chicago Bank & Trust, 93 percent; Inland Bank & Trust, 87 percent; Edgebrook Bank, 86 percent; AztecAmerica Bank, 85 percent; Town Community Bank & Trust, 83 percent; and Chicago Community Bank, 80 percent.

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