With expanding commercial real estate loan problems, the number of distressed banks in the U.S. rose to 702 in the fourth quarter, marking the highest level in 16 years, according to a report released Tuesday by the Federal Deposit Insurance Corp..

A congressional watchdog group reported on Feb. 11 that over the next few years, a wave of commercial real estate loan failures could threaten the U.S. financial system, and in the worst-case scenario, hundreds of additional community and mid-sized banks could face insolvency.

The FDIC also reported that its Deposit Insurance Fund, used to protect depositors, dropped further into negative territory, reporting a $20.9 billion loss for its fund balance in the fourth quarter, worse than the $8.2 billion loss in the third quarter -- and its lowest number on record.