5%. That's the magic number, the secret formula, to push banks over the edge into the loving arms of the FDIC. Like date night, bank seizure is now a Friday tradition. In other words, the magic 20 to 1 good debt, bad debt ratio is the tipping point and probably will cause the bank to fail. The dreaded 5 is the ratio of non-performing loans, often aliased as toxic assets.

In Bloomberg's Toxic Loans Topping 5% May Push 150 Banks to Point of No Return :

More than 150 publicly traded U.S. lenders own nonperforming loans that equal 5 percent or more of their holdings, a level that former regulators say can wipe out a bank’s equity and threaten its survival.