Final answer:
A bank can end up with negative net worth primarily due to declining asset values and insufficient capital to cover loan defaults, especially in an economic downturn.
Step-by-step explanation:
A bank can end up with a negative net worth if its assets are worth less than its liabilities. This situation could arise due to various factors, but the significant causes include declining asset values and insufficient capital. In a recession or economic downturn, the value of assets held by the bank such as real estate or securities may fall, and if the bank lacks sufficient capital to absorb losses or loan defaults, its net worth can dip into negative territory. High levels of non-performing loans - loans that are not being repaid as agreed - can precipitate this condition, especially if the bank has not diversified its loan portfolio or is holding onto too many high-risk loans.