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July 15, 2008

Economy: Current List Of Most Troubled American Banks

Banks in Colorado, Maryland, Georgia and California top privately-prepared lists of troubled banks being circulated on Wall Street and in Washington.

While the Federal Deposit Insurance Corporation (FDIC) is keeping secret its official list of 90 troubled banks, ABC News has obtained other lists prepared by several research groups and financial analysts.

The lists use versions of the so-called “Texas ratio” which compare a bank’s assets and reserves to its non-performing loans, based on financial data made public by the FDIC in March.

Analysts say banks with a ratio over 100 per cent would be the most likely to fail, based on what happened to Texas savings and loans during the 1980’s.

“That a fair measure,” said Hal Scott, a Harvard law school professor specializing in banking law.

“It doesn’t mean every one of those banks is going to become insolvent, but if you have more bad loans than assets, it’s not a bad way to judge what could happen.”   List of troubled banks below:

Bank

City

State

“Texas-ratio”

Colorado Federal Savings Bank

Greenwood Village

CO

244.8

Eastern Savings Bank, FSB

Hunt Valley

MD

222.7

Integrity Bank

Alpharetta

GA

191.6

Ameribank, Inc.

Welch

WV

153.7

First Priority Bank

Bradenton

FL

122.6

First Security National Bank

Norcross

GA

112.1

Magnet Bank

Salt Lake City

UT

110.4

Security Pacific Bank

Los Angeles

CA

102.8

First National Bank of Brookfield

Brookfield

IL

102.1

The State Bank of Lebo

Lebo

KS

100.6

 

“This is information that the FDIC essentially hides in plain sight,” said Jeff Fiedler, president of Research Associates of America.

At the top of the list was ANB Financial National Association of Bentonville, AR, with a 344 ratio. The bank failed earlier this year and was later taken over by a Louisiana bank.

The Colorado Federal Savings Bank of Greenwood Village, CO, was listed as having a bad loan to asset ratio of 244.82.

The Eastern Savings Bank of Hunt Valley, MD was listed as having a Texas ratio of 222.74, meaning it had twice as many bad loans as assets and surplus.

The Integrity Bank of Alpharetta, GA was listed with a 191 ratio.

The Atlanta Constitution quoted the bank’s president and chief executive, Patrick Frawley, as saying the Texas ratio is “a little misleading.” Frawley said the Texas ratio doesn’t count all of the bank’s reserves for losses and fails to reflect that the loans are secured with real estate collateral.

With a ratio just under 100, at 96, the $13-billion Downey Savings and Loan of Newport Beach, California is the biggest financial institution with a high ratio of bad loans.

Tom Prince, Downey’s chief operating officer, said many of the bank’s non-performing loans in March have since become current and that the Texas ratio “is only a statistic.”

“I don’t think there is any one number you can point to and say that will predict what will happen going forward,” Prince said. “We feel good about our situation,” he said.

The banks on the list are FDIC-insured, meaning that depositors with less than $100,000 would be covered should their banks go under.

 

Washington Mutual Inc., after dropping the most since its initial public offering in 1983, said it is “well capitalized” with more than $40 billion in liquidity and $150 billion in retail deposits.

The company’s tangible equity to tangible assets ratio is 7.8 percent as of June 30, Seattle-based Washington Mutual said in a Business Wire statement after the close of regular trading. Details will be provided on its July 22 earnings call, the company said.

Washington Mutual Inc., after dropping the most since its initial public offering in 1983, said it is “well capitalized” with more than $40 billion in liquidity and $150 billion in retail deposits.

The company’s tangible equity to tangible assets ratio is 7.8 percent as of June 30, Seattle-based Washington Mutual said in a Business Wire statement after the close of regular trading. Details will be provided on its July 22 earnings call, the company said.

Washington Mutual led a slide in home lenders after IndyMac Bancorp Inc. was taken over last week in the second-biggest seizure of a financial company by U.S. regulators. Lehman Brothers Holdings Inc. predicted today that Washington Mutual’s cumulative losses this year will reach $26 billion as the mortgage crisis worsens.

Washington Mutual rose 10 percent to $3.54 in extended trading after tumbling 35 percent at 4 p.m. on the New York Stock Exchange. The shares have lost 76 percent of their value this year, the second-biggest decline in the 24-member KBW Bank Index. National City Corp. has dropped 77 percent.

At an investor presentation in May, Citigroup Inc. Chief Executive Officer Vikram Pandit said shrinking the bank’s $2.2 trillion balance sheet, the biggest in the U.S., was a cornerstone of his turnaround plan.

Nowhere mentioned in the accompanying 66-page handout were the additional $1.1 trillion of assets that New York-based Citigroup keeps off its books: trusts to sell mortgage-backed securities, financing vehicles to issue short-term debt and collateralized debt obligations, or CDOs, to repackage bonds.

Now, as Citigroup prepares to announce second-quarter results July 18, those off-balance-sheet assets, used by U.S. banks to expand lending without tying up capital, are casting a shadow over earnings. Since last September, at least $100 billion of assets have flooded back onto Citigroup’s balance sheet, accompanied by more than $7 billion of losses.

“If you start adding up all the potential exposures, it’s a huge number,” said Sam Golden, a former ombudsman for the U.S. Office of the Comptroller of the Currency who now heads the financial-industry practice for restructuring adviser Alvarez & Marsal in Houston. “The banks will say that it was disclosed. Investors are saying, `Yeah, but it was cryptic. We really didn’t know what you were telling us.”’

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10 Comments »

  1. Scary indeed. Like I said yesterday in a comment here, there will be a lot more banks that will fail. This financial crisis isn’t over yet. And there really isn’t much the Fed can do about it. If Fannie and Freddie fail we are in a world of hurt.

    Comment by deannaizme — July 15, 2008 @ 1:46 pm | Reply

  2. Deanna — I am worried sick. Enough people have lost their job, now life savings are disappearing this is like Enron but on a different level. If companies start losing money because banks go under they will have to layoff/fire more people. George Bush should be impeached. He raped America with all his lack of oversight in general – banking, real estate, FDA, etc.

    Comment by Paulette — July 15, 2008 @ 2:10 pm | Reply

  3. Do you really trust companies like WM? Bear Stearns also reiterated constantly that things were fine. I wrote about this today too

    http://hubpages.com/hub/Which-banks-are-in-the-most-trouble-now

    Comment by Aaron — July 15, 2008 @ 5:01 pm | Reply

  4. Aaron — it’s very sad and scary but we cannot trust any banks right now. Your post was well written and well researched — thank you for sharing!

    Comment by Paulette — July 15, 2008 @ 5:08 pm | Reply

  5. We, the people, who carry these banks have a right….to a complete list of banks’ Ratio Indexes.
    Where can we find this list.Thank you.
    NICHOL

    Comment by NICHOL — July 16, 2008 @ 11:37 am | Reply

  6. Nichol — unfortunately these lists are not made public. Isn’t that ridiculous! That is crucial information that we the depositors should be privy to so we know when to hold ’em and when to withdrw ’em!

    Comment by Paulette — July 16, 2008 @ 11:52 am | Reply

  7. […] Oil Prices, housing prices going up, food prices reaching new heights, bank failures, consumer prices increases at the highest percentage since 1982 levels. We could easily go on in […]

    Pingback by Woe is US!: The Economy Sucks | How To Fix America! — July 16, 2008 @ 8:37 pm | Reply

  8. Please give me & John Q Public a list of the top 100 banks with POOR ratio Indexes & a high possibility of failing. WE have a right to know. Thank you

    Comment by NICHOL — July 18, 2008 @ 8:43 pm | Reply

  9. Nichol — I have no way of knowing. It’s ‘private’ information. I, like you, would love to have that information so I know where NOT to deposit my few pennies. I am just ‘Joe Public’ like you. If I find any additional lists I WILL post.

    Comment by Paulette — July 18, 2008 @ 8:48 pm | Reply

  10. […] Mutual? Anyone else want to add to the list? Mark There are at least 10 US banks on watch Economy: Current List Of Most Troubled American Banks Let Us Talk __________________ Bill Information posted here is given in good faith. If in doubt do your own […]

    Pingback by The vultures are circling — September 18, 2008 @ 9:44 am | Reply


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