These Banks Need to Raise Capital Quickly

Colorado FSB was also considered critically undercapitalized as of March 31. Patrick Fogherty, the institution's CFO, told us that a deal is in place to sell the institution.

Imperial S&LA was considered significantly undercapitalized as of March 31, with a leverage ratio of 2.16% and a risk-based capital ratio of 4.76%. While the institution was established in 1973, it is tiny, with total assets of just $9 million. Its loan portfolio is mixed, with residential mortgages, auto loans and some commercial real estate and leasing. Nonperforming assets comprised 2.74% of total assets as of March 31, which is not a terrible level in the current environment.

However, the institution has been posting losses for the past several quarters, which eat into its capital. It just can't generate enough interest income to cover its personnel and office expenses, and its fee income is negligible. In this market, interest rates spreads remain quite narrow, since there is so much competition for deposits. A call to the thrift seeking comment was not returned.

Mesilla Valley Bank of Las Cruces, N.M., had the worst loan quality on the list, with nonperforming assets comprising 26.61% of total assets as of March 31. It was also considered significantly undercapitalized at March 31, as its leverage ratio was 3.33% and the risk-based capital ratio was 5.73%.

After charging off a good portion of its loan portfolio in the early 2007, the institution was undercapitalized for two quarters, after which a drastic reduction in the size of its balance sheet brought it back to well capitalized for the third and fourth quarters of 2007. In the first quarter of 2008, the institution reported a loss of $63,000, and with loan quality continuing to worsen it was back to undercapitalized. Mesilla Valley Bank didn't return a call seeking comment.

Please see Florida's Most Troubled Banks and Thrifts for recent discussions on First Priority Bank and Bank of Bonifay.