Is Your Ohio Bank Financially Safe?

As we head into earnings season, this is a good time to take a look at Ohio banks and savings and loans, continuing our series that has previously covered Florida, Georgia and California institutions.

According to RealtyTrac, one in every 410 households in Ohio received a foreclosure notice during the month, ranking it ninth of all U.S. states in May. The Cleveland and Toledo metro areas had the highest concentrations of foreclosure notices in the state.

With so many big banks in Ohio, let's start by looking at the 10 largest:

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While JPMorgan Chase(JPM Quote) is, of course, a New York holding company, its biggest bank charter is headquartered in Columbus, Ohio, having moved into Bank One's offices there in 2004.

Not surprisingly, JPMorgan Chase Bank's earnings have suffered, with elevated provisions for loan-loss reserves over the past year. While the provision for loan-loss reserves for the first quarter was a whopper, at $3.7 billion, the bank reported net income of $2.1 billion, or a return on average assets (ROA) of 0.63% and a return on average equity (ROE) of 7.93%. While these earnings would be considered weak in better times, they look pretty good for 2008.

The holding company releases second quarter earnings results on Thursday. While it will probably have little effect on JPMorgan Chase Bank, NA, it will be fascinating to see the effect of the Bear Stearns acquisition on the holding company's financials.

U.S. Bank, NA (the primary subsidiary of U.S. Bancorp(USB Quote)) has fared better than many other regional banks. While the institution's charge-offs have ticked up over the past year and it has increased its quarterly provisions for loan-loss reserves, it has posted very strong earnings, with ROA hovering around 2% and ROE over 20% in four of the past five quarters, ending March 31.

U.S. Bank's loan-loss reserves covered 108.33% of nonperforming loans as of March 31. At least through the first quarter of 2008, the institution stood out with strong loan quality, relative to its peers, in its diversified loan portfolio.

With leverage and risk-based capital ratios of 6.20% and 10.68%, the bank was not holding excess capital, but so far, it has not been forced to cut its dividend on common stock or take other measures to shore up capital. In fact, the holding company increased its annual dividend from $1.60 per common share to $1.70 on June 17.

In order to be considered well capitalized under regulatory guidelines, a bank needs to maintain a leverage ratio of at least 5% and a risk-based capital ratio of at least 10%.

Berkshire Hathaway(BRK.A Quote) was the largest holder of U.S. Bancorp's common stock as of March 31, with 3.94% of shares outstanding, according to Bloomberg. Shares have returned a negative 17.06% over the past year through Friday's market close, measuring up quite well against the S&P 500 Financials index, which returned a negative 47.76% over the same period.

The tribulations of National City Bank (held by National City Corporation(NCC Quote)) have, of course, been discussed time and time again. We looked at the institution's financial condition last month, in our article on major banks' exposure to nonperforming construction loans.

KeyBank, NA (held by KeyCorp(KEY Quote)) was also mentioned in our construction lending article, since 13.05% of its construction portfolio was delinquent at least 30 days, as of March 31.