This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Does Your Bank Have Enough Capital?

A total of 17 banks reported being undercapitalized as of June 30, based on preliminary FDIC data.

This excludes First Priority Bank of Bradenton, Fla., and First National Bank of Nevada, both of which were recently shut down by regulators.

Before presenting the list of undercapitalized banks, it is important to point out a few things.

The list is based on preliminary data. Most banks have filed their call reports, which our data provider, Highline Financial, Inc., obtains from the FDIC. The set of data was not yet finalized when we downloaded it on Aug. 11, and there were at least 100 banks that had not filed yet. This data is often updated by banks before it is finalized.

The list includes only banks. The Office of Thrift Supervision does not make preliminary data available for the over 800 S&Ls supervised by the agency.

The data are for the banks themselves, not holding companies. This is particularly important, as we saw when BankAtlanic Bancorp (BBX - Get Report) sued analyst Richard Bove and his employer, Ladenburg Thalmann (LTS - Get Report). The holding company accused Bove of mixing holding company data with thrift data in his "Who is Next?" report.

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%. These ratios need to be at least 4% and 8% for a bank to be considered adequately capitalized. Looking again at the two failed banks mentioned above, the capital ratios were 0.70% and 1.72% for First Priority Bank and 5.07% and 6.78% for First National Bank of Nevada.

All of the banks on this list failed to meet one of the thresholds for an adequately capitalized institution.

Click here for larger image.

Main Street Bankof Northville, Mich., had the lowest leverage ratio on the list, at 2.28%, and a risk-based capital ratio of just 4.20%. The $112 million institution was organized in 2004, and achieved profitability in 2006. However, loan quality declined sharply through 2007, as nonaccrual mortgages and construction loans mounted.
1 of 4

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
CSE $15.50 -0.51%
BBX $15.05 0.00%
LTS $2.58 0.00%
AAPL $95.18 0.00%
FB $117.43 0.00%


Chart of I:DJI
DOW 17,750.91 -140.25 -0.78%
S&P 500 2,063.37 -18.06 -0.87%
NASDAQ 4,763.2240 -54.37 -1.13%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs