The Best U.S. Banks and Thrifts Now

The industry's combined realized losses on securities was $7.2 billion for the third quarter, compared to a loss of $1.9 billion in the second quarter and a gain of $302 million in September 2007.

For the combined industry, capital ratios decline slightly during the quarter, but this is expected to be reversed when the fourth-quarter numbers come in, which will reflect the capital infusions from the Treasury's Troubled Assets Relief Program.

While the combined capital ratios for the industry were considerably higher than a year earlier, the number of institutions with leverage and risk-based capital ratios below the 5% and 10% thresholds required to be considered well-capitalized under regulatory guidelines increased to 161 as of Sept. 30, from 139 the previous quarter and 80 in September 2007. T

The industry's nonperforming assets, which include loans past due 90 days or more and repossessed real estate, comprised 1.39% of total assets as of Sept. 30, up from 1.25% the previous quarter and 0.63% a year earlier.

Net charge-offs (actual loan losses) totaled $29.4 billion, up from $26.7 billion in the second quarter and just $10.8 billion in the third quarter of 2007. The annualized ratio of net charge-offs to average loans was 1.45%, an increase from 1.32% in the second quarter and 0.60% in September 2007.

The industry's ratio of loan-loss reserves to total loans was 1.95% as of Sept. 30, rising from 1.32% in June and 1.13% in September 2007. While end-of-quarter reserve coverage was ahead of the annualized pace of charge-offs, many banks expect continued increases in loan charge-offs, including Synovus Financial (SNV Quote) and Regions Financial (RF Quote). For additional discussion of those companies and political pressure for banks receiving TARP money to expand their lending, check out Synovus Shows Why Banks Aren't Lending.

Strongest Banks and Thrifts

This quarter, 40 banks and thrifts were assigned Financial Strength Ratings of A+. Rather than list only some of these by a certain type of criteria, we have decided to list all of them this quarter, sorted by asset size.

A+ Rated Banks and S&Ls (Millions) Highline Financial, Inc.

While this is a big list, there are 769 institutions rated A- or above. You can check your bank's rating using the link at the end of this article.

Looking at the list, it's clear that all of these institutions are very strongly capitalized. Most also posted impressive earnings results for the first three quarters of 2008, with an annualized return on average assets (ROA) well above 1%. Returns on average equity (ROE) were less impressive for some of the A+ rated institutions, simply because these banks hold what some investors might consider to be "excess capital." Of course, for depositors, excess capital is a great thing, especially in a troubled economy.