The Strongest U.S. Banks and S&Ls

TSC Ratings provides exclusive stock, ETF and mutual fund ratings and commentary based on award-winning, proprietary tools. Its "safety first" approach aims to highlight risks to bank and thrift depositors and insurance customers of all types, while seeking solid outperformance on a total return basis for stock, mutual fund and ETF investors.

While there are lurking fears about commercial real estate and consumer loans in the wake of the mortgage crisis, a quarterly analysis by TheStreet.com Ratings shows there are thousands of healthy banks and thrifts.

Government officials and CEOs of bank holding companies like Citigroup(C Quote), Bank of America (BAC Quote) and Wells Fargo (WFC Quote) have been talking up stock prices. Still, the overall risk exposure of the U.S. bank and thrift industry is likely to increase over the next few quarters.

Deutsche Bank analyst Richard Parkus recently said total delinquencies on commercial real estate loans might reach 6% by next year, coming close to the peak delinquency levels of the real estate meltdown in the early 1990s.

While many commercial real estate loans are securitized, and therefore not reflected on bank and thrift financial statements, thousands of community banks have high asset concentrations in these loans. As of Dec. 31, composite data for the fourth quarter showed that 2.68% of total commercial real estate loans (excluding construction loans and multifamily projects) were delinquent 30 days or more, up from 2.13% in September and 1.58% in December 2007.

While commercial real estate delinquency rates for U.S. banks and thrifts have increased considerably, it's conceivable that they could double by the end of the year.

A Kitchen-Sink Quarter

According to the Federal Deposit Insurance Corp.'s revised Quarterly Banking Profile, combined U.S. banks and thrifts lost $32 billion during the fourth quarter, compared with net income of $1.7 billion in the third quarter and $5.8 billion in the fourth quarter of 2007.