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Strongest and Weakest California Banks

Stocks in this article: BACUSBCYN

TSC Ratings provides exclusive stock, ETF and mutual fund ratings and commentary based on award-winning, proprietary tools. Its "safety first" approach to investing aims to reduce risk while seeking solid outperformance on a total return basis.

California ranks second to Georgia for the largest number of bank and thrift failures during the current economic crisis, with regulators shutting down eight institutions since the beginning of 2008.

While Georgia has had more bank failures, California has been the costliest state for the Federal Deposit Insurance Corp., accounting for $13.6 billion of the $19.5 billion of costs incurred by its insurance fund as of Feb. 27.

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Strongest California banks and thrifts: As bad economic news piles up and the banking industry increases its overall exposure to problem assets, it's easy to forget that strong banks and thrifts still exist. Based on year-end financial reports, 28 of California's 317 banks and thrifts were rated B-plus or better, grades considered "good" or "excellent."

California Banks and S&Ls Rated B+ or Higher - Dec. 31, 2008 ($Mil)
Highline Financial

What about larger institutions? The following chart shows the capital, earnings and asset quality indicators for the 10 biggest California banks and thrifts.

Largest Ten California Banks and S&Ls - Dec. 31, 2008 ($Mil)
Highline Financial

Bank of America California NA of San Francisco, held by Bank of America (BAC), was rated C-plus, or "fair," a downgrade from B-minus last quarter. The downgrade reflected the institution's holding company affiliation. Its larger sibling, Bank of America NA of Charlotte, N.C., also received a C-plus grade.

City National Bank of Beverly Hills, a subsidiary of City National (CYN), ranked highest among California's largest banks and thrifts, with a B rating.

Weakest California banks: The three California banks that failed this year were undercapitalized based on regulatory guidelines as of Dec. 31. Three other California institutions were considered undercapitalized by regulatory standards as of Dec. 31. TheStreet.com Ratings has assigned financial strength ratings of E, or "very weak," or lower for each of them.

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