Banks

More Banks Fall Short of Capital Mandates

Stock quotes in this article:JPM, FITB, USB 

NEW YORK (TheStreet) -- Three times as many U.S. banks and thrifts are undercapitalized compared to last year as the industry struggles to recover from the credit crisis.

Earlier this month, preliminary data from SNL Financial indicated that capital levels at 108 banks had fallen short of regulatory requirements as of June 30. Now that complete second-quarter data is available, that list has grown to 116. Only 30 banks were undercapitalized a year earlier.

Almost a year after Washington Mutual became the biggest bank failure in U.S. history, the nation's banks and thrifts continue to wrestle with troubled loans on their balance sheets. The Federal Deposit Insurance Corporation said yesterday that its "problem list" of banks had expanded to 416 from 305 the previous quarter.

Undercapitalized banks are more likely to fail than those that meet regulatory requirements. To stay afloat, these banks must suspend dividends and raise capital, through their current investors or private equity, or arrange asset sales or mergers with stronger institutions.

Most banks and S&Ls need to maintain tier 1 leverage, tier 1 risk-based and total risk-based capital ratios of at least 5%, 6% and 10% to be considered well-capitalized. The ratios need to be at least 4%, 4% and 8% for most to be considered adequately capitalized.

A previous list of undercapitalized banks and thrifts wasn't complete, because a full set of second quarter data wasn't yet available. The updated list, based on data from SNL Financial, excludes the 12 institutions that have failed since the previous list was published.

TheStreet Premium Services    For Personal Service: 877-471-2967

Jim Cramer
Jim Cramer's Action Alerts PLUS:
Trade right alongside a Wall Street pro — enjoy access to his Charitable Trust portfolio and be sent trade alerts BEFORE he makes a move. Learn More
New: ETF Profits
ETF Profits:
Get money-making ideas from the hottest investment vehicle on the planet. Our experts show you how to play various ETF sectors to help pump-up your portfolio. Learn More
OptionsProfits
OptionsProfits:
Get 50+ trade ideas a week from the industry's top options experts. Plus — exclusive commentary on market trends and essential trading tools. Learn More
Doug Kass
Real Money:
Our team of professional Wall Street Pros — including Jim Cramer, Doug Kass, and Nicholas Vardy — delivers intelligent analysis, timely trade ideas, and colorful commentary. Learn More
Stocks Under $10
Stocks Under $10:
Break into the market with small- and mid-cap stocks... all $10 or less! David Peltier tells you exactly which low-priced stocks he's buying and selling. Learn More
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
blog comments powered by Disqus
Dow Jones S&P 500 NASDAQ 10-Year Note
12,801.23 1,342.64 2,903.88 19.69
Oil *
117.67
DOWN
89.23
DOWN
9.31
DOWN
23.35
DOWN
0.78
10 Yr
1.97%
SPDR Gold
167.14
-0.69%
-0.69%
-0.80%
-3.81%
Data delayed 20 minutes

Top Stories and Tools

Brokerage Partners

After the Bell

Before the Bell

Booyah! Newsletter

ETF Daily

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

We respect your privacy.
Podcasts

Connect with TheStreet