TheStreet.com Ratings takes a conservative approach with bank ratings, and places the greatest weight on capital strength, credit quality and earnings stability.
Looking at the highest-rated California banks and thrifts, most had nonperforming asset ratios below 1%, and risk-based capital ratios greatly exceeding the 10% required for most institutions to be considered
well-capitalized under regulatory guidelines.
The largest bank among the highest-rated in the state was
Silicon Valley Bank of Santa Clara, a $10.7 billion subsidiary of
SVB Financial Group
(SIVB - Get Report).
Largest California Institutions
The following includes capital, earnings and asset-quality indicators for the 10 largest California banks and thrifts.
Two of the nation's largest holding companies have subsidiary banks in the state with portfolios comprising almost entirely of residential mortgages, including
Bank of America California NA
, held by
Bank of America
(BAC - Get Report)
, which has remained profitable through the crisis, and
JPMorgan B&TC NA
, held by
(JPM - Get Report)
, which was organized in August 2008 and has also remained profitable.
The biggest bank in the state with a weak rating is
United Commercial Bank of San Francisco
, a subsidiary of
United Commercial Bank was included in
undercapitalized banks and thrifts
as of June 30, with a tier 1 leverage ratio of 4.02% and a risk-based capital ratio of 7.92%. Those ratios need to be 4% and 8% to be considered adequately capitalized under
regulatory capital guidelines
. Well-capitalized banks are at least 5% and 10%.
Even after charging off $426 million in soured loans during the second quarter, United Commercial's nonperforming-loan ratio still increased to 10.44% as of June 30, up from 8.28% in the previous quarter. The annualized ratio of net loan charge-offs was 20.39%, and the bank's ratio of loan-loss reserves to total loans was 4.37% -- far behind the pace of loan losses.