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TheStreet Open House

154 Small Banks Hurdling Toward Oblivion: TheStreet Watch List

Stocks in this article: STI ONB GRAN FMAR CBCR BRBI

NEW YORK ( TheStreet) -- Now that a complete set of second-quarter data is available for the nation's banks and savings and loan associations, it's clear that there are still community banks heading toward their doom.

There are now 154 undercapitalized institutions on the TheStreet's Bank Watch List, with second-quarter data now available for all of the nation's banks and thrifts. This is up from 149 on our previous list form August 2, when data wasn't yet available for most S&Ls, and also factors-in three more bank failures.

Based on second-quarter regulatory data supplied by SNL Financial, 154 institutions were undercapitalized according to the regulatory guidelines that apply to most institutions.

Click the link below to see the full list:

>>>Bank Watch List

It is important to note that any capital raised by institutions during the third quarter of 2011 will not be reflected on the Watch List.

Most banks and thrifts 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 under regulatory guidelines. Some trust banks carry lower capital requirements. The ratios need to be at least 4%, 4% and 8% for most to be considered adequately capitalized.

Thrifts joining the Watch List now that all of the second-quarter data is available, include SCB Bank of Shelbyville, Ind., which is held by Blue River Bancshares (BRBI). SCB bank is operating under a May 16 cease and desist order from the Office of Thrift Supervision, requiring the institution to achieve and maintain a Tier 1 leverage ratio of 8.25%, "after the funding of an adequate Allowance for Loan and Lease Losses," and a total risk-based capital ratio of 12.25% by September 30, "

The largest of the seven thrifts joining the Watch List is Lydian Private Bank of Palm Beach, Fla., which is now the second-largest bank on the list. Lydian filed an updated first-quarter Thrift Financial Report in June, according to the South Florida Business Journal, to restate its first-quarter net loss to $23.4 million, from $15.9 million, thus slipping to "critically undercapitalized" status. The first-quarter restatement mainly reflected an increased provision for loan losses.

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