This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

10 Banks on Solid Financial Footing

NEW YORK ( TheStreet) -- With the economy's recovery uncertain and many large banks still unable to gauge their ultimate risk from mortgage putback lawsuits, TheStreet has identified the U.S. bank holding companies with the strongest capital ratios.

The list was compiled using second-quarter data from Securities and Exchange Commission filings provided by SNL Financial. In order to keep the data uniform, thrift holding companies were excluded.

The group includes the 10 bank holding companies with total assets exceeding $25 billion, with the highest Tier 1 common risk-based capital ratios as of June 30.

Tier 1 capital is one of the most conservative measures of a bank's capital strength, and excludes some intangible assets, including certain deferred tax assets, goodwill, and mortgage servicing rights. Tier 1 capital also excludes some preferred equity, including the recent $5 billion investment in Bank of America (BAC - Get Report) by Warren Buffett's Berkshire Hathaway (BRK.B), since the 6% dividend on Buffett's preferred shares is cumulative.

Tier 1 Common is even more conservative, since it excludes all preferred equity. This shows just how desperate Bank of America was for Buffett's money, since the Berkshire preferred shares won't help the nation's largest bank achieve the higher capital ratios required under the enhanced Basel III standards.

JPM Securities analyst on Friday reiterated his neutral rating for Bank of America, but said that "if the cumulative destruction of the current pro-forma equity buffer were significant enough (i.e., $37 billion per our analysis), the company would be at minimum capital levels and thereafter need to execute a dilutive common raise."

For the group of banking holding companies we selected, we have also included the total risk-based capital ratios, which include preferred (and cumulative preferred) equity, most loan loss reserves, some unrealized losses on securities gains, and some subordinated debt.

With the entire banking sector being hammered this year, some of the 10 strongly-capitalized large banks identified here are priced very cheaply to consensus forward earnings estimates, reflecting investors' suspicions about the entire sector, and the prospects for a double-dip recession. Then again, banks have been consistently beating analysts' quarterly earnings estimates over the past year.

Four of large, strongly capitalized bank holding companies are priced below tangible book value, according to SNL Financial.

Here they are, in ascending order by Tier 1 capital
1 of 11

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
BAC $17.48 0.00%
BPOP $29.45 0.00%
BK $43.88 0.00%
C $54.21 0.00%
KEY $13.14 0.00%


Chart of I:DJI
DOW 17,798.49 -14.90 -0.08%
S&P 500 2,090.11 +1.24 0.06%
NASDAQ 5,127.5250 +11.3820 0.22%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs