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The ranks of undercapitalized banks continue to grow.

The full set of finalized regulatory data for the fourth quarter is available for all U.S. banks and savings and loans, and Ratings has updated its list of undercapitalized institutions. Since our preliminary lists of

undercapitalized banks

and thrifts were published on Feb. 20, five more banks filed finalized call reports showing they were undercapitalized as of Dec. 31.

One bank has been removed from the list. Finalized call report numbers for

Warren Bank

of Warren, Mich. include a total risk-based capital ratio of 8.04% as of Dec. 31, putting the institution into the adequately capitalized category.

Under normal

regulatory capital guidelines

, a bank or thrift needs to have a tier-1 leverage ratio of at least 5%, a tier-1 risk-based capital ratio of at least 6% and a total risk-based capital ratio of at least 10%. To be considered adequately capitalized, these ratios need to be 4%, 4% and 8%.

This time we have included all 14 institutions that filed regulatory financial reports showing they were undercapitalized as of Dec. 31, and failed during the first quarter. With two-thirds of the 2009 failed institutions having reported being undercapitalized, this is obviously a good indicator of the likelihood of an institution's failure.

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Of course, in the current environment, several banks and thrifts have entered into regulatory agreements requiring them to achieve higher capital benchmarks in order to be considered well-capitalized. An example of this is

Corus Bank NA

, held by

Corus Bankshares

( CORS), which was required to achieve and maintain tier-1 leverage and tier-1 risk-based capital ratios of at least 9% and 12% within 120 days of a Feb. 18 agreement with the Office of the Comptroller of the Currency.

For information on all of the bank failures during 2008 and 2009, please see's


bank failure map

, which also includes a table listing failures by date.

Once again, we're excluding one bank that only operates as a trust bank, with no deposits or loans, and a very small Texas bank that is just a "shell" at this point, with no deposits, no loans and hardly any assets, since the bank charter is being transferred. We are also excluding IndyMac Federal Bank, since it was still being run by the FDIC receivership as of Dec. 31.

There were three institutions that reported negative capital ratios as of Dec. 31. Two have already failed. The third is

American Sterling Bank

, whose CEO, John Kopecky, told us on Feb. 18 that the institution had total equity capital of $12.4 million as of Dec. 31. Tier-1 capital was negative $1.9 million, mainly because deferred tax assets of $14.2 million were required to be excluded. He also expressed confidence the institution would either be sold by the end of March, or would be able to raise additional capital.

Kopecky wasn't immediately available for comment for this article.

Ratings Ratings

issues independent and very conservative financial strength ratings on each of the nation's 8,500 banks and savings and loans. These are available at no charge on the

Bank & Thrift Ratings Screener

. In addition, the Financial Strength Ratings for 4,000 life, health, annuity, and property/casualty insurers are available on the

Insurers & HMOs Screener


Philip W. van Doorn joined Ratings Inc. in February 2007. He is the senior analyst responsible for assigning financial strength ratings to banks and savings and loan institutions. He also comments on industry and regulatory trends. Mr. van Doorn has fifteen years experience, having served as a loan operations officer at Riverside National Bank in Fort Pierce, Florida, and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a Bachelor of Science in business administration from Long Island University.