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Nine of the nation's 804 savings & loan associations were
per regulatory guidelines as of Dec. 31, according to preliminary data reviewed by TheStreet.com Ratings.
Combined with an updated list of 40 banks considered undercapitalized by regulatory standards, also based on preliminary data, several of this group of financial institutions have already joined the growing legions of
. Thirty-eight banks and thrifts have failed since the beginning of 2008.
of Crofton, Md., which was shut down by the Office of Thrift Supervision on Jan. 30, was one of the nine undercapitalized savings & loans.
The table below lists the eight remaining thrifts that were undercapitalized as of Dec. 31, according to the preliminary data supplied by Highline Financial:
Please keep the following in mind for this table and for our updated list of undercapitalized banks below:
- The lists are based on preliminary data: S&Ls have filed their thrift financial reports with the OTS and banks have filed their call reports with the Federal Deposit Insurance Corp., which our data provider, Highline Financial, obtains from the agencies. The data was not yet finalized when we downloaded it on Feb. 17. This data is often updated before it is finalized.
- The data is for the S&Ls and banks themselves, not holding companies.
- An S&L or bank on the list may have raised capital since Dec. 31: Most institutions with capital concerns are trying very hard to raise capital any way they can. Some on the list may have raised significant capital privately since filing their Dec. 31 call reports. If your S&L or bank is on either of these lists, you should determine if you have any deposits that exceed the FDIC's insurance limits and consider discussing the situation with the institution.
Leading the list was
IndyMac Federal Bank FSB
, the successor institution which was run by the FDIC since
in July. The FDIC reached an agreement in January to sell the institution to a partnership including J. Christopher Flowers, George Soros and
CEO Michael Dell. The partnership was to put up $1.3 billion in capital toward the purchase, with the FDIC standing behind some of the remaining IndyMac loans with a loss-sharing agreement.
Another S&L on the list with negative capital ratios was
American Sterling Bank
of Sugar Creek, Mo. The institution reported net losses of $18 million for 2008 from writedowns of available-for-sale loans in the third quarter and provisions for mortgage loan losses.
CEO John Kopecky, who joined American Sterling in August, explained that while the thrift's majority shareholder infused $20.5 million in new capital early in the third quarter, the institution was forced to record $12.9 million in writedowns of loans it had expected to sell to
, before Countrywide was acquired by
Bank of America
Kopecky said that after the merger was completed, Countrywide was no longer willing to make good on its agreement to purchase $40 million in new mortgages, and illiquidity in the secondary market forced American Sterling to take the writedown.
Kopecky went on to point out that on a GAAP basis, American Sterling 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.
Rounding out the critically undercapitalized thrifts were two Florida institutions:
Federal Trust Bank
of Sanford and
of Coral Gables.
Federal Trust Bank is held by
Federal Trust Corp.
, which announced on Feb. 10 that its agreement with the OTS to either sell the thrift or most of the thrift's assets, was extended to March 13.
BankUnited FSB, Florida's largest bank or thrift, with $23.5 billion in assets, is held by
TheStreet.com Ratings downgraded
to an E- (very weak) financial strength rating on Jan. 28, when the company warned in its fourth-quarter earnings release that it could be closed by the OTS.
A subsequent bid for BankUnited Financial led by investor
, which would have (presumably) included a loss-sharing agreement with the FDIC, caused shares to pop on Feb. 10, closing at 35 cents, up 40% on the day.
The deal seemed to fizzle, with
The Wall Street Journal
citing sources who said the FDIC would not be willing to enter into a loss sharing deal to assist in a potential acquisition.
On Friday, BankUnited, along with
announced it would halt foreclosures for at least a month. Several analysts commented that the institutions were hoping the federal government's upcoming loan buying activities would allow them to unload a significant amount of nonperforming mortgage loans.
Of course, even if the federal government were to buy a significant portion of BankUnited's poisoned portfolio of option-payment adjustable-rate mortgages, the bank might have to book even more losses at that time. It would also be a tall order for enough assets to be removed from the institution to boost it back to being well-capitalized.
Update: Undercapitalized Banks
partial list of 40 undercapitalized banks has changed since we published our
, based on preliminary call report data downloaded from Highline Financial. Two of the banks,
, failed later that same day.
Another undercapitalized bank,
of Culver City, Calif., also failed on Feb. 6. Alliance was not on the undercapitalized list because its preliminary year-end call report data was not available on Dec. 5.
Two more undercapitalized banks from the preliminary list failed on Feb. 13:
Another institution on the original list,
of Warren, Mich. no longer appears on the list of undercapitalized banks, since its call report numbers were revised. Warren Bank's revised tier-1 leverage and risk-based capital ratios as of Dec. 31 were 5.22% and 8.04%, putting it in the adequately capitalized category.
Here's the updated list of undercapitalized banks as of Dec. 31. 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.
Joining the list since Feb. 6 is
Lehman Brothers Commercial Bank
of Salt Lake City,
, of Paola, Kan.,
Texas First Bank
of Galveston and
Texas National Bank
Lehman Brothers Commercial Bank and the significantly undercapitalized
Lehman Brothers Bank FSB
, are held by
Lehman Brothers Holdings
, which filed for bankruptcy in September. Lehman Brothers declined to comment for this article.
Philip W. van Doorn joined TheStreet.com 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.