NEW YORK (
) -- While the Federal Deposit Insurance Corp. reported earnings improvement at more than half of U.S. banks and savings and loan associations last week, the ranks of troubled community banks continued to swell.
Based on a full set of first-quarter regulator data provided by SNL Financial for the nation's 7,900 banks and savings and loan associations, 161 were
, according to the guidelines that apply to most institutions. Click the link below to see the full list:
The list is sorted by state, city and name of the undercapitalized bank or thrift. The Watch List of 161 institutions is down slightly from 163 on a similar list published by
on Feb. 24, although 49 of the institutions on the previous list have already failed.
When the FDIC published its
quarterly banking profile on Thursday, the agency also said that its "problem bank list" had grown to 775 from 702 at the end of the fourth quarter and 305 at the end of the first quarter of 2009. While the problem bank list is not made public, it presumably includes all the undercapitalized institutions as well as others threatened by high levels of nonperforming loans and securities.
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% respectively 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% respectively for most to be considered
Sterling Savings Bank
of Spokane, Wash., is the largest bank on the watch list with $10 billion in total assets and is the main subsidiary of
. The holding company had announced on May 6 that it had received approval from the U.S. Treasury Department to raise $555 million worth of common and preferred stock, including an investment of up to $170 million by
Thomas H. Lee Partners
, a Boston-based private equity firm. Then on Monday, Sterling Financial announced that
Warburg Pincus Private Equity
had agreed to invest $139 million while Thomas H. Lee Partners had agreed to lower its investment to the same amount, for a combined $278 million. If Sterling succeeds in raising the entire $555 million, the two investment groups would then have a combined 40% stake in Sterling, after regulatory approval.
Bank Stock Picks Picking a Winner Among Tarp Holdouts
This is quite a positive development for Sterling, especially because it is so difficult for an operating bank to compete for investor money with the FDIC offering up failed institutions for very small premiums and agreeing to share in losses on acquired assets. The new investment is sufficient to move Sterling back to well capitalized status and is also great news for the Treasury, because Sterling still owes the government $303 million in bailout money received via the Troubled Assets Relief Program, or TARP.
Four of the banks on the list actually had negative capital levels as of March 31. One of these was
Bank of Florida-Southwest
of Naples, which is a subsidiary of
Bank of Florida Corp.
. Two other subsidiaries of the holding company are undercapitalized
: Bank of Florida-Tampa Bay
Bank of Florida-Southeast
of Fort Lauderdale.
Bank of Florida Corp. on May 18 amended its first-quarter results to recognize more impaired loans, saying that its net loss for the three months ended in March was $48.2 million, much wider than the $33.1 million loss it originally announced on May 3. The company also extended a rights offering that seeks to raise $72 million to June 28.
of Lansing, Mich., is another publicly traded holding company with multiple undercapitalized bank subsidiaries on the Watch List, including
Pisgah Community Bank
of Ashville, N.C.,
Michigan Commerce Bank
of Ann Arbor,
Sunrise Bank of Arizona
Central Arizona Bank
of Casa Grande and
Bank of Las Vegas
Capitol Bancorp had 64 separately charted bank subsidiaries in 17 states at the end of 2009 and plans to reduce the number of subsidiaries to 26 this year through sales and mergers. The company announced agreements with private investors to raise $7.5 million in common equity on April 26.
Other large undercapitalized subsidiaries of actively traded holding companies include
of Madison, Wis., which is held by
Anchor BanCorp Wisconsin
of Los Angeles, a subsidiary of
Bank of Hampton Roads
of Norfolk, Va., which is a subsidiary of
Hampton Roads Bankshares
Hampton Roads on Monday announced plans to raise $255 million in new capital, including commitments of $73 million each, from
Anchorage Advisors LLC
. Each investor group will wind up controlling 23.1% of the company's shares, if Hampton Roads completes all of its planned capital-raising activities.
of Chicago was in dire shape as of March 31, with a Tier 1 leverage ratio of just 1.16% and nonperforming assets exceeding 14%, but the well-connected institution was reportedly rescued this week by a group of investors that included
GE Capital unit. According to the
, investors agreed to pour $150 million into the bank, which would then seek $70 million in capital from the federal government.
Ongoing Bank Failure Coverage
All previous bank and thrift failures since the beginning of 2008 are detailed in
interactive bank failure map:
The bank failure map is color-coded, with the states having the greatest number of failures highlighted in red, and states with no failures in gray. By moving your mouse over a state you can see its combined 2008-10 totals. Then click the state to open a detailed map pinpointing the locations and providing additional information for each bank failure.
Free Financial Strength Ratings
features independent and very conservative financial strength ratings provided each quarter by Weiss Ratings, for each of the nation's banks and savings and loans. The ratings are available at no charge.
Written by Philip van Doorn in Jupiter, Fla.
Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for TheStreet.com Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., 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.