These ratios need to be at least 5% and 10% for a bank or thrift to be considered well-capitalized under regulatory guidelines. They need to be at least 4% and 8% for an institution to be considered adequately capitalized.

For FirstCity, there were other indications of major problems, since the institution's ratio of nonperforming assets to total assets was 20.41% as of Dec. 31. This was the first failed institution during the 2008-2009 crisis for which the FDIC was unable to find a buyer for deposits and branches, with the main reason being that nearly all of FirstCity's deposits had been made through brokers.

Banks with High Levels of Problem Loans

Thirty-three Georgia banks and thrifts had nonperforming asset ratios above 10%, a sign of trouble for most banks. Not surprisingly, TheStreet.com Ratings has assigned nearly all the institutions on this list ratings of D (weak) or below.

Georgia Banks Reporting nonperforming Assets Exceeding 10% as of Dec. 31
Highline Financial

The one exception is Bank of Wrightsville, which was assigned a C- (fair) rating, as its capital position was relatively strong, with a tier-1 leverage ratio of 13.10% and a risk-based capital ratio of 21.19%.

When gauging an institution's overall health, no one ratio provides enough information. Strong capital ratios can mitigate risk associated with loan charge-offs. Comparing an institution's ratio of loan loss reserves to total loans to its ratio of net loan charge-offs to average loans can also be useful. This can provide an indication of whether an institution might need to make relatively large provisions for loan losses over coming quarters, probably leading to quarterly net losses. Keep in mind that the net charge-off ratios above were for all of 2008. The pace of charge-offs in the fourth quarter may have been much greater.

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