Among the 89 undercapitalized banks and S&Ls on a list published by TheStreet.com in late May, 35 have already failed. This year, 81 institutions have failed, and 25 were seized by regulators in 2008.

Banks and thrifts have up to 18 months to make corrections to their financial reports, so it's possible that an institution with a significant capital shortfall didn't make the list. An example is Guaranty Bank, which announced on July 17 that its first-quarter financial results needed to be restated to account for an additional $1.45 billion in securities writedowns. Guaranty Bank failed on Friday.

Undercapitalized Banks and Thrifts

Data used to compile the list of undercapitalized banks is subject to revision. For example, a bank or S&L might have raised capital since June.

The list also excludes banks and thrifts whose capital ratios meet the typical government standards but are considered undercapitalized because regulators are requiring them to hold additional capital.

The list is sorted by state in ascending order by tier 1 leverage ratio.

Undercapitalized Banks & S&Ls
SNL Financial

The largest institution on the list is United Commercial Bank of San Francisco, a subsidiary of UCBH Holdings ( UCBH), which had $12.8 billion in total assets as of June 30.

Five of the institutions on the list reported negative tier 1 capital as of June 30. The largest of these is Corus Bank NA of Chicago, the main subsidiary of Corus Bankshares ( CORS).

Washita State Bank of Burns Flat, Okla., had a strong tier 1 leverage ratio of 9.26%, despite its low risk-based capital ratio of 3.86%. As the government quantifies banks' potential losses, draconian accounting rules are causing some of Washita's securities that were recently downgraded to be weighted up to 400% of their value.

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