NEW YORK ( TheStreet) -- Despite continued improvement for the banking industry as a whole, third-quarter regulatory data indicates the accelerated pace of bank failures will hold up for at least two more quarters. Based on preliminary third-quarter regulatory data supplied by SNL Financial for roughly 93% of the nation's 7,700 banks and savings and loan associations, 155 were undercapitalized according to the regulatory guidelines that apply to most institutions. Click the link below to see the full list: >>>Bank Watch List The number of undercapitalized institutions has declined only slightly from last quarter, even though 21 banks have failed since the second-quarter list was pulled on September 7. The third-quarter list is also likely to grow once the remaining regulatory data becomes available. Another thing to consider is that any capital raised by institutions during the fourth quarter of 2010 will not be reflected in current results. 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% 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% for most to be considered adequately capitalized. Seven of the banks on the Watch List were actually negatively-capitalized as of September 30. The largest of these was First Commercial Bank of Florida, which is headquartered in Orlando and had $599 million in total assets as of September 30 after posting a third-quarter net loss of $15.8 million was left with a Tier 1 capital ratio of -1.60%. The bank's ratio of nonperforming assets - including loans past due more than 90 days or in nonaccrual status (less government-guaranteed balances) and repossessed real estate - to total assets was 21.80% as of September 30, more than double from the previous quarter. The three largest banks on the Watch List last quarter have sufficiently improved their capital ratios to be excluded from the third-quarter list:
The largest bank on last quarter's undercapitalized bank was Sterling Savings Bank of Spokane, Wash., which had $10.3 billion in total assets as of September 30 and is held by Sterling Financial ( STSA). Sterling Bank improved to well-capitalized as of September 30, with a Tier 1 leverage ratio of 10.19% and a total risk-based capital ratio of 16.77%, following the holding company's completion of its $730 recapitalization in August, which included large issuances of common shares to private equity investors Thomas H. Lee Partners and Warburg Pincus LLC and the conversion of $303 in preferred stock held by the U.S. Treasury Department for bailout funds received through the Troubled Assets Relief Program, or TARP, to common shares.