NEW YORK ( TheStreet) -- Nearly 85% of Illinois banks and thrifts were profitable during the first quarter, but with 575 banks in the state there's plenty of pressure for the 87 institutions still losing money to consolidate with stronger rivals. Illinois trails only Georgia and Florida for the largest number of bank failures since the current closure wave began during 2008, but there have only been three bank failures in the Land of Lincoln during 2011, with none so far during the second quarter. According to data provided by Thomson Reuters Bank Insight, there were 16 undercapitalized Illinois banks and thrifts as of March 31. These are included on TheStreet's first-quarter Bank Watch List. Since the Watch List is based solely on capital ratios, we take a different approach on our quarterly coverage of banks in key states, by looking at overall credit quality to identify troubled institutions.
Illinois Banks with Weakest Asset Quality
The following list includes all banks in the state with nonperforming assets comprising more than 15% of total assets as of March 31:
Nonperforming assets (NPA) include nonaccrual loans, loans past due 90 days or more and repossessed assets. Government-guaranteed loan balances are excluded. The ratio of net charge-offs to average loans is annualized. The total risk-based capital ratios needs to be at least 8% for most institutions to be considered adequately capitalized by regulators and 10% for most to be considered well-capitalized. There are only four undercapitalized banks on the above list. Metrobank of Chicago was undercapitalized as of March 31 -- despite having a total risk-based capital ratio of more than 10% -- because its Tier 1 leverage ratio was below 4.00%. The list also includes financial strength ratings provided by Weiss Ratings. Weiss Ratings uses a very conservative ratings model, placing the greatest weight on capital strength, credit quality and earnings stability to assign ratings ranging from A-plus (Excellent) to E-minus (Very Weak). The Illinois institution with the highest level of nonperforming assets as of March 31 was American Metro Bank of Chicago, which had $85.3 million in total assets, with nearly 32.27% NPA, and was undercapitalized, with a total risk-based capital ratio of 6.02%, slipping from 6.77% at the end of 2011.