'Who Is Next' lists 7 banks in 'danger zone'

[jus_the_facts]

Source: San Francisco Chronicle

Regional bank stocks, which got slammed Monday after the government took over IndyMac Bank over the weekend, recovered a bit on Tuesday. But concerns linger over what other banks could fail. On Saturday, banking analyst Dick Bove of Ladenburg Thalmann & Co., released a report entitled "Who Is Next?"

Bove ranked the 107 banks and thrifts with more than $5 billion in assets by two measures of risk. (There are almost 8,500 U.S. banks and thrifts, but these 107 represent about 79 percent of industry assets.)

We can now presume that anything smaller than IndyMac will be left to fail. Bove says IndyMac is the nation's 30th-largest bank holding company by assets. The FDIC, which ranks individual banks and thrifts, ranks it 52nd.

For banks in between, I guess we'll just have to see.



Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/07/15/BUNK11PLV9.DTL

[XemaSab]

1. Not to post spoilers, but the banks were:

Downey Financial (13.9 percent), Corus Bankshares (13.2 percent), Doral Financial (12.8 percent), IndyMac Bancorp (10.5 percent), FirstFed Financial (6.7 percent), Oriental Financial Group (6.12 percent) and Bank United Financial (5.4 percent).

IndyMac is by far the largest of these. Washington Mutual, one of the nation's 10 largest financial institutions, was 12th on Bove's list, with a ratio of 3.9 percent.

[LeftyMom]

2. Downey has a branch just up the road a bit.

Guess I'm glad I opted to go a bit farther to stick with a credit union.

[WhiteTara]

23. some of those are very shaky too

mine is

[bananas]

5. I just heard on the radio there is another list going around

Listening to KGO news, they mentioned some of the banks -
if I heard right, they mentioned Ameribank, Security Pacific, and another bank.

Edit to add: Here's the list
http://abcnews.go.com/Blotter/story?id=5374205&page=1

<snip>
While the Federal Deposit Insurance Corporation (FDIC) is keeping secret its official list of 90 troubled banks, ABC News has obtained other lists prepared by several research groups and financial analysts.
<snip>
http://www.abcnews.com/images/Blotter/top%20troubled%20banks.doc

Bank City State “Texas-ratio”
Colorado Federal Savings Bank Greenwood Village CO 244.8
Eastern Savings Bank, FSB Hunt Valley MD 222.7
Integrity Bank Alpharetta GA 191.6
Ameribank, Inc. Welch WV 153.7
First Priority Bank Bradenton FL 122.6
First Security National Bank Norcross GA 112.1
Magnet Bank Salt Lake City UT 110.4
Security Pacific Bank Los Angeles CA 102.8
First National Bank of Brookfield Brookfield IL 102.1
The State Bank of Lebo Lebo KS 100.6
Source: Research Associates of America

[LiberalFighter]

10. Never heard of any of them.

[oneinok]

21. Just like Grandpa said

Don't trust banks.

[aquart]

6. Good ol' WaMu.

I knew that operation was dirty from Day One. Retail stores couldn't survive so banks came into their space. HTF did the banks survive in expensive areas that couldn't support retail? No way in hell it could have been done in any economically healthy way.

[ForrestGump]

7. I used to despise WaMu

For various reasons. And then I signed up with them in Los Angeles, because they seemed a better deal than the bank I last had when in the US a few years before (Bank of America), and found whole new reasons to dislike them, primarily the stunning ignorance and surliness of the staff at my home location in LA. When I moved to Vegas, though, they turned out to be like an entirely different bank, and vastly better on the ground in the branches, with excellent staff. I'm still not a huge fan, mainly because some of the oddities of their posting transactions has resulted in me racking up way too many of those $30 overdaft fees, including a couple that were entirely bogus by any measure.

I've never kept my money in that or my other bank account. I tend to just deposit enough cash to cover my cards, Paypal/eBay, and other such transactions...now that I primarily earn cash I like operating more in my own personal cash economy, though the main reason I've never kept surplus funds in my WaMu account is that it's linked to my PayPal and I've never been entirely convinced that the link was absolutely secure. Reading about even the possibility of banks going under has me kind of happy about my minimalist approach to banking these days.

[Gormy Cuss]

12. I had the same experience with poorly informed staff in a NorCal branch of WaMu.

I closed the account and moved on to other banks. Friends who use a WaMu branch in San Francisco are very happy with them. When you write "oddities of their posting transactions" are you describing check sequencing? That's when they hold checks for as long as permissible and process them in order of smallest to largest amount in order to maximize the number of checks that bounce because NSF fees are a huge profit center for some banks. I wouldn't be surprised to hear that WaMu does that.

[JeanGrey]

14. WaMu? Don't get me started - lealized loan sharks.

THUGS. Disgusting.

[Hugabear]

15. I have money in WaMu - time to start pulling out?

Seriously, all this talk of banks going under is really starting to worry me. I do not have any faith whatsoever in the FDIC.

[Xithras]

16. Eeek, I hope not. I'm a WaMu stockholder :(

I invested about $18k at $32. It's trading at about $4.20 right now. I can't imagine what will happen if everyone pulls their money and the feds have to step in.

At this point, I just have to hold it as a very long prospect and hope they eventually recover or get bought. That money is about half of my kids college funds, and a chunk of what my grandfather left my kids when he passed, so I can't just eat the loss and sell.

[Renew Deal]

19. WaMu has been on multiple "in danger" lists.

I posted yesterday that if I was with WaMu, Wachovia, National City and maybe citibank I'd get out. I certainly would bail on the small banks posted above.

[Renew Deal]

18. Never heard of any of those

Thankfully

[comtec]

3. what about credit unions?

I have an account at both Union bank of California and PayPal... any word on those?
I imagine paypal is ok, but im worried about uboc.
(edited to remove what an idiot i am)

[Selatius]

4. I would assume credit unions are OK. Depositors have voting rights at CUs, not at banks.

Credit unions are cooperatively owned by the depositors who have voting rights.

They're definitely going to avoid high risk ventures that sink traditional banks, like getting into the fool's errand of sub-prime mortgages. Sure, they may have been profitable in the short-run, but they're high risk, and in the long-run, they failed as we are currently seeing.

A credit union that was run that recklessly is a credit union whose members are that careless, and I assume most people who are depositors at credit unions, of which I call myself a depositor as well, do not want that kind of reckless disregard in the administering of my own money.

The list I've seen included no credit unions, just traditionally structured banks owned by shareholders.

[Gormy Cuss]

13. A caution on credit unions: look for ones that have NCUA protection

It assures deposit protection that is similar to FDIC insurance.
In my experience, most CUs are covered but some smaller ones without it have gone under.
http://www.ncua.gov/

[Paula Sims]

8. There are MANY lists

Each regulator (OCC, FDIC, NCUA, OTS, States, Fed) have their own list of banks they're watching, each with a different criteria. Some of that criteria is public (like quarterly reports) and some is private (like examination information). Then there are those analysts who posts lists based on generally public information. It's too much data and not enough information.

As far as Credit Unions go, they are just as vulnerable as any. The problem is that several (including the one I used to belong to) opted OUT of FDIC insurance and went with a private insurer instead. That was one of the issues of the S&L crisis in Ohio & Texas in the 1980's.

Bottom line -- don't panic but DON'T keep more than 100k per person per bank (see FDIC web site). Yes, I know there are exceptions and nuances but sometimes it's a matter of interpretation and a conservative approach may be best during these times.

Paula

[Phoebe Loosinhouse]

9. Credit Unions and private insurance - RI in 1990

(This is a slightly edited repost from a thread from yesterday which seems relevant here.)

In the late 80's, the Rhode Island Credit Unions were headed for their very own miniaturized version of the larger S&L crisis. Rhode Island, being the cranky little state that it is, decided that they should have their very own form of credit union insurance (vs. NCUA, the large national insurer) which they set up and called RISDIC (Rhode Island Share Indemnity Corporation). They were famous for their ads which showed a pair of hands chiseling out the initials R I S D I C while a stentorian voice proclaimed that their commitment to you was "carved in stone".

And again because of their congenital suspicion of anything large (like national banks), Rhode Islanders embraced a multitude of neighborhood credit unions. (Side note - even the banks in RI had peculiar names like Hospital Trust,and Old Stone Bank (who used Fred Flintstone as their mascot,because who wouldn't trust Fred with their money?) These credit unions became somewhat known for their "handshake" form of business practice which quickly translated into an insider type of lending where the same players often went to the well over and over. This ominous brew was then supplemented by a real estate bubble,often supported by inflated appraisals and a property version of musical chairs where the same fannies changed the same set of seats over and over.

The only thing missing was embezzlement. Oh wait, it wasn't missing. That's right, one of the friendly credit union Presidents was also lining his own pockets and keeping duplicate books. And it started to get harder and harder to cover his tracks especially if any real auditors showed up. And, one day the jig was up and he beat it out of town to hide out in Florida while his transgressions were discovered.( another side note - every single news account mentioned that on his way out of town, he illegally parked in a handicapped spot at the airport.)

The embezzlement turned out to actually be rather small - only about 1 mil. But imagine the surprise of all the cranky yet trusting Rhode Islanders when they discovered that RISDIC (carved in stone) could not cover the loss! This discovery was made on December 30 or thereabouts. And then all the now hysterical and no longer trusting Rhode Islanders were waiting impatiently to stampede to the credit unions to pull out their money on Jan. 2.

But, the credit unions were ALL closed down on January 1st, 1990 by the Governor. Happy New Year Rhode Island! And then followed a whole succession of events involving public hearings, investigations, audits,etc. Some people could not get access to their money for a very long time. Businesses shut down, kids had to leave school, houses were lost and there was an enormous ripple effect over the very small pond known as the Rhode Island economy.

Anyway, the moral to my sad tale is that the institutions are only as sound as the insurance behind them.

BUT, I do think that the FDIC is hundreds of times sounder than RISDIC. I also know that a run on banks will be a very, very bad thing and really there is no alternative aside from your mattress. I think it is best if we all just pretend that the banks are sound because that is almost the only thing that will keep them sound. The feds can run around for the next few years and close down the worst ones in a controlled fashion while the rest of us just go about our business.

[shrike]

20. "The excrement has hit the whirling blades, my friend."

Comment by one of the governor's aides, after the shutdown.

I used to live in Rhode Island, and my yes, it is a cranky state, though it has its charms.

[Phoebe Loosinhouse]

22. Its crankiness IS one of its charms.

I don't live there anymore, but I miss it. We moved when it became evident that the entire state is headed for a financial implosion sometime in the not too distant future.

Its smallness in many ways functioned like a laboratory for corruption. I have seen quite a few Rhode Island scenarios seem like a dry run for something similar on a national scale. They just went through a big scandel that cleaned out a large part of their Statehouse leadership for being on the leash of corporate interests.

[shrike]

24. Yeah, the Ocean State is unique

I miss it, too. I tell people how you can drink a cabinet in Rhode Island and no one believes me.

Interesting comment about local scandals being a dry run for what goes on to happen on a national scale. And I'm sorry to hear that the state is headed for a financial implosion. Been a while since I was there, but I have a lot of good memories. Would have wished a better fate for the people and the state.

[cascadiance]

11. Here's a page that describes the insurance like my Credit Union has (NCUSIF)

They insure up to $100,000 of your accounts, as well as anything up to $250,000 in IRA accounts.


http://www.ncua.gov/ShareInsurance/Index.htm

[Buns_of_Fire]

26. Durn. It's going to be tough holding my account to under $100,000.

But I've managed to do it without any difficuly for forty years or so, so I guess I'll *sigh* struggle by... :-)

[PittPoliSci]

17. this sort of report seems like it would create more panic.

i can see why he wrote the list, and that makes sense to me, but if i saw my bank on there and i was super rich, i'd probably go and pull all of my money out of that bank expediting the process of failing.

[MaryEllen71]

25. thats why i'm in the process of switching from Charter One to Bank of America

one, its closer to my house and two I have a feeling Charter One is going to fail in the next year or two because they are smaller and only operate in 4 states: Michigan,Illinois, parts of Ohio, and Indiana.