Texas Ratios, Capitalization Ratios, 30 Day Late Loans of Recently Failing Banks
by ilene - May 1st, 2010 5:02 pm
Texas Ratios, Capitalization Ratios, 30 Day Late Loans of Recently Failing Banks
Courtesy of Mish
Inquiring Minds just may be interested in the Texas Ratios, capitalization ratios, and percentages of 30 day late loans or higher at recently failed banks.
The Texas ratio is a measure of a bank’s credit troubles. Developed by Gerard Cassidy and others at RBC Capital Markets, it is calculated by dividing the value of the lender’s non-performing assets (Non performing loans + Real Estate Owned) by the sum of its tangible common equity capital and loan loss reserves.
In analyzing Texas banks during the early 1980s recession, Cassidy noted that banks tended to fail when this ratio reached 1:1, or 100%. He noted a similar pattern among New England banks during the recession of the early 1990s.
Bank Failures 2010-04-30
Westernbank Puerto Rico: 136%
Total Capital: 8%
Total Capital% minus (30+ days late or more / Total Assets): -7%
Eurobank Puerto Rico: 213%
Total Capital: 4%
Total Capital% minus (30+ days late or more / Total Assets): -10%
R-G Premier Bank of Puerto Rico: 270%
Total Capital: 6%
Total Capital% minus (30+ days late or more / Total Assets): -19%
CF Bancorp (MI): 421%
Total Capital: -1%
Total Capital% minus (30+ days late or more / Total Assets): -10%
Champion Bank (MO): 344%
Total Capital: 2%
Total Capital% minus (30+ days late or more / Total Assets): -19%
Champion Bank (MO): 194%
Total Capital: 2%
Total Capital% minus (30+ days late or more / Total Assets): -6%
7 Bank Failures Cost FDIC About $7.4 Billion
The above 7 bank failures will take a $7.4 billion bite out of FDIC deposit fund.
Emergency Powers Stabilize Puerto Rico Banks
Inquiring minds are reading Puerto Rico Banks Seized as Regulators Waive Deposit Limits.
Regulators used emergency powers to stabilize Puerto Rico’s banks, putting almost a third of the U.S. territory’s deposits in Popular Inc. and giving control of another lender to a Canadian firm.
Deposit limits were waived to allow Banco Popular of Puerto Rico to hold $19.5 billion, or 31.4 percent of the island’s total, after its purchase of Westernbank Puerto Rico, the Federal Reserve said yesterday in a statement. Three banks on the island were shut at a cost to the Federal Deposit Insurance Corp. of $5.3
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How Safe Is Your Bank? Texas Ratios of 7,500+ Banks
by ilene - April 22nd, 2010 3:00 pm
How Safe Is Your Bank? Texas Ratios of 7,500+ Banks
Courtesy of Mish
In March I posted an Interactive Map of Worst Banks in the U.S. by Texas Ratio, Non-Performing Assets, and Total Capital.
Today I have data for every bank in the report, over 7,500 banks. There are so many banks in the list, an interactive map is not possible.
Note: This post flooded the Tableau Servers – They are working on it. If you receive an error message, please try later in the day. [Try at Mish's site directly, click here.>]
This display contains a lot of data and it may take extra time to load. Please be patient. It takes an extra 3-5 seconds on my computer. Your results may vary. If you have an inadequate memory, the display may be slow or inoperable.
Thanks to Ellie Fields and Ross Perez at Tableau Software for help with the display!
Usage Notes
click on chart for sharper image
I can refresh the data every quarter. First quarter 2010 will be out in a month or so. The above data is from the fourth quarter of 2009.
For an interactive map of the worst banks in the country, please click on the first link.
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The FDIC Anesthesia Is Wearing Off
by ilene - November 20th, 2009 4:34 pm
Here are a couple articles from Elliott Wave International on bank safety, credit expansion and the FDIC. – Ilene
The FDIC Anesthesia Is Wearing Off
Courtesy of Robert Prechter of Elliott Wave International
The following article is an excerpt from Robert Prechter’s Elliott Wave Theorist. For more information from Robert Prechter on bank safety, download his free report, Discover the Top 100 Safest U.S. Banks.
Perhaps the single greatest reason for the unbridled expansion of credit over the past 50 years is the existence of the Federal Deposit Insurance Corporation, another government-sponsored enterprise created by Congress. The coming rush of bank failures is an outcome made inevitable the very day that Congress created the FDIC. The reason is that the creation of the FDIC allowed savers to believe that their deposits at banks are “insured” against loss.
But the FDIC is not really an insurance company. No enterprise, absent fraud, could possibly insure all the banking deposits in a nation. Nor does the FDIC do so, despite its claims. The FDIC is like AIG, the company that sold too many credit-default swaps. It contracted for more insurance than it could pay upon. Because depositors believe the sticker on the door of the bank, they have abdicated their responsibility to make sure that their banks’ officers handle their deposits prudently. This abdication allowed banks to lend with impunity for decades until they became saturated with unpayable debts.
Today, most banks are insolvent, and the FDIC is broke. This condition is deflationary for three reasons: (1) Banks are coming to realize that the FDIC cannot bail them out in a systemic crisis, so they have become highly conservative in their lending policies, as described above. (2) The main way that the FDIC gets its money is to dun marginally healthy banks for more “premiums” (meaning transfer payments) to bail out their disastrously run competitors. The more money the FDIC sucks out of marginally healthy banks, the less money those banks have on hand to lend, which is deflationary. (3) The banks that have to cough up all this money will become more impoverished at the margin, so banks that otherwise might have survived a credit crunch will be thrown even closer to the brink of failure. This is another deflationary risk.
A friend of mine whose family owns a bank told me that…
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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
Ilene is editor and affiliate program
coordinator for PSW. She manages the site