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Is Your Bank Doomed?

by Gene Kirsch | September 9, 2011

We don’t have the ability to see into the future. But we do have an excellent track record of identifying problem banks that end up in failure. 

In fact, of the 68 institutions that failed so far in 2011, 66 or 97% were rated E+ or lower (“Very Weak”) by Weiss at the time of failure.  Over the last 2 years since January 2010, 225 banks have failed.  That’s a whopping 3% of U.S. banks closed by regulators due to financial issues. 

If you were a customer of one of those banks, you might have done things differently ... if only you had seen the failure coming.    And for those with cash in the bank, especially anyone who has moved out of the stock market and is sitting with a significant amount, it’s a real good time to know the financial standing of the bank holding your money. 

The good news:  Weiss Ratings keeps track of these statistics so you don’t have to.  We’ve identified 218 (97%) of those failed institutions as very weak prior to failure. So don’t wait until the worst happens to find out about your bank’s financial health.  Instead, keep your eye on the Weiss list of banks that may be headed for trouble. 

Whether you’re an investor or just trying to keep your money safe, bank strength should be a crucial part of your financial decision making.  And having Weiss as a resource you can trust will keep you attuned to the safety of our nation’s banks. 

Weiss Ratings currently lists 450 banks and thrifts as “Very Weak” with a rating of E+, E, or E-. These are the institutions we believe are the most vulnerable. While these banks may not fail, they are clearly in a high risk category. 

Take a look at the list below of Weiss weakest-rated U.S. banks with assets over $1 billion. 

Name	City	State	Assets ($ in Bil)	Net Income ($ in Mil)	Current Rating	Prior Rating
Northeast
Amalgamated Bank	New York	NY	$4.5	-$ 2.7	E+	D-
First National Community	Dunmore	PA	$1.2	+$ 0.6	E+	E+
MidAtlantic
CommunityOne Bank, NA	Asheboro	NC	$1.8	-$47.2	E-	E-
First Mariner Bank	Baltimore	MD	$1.3	-$ 6.8	E-	E-
Paragon Commercial Bank	Raleigh	NC	$1.1	-$ 1.2	E+	E+
Bank of The Commonwealth	Norfolk	VA	$1.0	-$ 6.6	E-	E+
Southeast
Ocean Bank	Miami	FL	$3.6	+$ 2.2	E	E
US Century Bank	Doral	FL	$1.7	-$16.3	E	D-
Great Florida Bank	Miami Lakes	FL	$1.5	-$ 1.6	E-	E-
CNLBank	Orlando	FL	$1.5	-$ 1.1	E	E+
Brand Banking Co.	Lawrenceville	GA	$1.2	-$0.1	E-	E
Midwest
AnchorBank FSB	Madison	WI	$3.4	-$14.3	E-	E-
Monroe Bank & Trust	Monroe	MI	$1.3	-$ 3.9	E-	E-
Guaranty Bank	Milwaukee	WI	$1.2	-$ 8.3	E+	E+
Centrue Bank	Streator	IL	$1.1	-$ 3.0	E+	D-
Liberty Bank	West Des Moines	IA	$1.0	+$ 0.9	E-	D-
Central
Metropolitan National Bank	Little Rock	AR	$1.2	-$ 4.1	E-	E-
Reliance Bank	St. Louis	MO	$1.2	-$ 4.6	E+	E+
Northwest
Homestreet Bank	Seattle		$2.3	-$ 3.4	E-	E-
Cascade Bank	Everett		$1.5	-$ 2.3	E-	E
West
Community Banks of Colorado	Greenwood Village	CO	$1.5	-$16.3	E-	E-
Mile High Banks	Longmont	CO	$1.1	+$ 1.4	E-	D-
Southwest
N/A - No banks over $1 billion

While this list represents only 22 of the 450 most vulnerable banks of this size, you can view the complete list of the strongest/weakest banks at Weiss Ratings.  Just register ... the list is free!

Georgia, Florida and Illinois account for 50% of the nationwide bank failures in 2011 and also account for 34% of the most vulnerable banks listed with Weiss Ratings.  The tables below show the top five states for bank failures in 2010 and 2011 through August 31, along with the number of potentially vulnerable banks with very weak ratings in those states.   

You’ll see that while bank failures have decreased for 2011 compared to 2010, there are still a sizeable number of institutions Weiss considers at risk for failure.  And unlike the regulators, we name names.  So you don’t need to be in the dark when it comes to the financial strength of your particular institution. 

Take a look at Weiss Ratings to get a reading on the health and safety of the institutions important to you.    If you don’t like what you find, be proactive. 

Download a complete report on the bank from Weiss Ratings so you can see the specific areas where the institution is weak.  Use that information to ask bank management some hard-hitting questions ...  

Find out if they have a plan for improvement that will address weak areas.  Plans should include: Increasing capital and revenues, reducing high levels of non-performing loans, selling large inventories of bank-owned real estate, and improving liquidity.  Also ask how long they expect it will take to turn things around. 

The weakest institutions should be on regulatory radar being pushed for a plan to stabilize.  If your bank has a plan, you can ask if it’s being reviewed or whether it’s already been accepted by regulators.  That would be a good sign!  If your bank has no plan or won’t share some insight with you, seriously consider moving your money to an institution that’s financially strong. 

There is no reason whatsoever for you to be part of a failing institution. There are many financially strong institutions out there to keep your money safe.  Just check out Weiss Ratings for the strongest institutions in your area.  Then take action. When it comes to getting information on financial health, you can bank on us!