Tennessee closes first banks since 2002
01/31/2012
Tennessee banks have managed to go somewhat unscathed through the four years since
the start of the financial crisis with state regulators just now getting around to closing
troubled banks. On Friday, January 27, Tennessee Commerce Bank in Franklin and BankEast in
Knoxville were shuttered-both rated E- ("Very Weak") by Weiss at the time of failure.
Tennessee Commerce Bank, with assets of $1.2 billion, reported a loss of more than
$116.1 million for the first nine months of 2011 (the most recent data available) and was
very poorly capitalized. It had below-FDIC-mandated Tier 1 (5%) and risk-based capital (6%)
ratios of just 0.95% and 2.34%, respectively. Republic Bank & Trust Company, Louisville,
Kentucky, with assets of $2.98 billion and a Weiss Financial Strength Rating of B+ ("Good"),
assumed the deposits of Tennessee Commerce Bank. A Weiss Financial Strength Rating of B+ or
higher makes Republic Bank & Trust a "Weiss Recommended Bank".
See the largest institutions in the nation rated B+ or higher.
BankEast, with assets of $272.6 million as of September 30 (the most recent data available),
was first identified as "Weak" by Weiss in December 2005. The institution reported a loss of more
than $4.4 million for the first nine months of 2011. It had below-FDIC-mandated Tier 1 (5%) and
risk-based capital (6%) ratios of 0.85% and 2.16%, respectively. Nonperforming loans represented
13.6% of its loan portfolio. U.S. Bank, N.A., located in Cincinnati, Ohio, with assets of $319
billion and a Weiss Financial Strength Rating of C- ("Fair"), assumed the deposits of BankEast.
U.S. Bank has Tier 1 and risk-based capital ratios of 7.99% and 12.77%, respectively, with nonperforming
loans making up only 1.8% of its total loan portfolio. U.S. Bank earned $3.3 billion for the nine months
ending September 30, 2011 for an ROA of 1.44%, well above the industry average of 0.94%.