5 banks safe from the storm

Northern Trust (NTRS, news, msgs), based in Chicago, has one of the best fundamental performance records in the business. Its profits are one standard deviation above those of its peers through June 30, and its loan default rate in the second quarter this year was just 0.03%. The main reason is that its noninterest income is four times greater than its net interest income, meaning that it doesn’t depend on loans to make a profit. Whalen believes its performance margin compared with those of its peers will widen over the next few quarters as banks with more credit exposure take a beating.

US Bancorp (USB, news, msgs), based in Minneapolis, still has a return on equity of 22% and has a high proportion of its income coming from nonloan services. It has charged off 1% of its total loans and is adding to loan-loss reserves at a 2-1 ratio without cutting dividends, which speaks well for management. Whalen says it is very unlikely that US Bancorp, “one of the best-performing commercial banks in the world,” will ever need to obtain additional capital or sell itself to outsiders.

Washington Federal (WFSL, news, msgs), a thrift based in Seattle, reported a 10.1% return on equity through the second quarter, compared with a negative 4% for peers. Returns have tracked a full standard deviation above those of its rivals. Its main operating unit reported just 0.21% of loan defaults versus 1.26% for its peers. It has received advances from the Federal Home Loan Bank system equal to 16% of its assets, but its strong capital position and profitability still make it a top choice for cash deposits.

Charles Schwab Bank (SCHW, news, msgs), based in San Francisco and the thrift subsidiary of a discount brokerage, has an “eye-popping” return on equity of 27%, which is 1.26 standard deviations above those of its peers, making it almost countercyclical. With virtually no credit losses in the second quarter, Whalen calls the thrift subsidiary of Schwab a “pretty safe place to stash your loot” and says it deserves kudos for its success in a declining credit market.

Bank of Hawaii (BOH, news, msgs), based in Honolulu, sports a return on equity of 26% and is a full standard deviation above its peers in funding its loans. With just a 0.46% charge-off rate and high average maturity of its loans, Whalen thinks it has done a beautiful job in a tough environment.

awgee - 10 September 2008 03:10 AM

usctrojanman29 - 10 September 2008 01:55 AM

no_vaseline - 09 September 2008 09:36 PM

usctrojanman29 - 09 September 2008 09:15 PM

awgee - 09 September 2008 08:45 PM

WaMu is not long for this world:

WaMu CDS spreads

So who goes first….WaMu, Downey Savings, or First Fed???

Is that like the joke that goes something like “A Priest, a Doctor, and an Attorney are in a transatlantic flight all alone, when the plane catches fire midair and starts to lose altitude….........................”?

No, I’m really curious which dog…errr bank gets taken over by the Feds.  Obviously Downey and First Fed aren’t going to have the impact that FDIC like WaMu going down will.

I think DSL is in worse shape, but I do not think there are CDSes written on it’s bonds so your guess is as good as mine.  First Fed?  I dunno.  I have not been following it, although I read some snide comment about it on CR from time to time.

Is WaMu too big too fail?  Are there too many CDSes written on it’s bonds?  If they just let it go, the result may a bit too interesting.

But interesting may be fun to see.

Lehman, WaMu, Merrill, and AIG are toast.  BOA may buy Merrill.  AIG and it’s credit default swaps are the 800 lb. gorilla.

It’s Friday! Did your bank fail today?

On November 7, 2008, Security Pacific Bank, Los Angeles, CA was closed by the California Department of Financial Institutions and the Federal Deposit Insurance Corporation (FDIC) was named Receiver.

All deposit accounts have been transferred to Pacific Western Bank, Los Angeles, CA (“assuming institution”) and will be available immediately.  On Monday, November 10, 2008, the former Security Pacific Bank locations will reopen as branches of Pacific Western Bank.

On November 7, 2008, Franklin Bank, SSB, Houston, TX was closed by the Texas Department of Savings and Mortgage Lending and the Federal Deposit Insurance Corporation (FDIC) was named Receiver.

All deposit accounts have been transferred to Prosperity Bank, El Campo, TX (“assuming institution”) and will be available immediately. On Saturday, November 8, 2008, the former Franklin Bank, SSB locations will reopen as branches of Prosperity Bank.

What is interesting is that Franklin Bank was run by Lew Ranieri, AKA the godfather of the mortgage bond.

awgee - 14 September 2008 09:47 PM

Lehman, WaMu, Merrill, and AIG are toast.  BOA may buy Merrill.  AIG and it’s credit default swaps are the 800 lb. gorilla.

Sometimes I scare myself.

awgee - 08 November 2008 05:53 AM

awgee - 14 September 2008 09:47 PM

Lehman, WaMu, Merrill, and AIG are toast.  BOA may buy Merrill.  AIG and it’s credit default swaps are the 800 lb. gorilla.

Sometimes I scare myself.

Will a great deal of respect, awgee - You scare me on a regular basis.  Most notably, you sent a chill down my spine with your call earlier in the year that lending would cease on the 4th of July.  I read it, and broke out in a cold sweat thinking, “What have I overlooked?”

IrvineRealtor - 08 November 2008 06:16 AM

awgee - 08 November 2008 05:53 AM

awgee - 14 September 2008 09:47 PM

Lehman, WaMu, Merrill, and AIG are toast.  BOA may buy Merrill.  AIG and it’s credit default swaps are the 800 lb. gorilla.

Sometimes I scare myself.

Will a great deal of respect, awgee - You scare me on a regular basis.  Most notably, you sent a chill down my spine with your call earlier in the year that lending would cease on the 4th of July.  I read it, and broke out in a cold sweat thinking, “What have I overlooked?”

Not exactly like I called, but it seems much of the credit market did freeze about one month after.

Well, it sure took long enough.  How in the world did they hold on this long?

Downey Financial

I actually thought they would go BEFORE WM and WB.  My bad.

awgee - 11 November 2008 07:56 PM

Well, it sure took long enough.  How in the world did they hold on this long?

Downey Financial

About time…but it’s not official until the FDIC rolls in through the doors on a Friday afternoon.  Does it happen this Friday or do they wait until after Thanksgiving?

morekaos - 11 November 2008 09:39 PM

I actually thought they would go BEFORE WM and WB.  My bad.

Me too.

And the final answer to this thread is….NO, NONE FAIL ANYMORE!!!

Another one bites the dust…........
regulators close another one

One day late

Fridays Takeovers

Todays Death list

Dead pool

this weeks list

friday bank take overs

Omni National Bank in Georgia Shut, 21st U.S. Failure

Bank Failures #56 & #57: Temecula Valley Bank, Temecula, CA and Vineyard Bank, Rancho Cucamonga, CA

I thought Vineyard had failed last year

ABC123 - 18 July 2009 01:59 AM

Bank Failures #56 & #57: Temecula Valley Bank, Temecula, CA and Vineyard Bank, Rancho Cucamonga, CA

I thought Vineyard had failed last year

Nope, but they were on the clock for a while.  One of my good friends and lurkers on this forum works there.  I actually called him as soon as I read that the OCC came in to shut it down.  He is still at work and will be there for a while and was asked to come in at 8am tomorrow morning.  He knew it was coming and is sorta relieved that it happened and can have some closure.

I’m waiting for my former employer…California National Bank…to be taken over by the Feds and when they do I’ll have a little smile on my face.

USCTrojanCPA - 18 July 2009 03:01 AM

I’m waiting for my former employer…California National Bank…to be taken over by the Feds and when they do I’ll have a little smile on my face.

Looks like it’s now the bottom of the 9th with 2 outs.

LA Business Journal, 9/28/09 - Crunch Time for Two L.A. Banks

Two of L.A.’s largest financial institutions, each operating under an enforcement order from regulators, could face severe consequences as early as this week if they cannot find a way to raise capital.

California National Bank, the fourth largest bank in Los Angeles by assets, and First Federal Bank of California, the county’s No. 2 savings and loan, have been ordered to shore up their capital levels by Sept. 30.

Executives at both banks strongly assert they will be able to meet their deadlines, but the ailing institutions are contending with an unfriendly capital market that has made it difficult for other troubled banks and thrifts to raise money.

...

In late May it got a consent order from regulators, which directed the bank to raise capital – essentially to get an infusion of cash –and develop a plan to maintain the necessary ratios by Sept. 30. If Cal National is unable to do so, then the order requires “a disposition plan, which shall detail the board’s proposal to sell or merge the bank, or liquidate” the bank’s assets.

“Time is running out,” said James Barth, a senior fellow who studies financial markets at the Milken Institute in Santa Monica. “It’s a difficult environment and it becomes ever more difficult as time runs out to raise capital.”

Cal National, owned by Oak Park, Ill.-based FBOP Corp., has contended for the past year that its core earnings are strong and it would be holding steady if not for its one-time, roughly $500 million loss due to its investments in the government mortgage giants. Still, its problem loans are increasing.

Gregory Mitchell, chief executive of Cal National, insists no plans are being made to sell the bank and that capital-raising efforts are progressing.

...

FBOP, which owns seven banks across the country in addition to Cal National, also has reportedly tried unsuccessfully to raise capital over the past year, including applying to the TARP program.

Besides Cal National, three of the company’s other banks are undercapitalized and the Federal Reserve ordered FBOP this month to submit a plan by Sept. 30 to raise its own capital levels.

Only 1 failed bank since the 3 that were shut down on October 2nd?  Something big coming down the pipeline?

FDIC out of money.  Can’t close any big banks.  The one last week was a small fry to quiet the tin foil hat crowd.  We’ll see if we get any more small fry today.

oops I spoke too soon.  One bank to add to the list today:

Partners Bank in FL

You mean bank failure 106?

106 bank failures this year

USCTrojanCPA - 18 July 2009 03:01 AM

I’m waiting for my former employer…California National Bank…to be taken over by the Feds and when they do I’ll have a little smile on my face.

Well, it looks like my wait is over and to say that I have a big smile on my face is an understatement.  Karma can be a bizatch (that goes to all the idiots in management over there) and I hope for the best for the good people working over there.  Not only did California National Bank get shut down, but all the other 6 banks within the FBOP group got taken over by the FIDC. 

California National Bank taken over by the FIDC