Are More Banks In Line To Fail?
IndyMac’s recent demise has led many to believe it’s the start of more bank failings to come. According to lists prepared by the Federal Deposit Insurance Corporation (FDIC), at least 90 more banks are in deep trouble.
The FDIC is keeping the names of the banks private, but ABC News obtained other lists prepared by several research groups and financial analysts that offer similar insight to those banks that are in danger of failing.
To determine the failure rate, the lists used what’s called the “Texas ratio,†an early warning system developed by Gerard Cassidy and others at RBC Capital Markets that compares a bank’s assets and reserves to its non-performing loans. Banks with a ratio of more than 100 percent are deemed the most likely to fail.
Included on the ABC News list of troubled banks was the Colorado Federal Savings Bank of Greenwood Village, Colorado. It had a Texas ratio of 244.8 - meaning its bad loans outweighed its assets. The Eastern Savings Bank of Hunt Valley, Maryland, was listed as having a Texas ratio of 222.74. The Integrity Bank of Alpharetta, Georgia, was listed with a 191 Texas ratio. Ameribank, Inc. in Welch, West Virginia, had a Texas ratio of 153.7.
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