The number of undercapitalized and "problem" U.S. banking institutions in the third quarter of 2017 was substantially unchanged from the previous quarter.
In this analysis, S&P Global Market Intelligence classifies a company as undercapitalized if it falls below the prompt corrective active thresholds effective Jan. 1, 2015: a total risk-based capital ratio less than 8%, or a Tier 1 capital ratio less than 6%, or a CET1 ratio less than 4.5%, or a leverage ratio less than 4%.
Sixteen banks met the undercapitalized criteria as of Sept. 30, down from 17 at June 30. Since quarter-end, Argonia, Kan.-based Farmers and Merchants State Bank of Argonia became the seventh bank to fail in 2017. The other company to drop off the second-quarter list was Grand Rivers Community Bank. After losing money for five consecutive quarters, the Grand Chain, Ill.-based bank reported $3.0 million in net income in the third quarter, significantly boosting its capital ratios.
Among operating companies, Elkton, Md.-based Cecil Bank reported the lowest ratio in each of the four regulatory capital categories at Sept. 30. Its parent company, Cecil Bancorp Inc., completed a common stock private placement in October and recapitalized the bank.
According to the Federal Deposit Insurance Corp.'s quarterly banking profile, "problem" institutions fell to 104, from 105 at June 30 and 132 a year ago. Total assets of "problem" banks declined by more than $1 billion during the quarter to $16.0 billion.
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Banks report regulatory capital information on the call report schedule RC-R, which can be accessed under the Regulatory Financials section of a company's briefing book page on the Market Intelligence website or with the Excel add-in tool. Users also can click here to watch a recorded training on performing a CAMELS analysis.
Click here to watch a recorded training on the new reporting requirements and disclosures related to regulatory capital under the final Basel III rules.