Introduction

All New Bank Star-Ratings this Week

All New Bank Star-Ratings this Week

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All bank star-ratings have now been updated in Jumbo Rate News and on our website. As a result, a number of banks changed categories in the newsletter and, more importantly, several banks have been dropped from our rate pages based on June 30th data.

The first two no longer exist:

5-Star RSI Bank, Rahway, NJ (a $620 million bank) has merged into its much larger neighbor, 5-Star Columbia Bank, Fair Lawn, NJ. Columbia Bank now has $9.4 billion in assets and operates through 66 branch offices spread throughout the Garden State.

5-Star Texan Bank, N.A., Houston merged its $455 million asset self into a $3 billion neighbor to the East: 5-Star Home Bank, N.A., Lafayette, LA. Since March, Home Bank sports 44 branch locations in Louisiana, Mississippi and Texas.

The remainder were dropped due to lower Star-Ratings:

3-Star North American Banking Company, Roseville, MN had been rated 4-Stars until a drop in capital levels at June 30th bumped it down to a 3-Star rating. North American BC remains profitable and has a pristine loan portfolio. We hope to see it re-qualify in the near future.

There are also six affiliate banks in Texas that were similarly dropped due to a decrease in capital levels. Five of the six reported negative equity at June 30th; all six dropped to 2-Stars. Even the parent, Industry Bancshares, Inc., reported negative equity capital, to the tune of ($31.5 million). (Regulatory capital does not reflect all items on the balance sheet, therefore the six banks are all still “Well-Capitalized” for regulatory purposes.) But we answer to a higher calling, you. The six banks are:

Cert #     Bank Name, City, State

  • 57102    Bank of Brenham N.A. Brenham, TX
  • 12501    Citizens State Bank,  Buffalo, TX
  • 3195      Fayetteville Bank, Fayetteville, TX
  • 5529      First National Bank, Shiner, TX
  • 3099      First National Bank, Bellville, TX
  • 12506    Industry State Bank, Industry, TX

On the bright side…

- Six de novo banks opened for business in the second quarter, and

- No banks have failed in 22 months.

And the not so bright side...

Banks rated 2-Stars or below are relegated to  Bauer’s Troubled and Problematic Report which grew by 35% (from 51 to 69 banks) during the second quarter.

Almost all of the banks are “Well-Capitalized” by regulatory Prompt Corrective Action (PCA) standards.  Only one, Zero-Star First Savanna Savings Bank, Savanna, IL, is currently rated less than “Adequately Capitalized” (A) by those standards. One thing that can alter the standard regulatory PCA classifications is an enforcement action.

First Savanna SB has been operating under FDIC Enforcement Actions since 2019. Its current action (issued in August 2021) requires new (higher) specific minimum capital ratios, including a leverage CR of 5.5%. That’s quite a bit higher than the 3.67% it reported at June 30th. The action also stipulates that the bank must raise its capital without letting go of any loan loss reserves, which are very limited as it is.

First Savanna has been on Bauer’s T&P Report for 2½ years. This is the fifth consecutive quarter it has earned Zero-Stars. Its PCA capital classification is “Undercapitalized” (U).

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