By  Wed Jan 9, 2013

These Banks Are Likely to Fail This Year

Chris / Flickr | http://www.flickr.com/photos/cr01/6309924015/

Chris / Flickr source

Compared to 2008 when banks were failing left and right, the number of bank failures have decreased gradually over the years. In 2012, financial regulators shuttered 51 banks, the lowest number of bank failures since the financial crisis. Many of these failed banks had disconcerting Texas Ratios, a financial metric that compares a bank’s non-performing assets and its equity capital and loan loss reserves — the higher the Texas Ratio, the greater risk for failure. Take a look at the banks that are currently walking on thin ice.

It is important to note that banks that have high Texas Ratios are not destined for failure. Ideally, banks maintain a Texas Ratio below 100 percent. Many troubled banks have taken the necessary measures to improve their balance sheets and stick around — good news for customers who wish to stay with the banks.

Hanging by a thread

This year’s five banks most likely to fail are based on Texas Ratios determined by bank data as of the third quarter of 2012. (In last year’s list, all five of the previously listed banks have failed — the lowest Texas Ratio was 544 percent.)

1. Westside Community Bank (University Place, Wash.)

Topping the list is Westside Community Bank, which operates only two branches in eastern Washington. The bank touts an alarming Texas Ratio of 963 percent. The last time its Texas Ratio was below 100 percent was during the first quarter of 2010. In June 2012, Westside Community Bank was ordered by the FDIC to either sell enough voting share or obligation to rebuild capital, or accept an offer to be acquired. UPDATE: Westside Community Bank was closed by federal regulators on Jan. 11, 2013. Sunwest Bank, based in Irvine, Calif., has taken over the failed bank’s deposits and operations.

2. Douglas County Bank (Douglasville, Ga.)

Douglas County Bank, with four branches in northwest Georgia, has a Texas Ratio of 684 percent. Nine of the 51 banks that failed in 2012 were based in the state of Georgia. Having avoided the top-5 list last year, Douglas County Bank could be the next Georgia-based bank to close its doors. UPDATE: Douglass County Bank was closed on April 26, 2013. Hamilton State Bank, based in Hoschton, Ga., agreed to assume the failed bank’s deposits.

3. Eastern Savings Bank, FSB (Hunt Valley, Md.)

Eastern Savings Bank operates five branches in Maryland and its Texas Ratio is 642 percent. The bank’s Texas Ratio has been increasing, up from 572 percent in the first quarter of last year. Maryland hasn’t experienced a significant number of bank failures — just eight since 2000 — but Eastern Savings Bank could be the ninth.

4. Frontier Bank (Lagrange, Ga.)

Another Georgia bank on the list, but that’s not surprising. Frontier Bank has 10 branches through Georgia and holds a Texas Ratio of 617 percent — a bad sign for the state’s already-poor reputation for bank failures. UPDATE: Frontier Bank was closed on March 8, 2013. HeritageBank of the South agreed to assume all deposits of the failed bank.

5. Community South Bank (Parsons, Tenn.)

With 14 offices through Tennessee, Community South Bank carries a Texas Ratio of 479 percent, up from just 137 percent in mid-2011. Like Maryland, Tennessee is not known for many bank failures — four since 2000.

Don’t see your bank here?

Doesn’t mean it’s necessarily in good health, financially or otherwise. Go check out your bank’s MyBankTracker Report Card here, where you can learn about its fiscal health, customer reviews, fees and locations all in one spot.

If you want to see if these banks can pull out of their slump, follow our 2013 bank failure list. We’ll update this story if and when the listed banks fail.

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Add Your 2 Cents

  • Ace

    This article is not helping these banks.

    • Gaston

      It’s about time someone helps the consumer.

  • http://www.facebook.com/people/Arthur-C-Nicholas/1506228696 Arthur C. Nicholas

    Who cares?

  • william ambrosia

    The article failed to. Mention the to big to fail behomth’s and their partners the Wall Street Financial Institutions who packaged all those toxic AAA rated mortgage backed securities ,that were passed through the banks and on to the investment markets of Europe and U.S. which resulted in the financial collapse and BANKRUPCY of both nations. Amnesia what a convienent disease.

  • Troubled in OHIO

    I think every Loan that they have should be gone over with a fine tooth comb. And all the screw ups fixed. You keep hearing about all the Lawsuits that are going on, But when are The Home Owners really going too see Compensation for what they have been through.

    I DOUBT that will ever Happen!

  • Madam Modifier

    It will take a very long time for anyone to see compensation from banks who screwed up loan documentation, so pull yourself together and move on. A mortgage modification is the best solution. Be careful where you go. MOST attorneys don’t have a clue how to achieve a modification. They take your money and the papers just sit on a desk because they don’t know what to do. There’s more to the process than just filling in the blanks. Understand, they didn’t learn how to do modifications in law school, they have never been an underwriter or processor of mortgages so how would they know what to do. THEY DON’T! I am a paralegal with 40 years of experience in real estate and mortgages. I owned my own mortgage company for 23 years and did all of my own processing and underwriting. I have been doing modifications for over 3 years and have gotten every single one of them done!!!!! I charge a small fraction of what an attorney charges. When you call, I answer the phone. I can and do these in every State.
    Email me with any questions. paralegaltemps@att.net and leave me your name and number. We also have a service that helps people sell their home, if that is what you want to do, buy buying your home and selling it to an investor. Don’t hesitate to contact me, you will be glad you did.

  • Prez Oboz

    Wish thug Bank of America would fail……

  • carmen

    I am very aware of Eastern Savings Bank and their banking pactice. They don’t care about “the American dream” your house or refinancing your terms. They want to take your house and nothng will stop them. I cant wait for the FDIC to bring them to their knees and shut them down. If your reading this,get a good attorney 2defend you.

  • linda

    why is eastern saving bank still open, they are monsters……