SOURCE: Weiss Ratings

Weiss Ratings

May 24, 2010 11:02 ET

Bank of America, Citibank, Wachovia, HSBC, Suntrust, Regions Bank, RBS Citizens and Many Others Still Vulnerable According to Weiss Ratings

Weiss Ratings Releases New List of 2,259 Weakest Banks and 962 Strongest

JUPITER, FL--(Marketwire - May 24, 2010) -  Twenty months following the $700 billion federal bailout designed to shore up the nation's largest banks, Weiss Ratings finds that Bank of America, Citibank, Wachovia Bank, HSBC Bank USA, Suntrust Bank, Regions Bank, RBC Citizens, and thousands more are still vulnerable to financial difficulties or even possible failure, based on its statistical analysis of each bank's capital, asset quality, earnings and other factors.

Overall, 2,259 U.S. banks and S&Ls, controlling $5.8 trillion, or 43.8% of the industry's total assets, are considered vulnerable, meriting a Weiss Financial Strength Rating of D+ (weak) or lower; while only 962 institutions, with $484 billion, or 3.7% of the industry's assets, are viewed as strong enough to be recommended to consumers, receiving a rating of B+ (good) or higher.

"Major U.S. banks continue to be plagued by toxic assets and an inability to raise capital," explained Martin D. Weiss, chairman of Weiss Ratings. "Despite the federal government's help, we've witnessed 73 bank failures so far in 2010, more than double last year's pace -- a pattern that is bound to continue as further loan deterioration and regulatory reform take their toll on already-shaky banks. Although most vulnerable banks will not ultimately fail, the failure rate could rise sharply if the U.S. experiences any further economic or financial adversity." 

"For consumers and also for bank regulators," Weiss continued, "the big dilemma is that many of the largest banks are still weak, while most of the strongest banks are relatively small and have fewer branches."

To help consumers avoid the weakest institutions and find the strongest in their state, Weiss Ratings has released its list of 2,259 weakest and 962 strongest banks to the public. "Given the severity of this situation and the growing difficulty of finding a truly safe place for their money, we have decided to end our former business practice of charging consumers for our ratings," Weiss added.

Among the U.S. banks Weiss Ratings considers vulnerable, there are 20 large institutions with $25 billion or more in assets, among which seven have $100 billion or more, as follows:

U.S. Banks and Thrifts Considered Vulnerable
(with a Weiss Rating of D+ or lower and assets of $25 billion or more; 12/31/09 data)
Institution City State Weiss Rating Assets ($bil)
Bank of America NA Charlotte NC D 1,465.2
Citibank NA Las Vegas NV  D- 1,161.4
Wachovia Bank NA Charlotte NC D 510.1
HSBC Bank USA NA McLean VA D 167.2
Suntrust Bank Atlanta GA  D- 164.3
Regions Bank Birmingham AL D 138.0
RBS Citizens NA Providence RI D 116.9
ING Bank FSB Wilmington DE D 90.3
Keybank NA Cleveland OH  D- 90.2
Union Bank NA San Francisco CA   D+ 85.2
Sovereign Bank Wyomissing PA D 73.8
Compass Bank Birmingham AL  D- 64.6
Ally Bank Midvale UT   D+ 55.3
Huntington National Bank Columbus OH  D- 51.1
M&I Marshall & Ilsley Bank Milwaukee WI D 50.3
E*Trade Bank Arlington VA  D- 45.0
Wells Fargo Bank South Central Houston TX D 40.6
Citizens Bank Of Pennsylvania Philadelphia PA D 32.5
RBC Bank (USA) Raleigh NC  D- 27.4
First Tennessee Bank NA Memphis TN D 25.8

Weiss Ratings Scale: A=Excellent, B=Good, C=Fair, D=Weak, E=Very Weak. Plus sign=top third of grade range; minus sign=bottom third. According to a 1994 GAO study of Weiss Ratings scale, a Weiss Rating of D+ or lower is considered "vulnerable."

However, among those Weiss Ratings includes in its "strongest" list, there is only one with $100 billion or more in assets -- State Street Bank & Trust -- which does not generally accept consumer deposits, while Goldman Sachs Bank USA, with $91 billion in assets, also serves mostly brokerage customers. As shown in the table below, all of the remaining strong banks are far smaller, with the largest among them, Silicon Valley Bank, controlling only $12.2 billion in assets.

Strongest U.S. Banks and Thrifts
(with a Weiss Rating of B+ or higher and assets of $2 billion or more; 12/31/09 data)
Institution City State Weiss Rating Assets ($bil)
State Street Bank & Trust Co* Boston MA B+ 153.7
Goldman Sachs Bank USA** New York NY B+ 91.0
Silicon Valley Bank Santa Clara CA B+ 12.2
GE Capital Financial Inc Salt Lake City UT A- 9.5
Sallie Mae Bank Murray UT B+ 7.6
Farmers & Merch Bk Long Beach Long Beach CA B+ 4.0
Nationwide Bank Columbus OH A- 3.2
Woodforest National Bank Houston TX A 3.2
Liberty Bank Middletown CT B+ 3.1
Bank of The Ozarks Little Rock AR A- 2.8
First National Bank Alaska Anchorage AK B+ 2.7
First Financial Bank NA Terre Haute IN B+ 2.4
American State Bank Lubbock TX A- 2.4
Broadway National Bank San Antonio TX A- 2.2
Bankplus Belzoni MS B+ 2.1
World Financial Network NA Columbus OH A 2.1
Burke & Herbert Bank & Trust Co Alexandria VA A- 2.0

Weiss Ratings Scale: A=Excellent, B=Good, C=Fair, D=Weak, E=Very Weak. Plus sign=top third of grade range; minus sign=bottom third.
* does not generally accept consumer deposits
** accepts primarily deposits from brokerage customers

Even if a bank is bailed out or taken over by the FDIC and sold to another institution, consumers can miss out on promised interest income, lose access to lines of credit and suffer other serious inconveniences. Therefore, Weiss recommends that consumers seriously consider avoiding banks with a Weiss Rating of D+ or lower, while seeking to do most of their business with banks meriting a rating of B+ or higher. Consumers can receive a free list of the strongest and weakest banks, with their ratings, by providing their email address at

About Weiss Ratings
Weiss Ratings accepts no payments for its ratings from rated institutions. It is among the nation's leading providers of independent ratings on 8,000 U.S. banks and S&Ls and the only provider of independent ratings on the nation's 4,200 insurance companies. Weiss Ratings also distributes independent ratings on the shares of thousands of publicly traded companies, mutual funds, closed-end funds and ETFs. 

Weiss identified, in advance, nearly all major banks that failed or required a federal bailout in the 2008-2009 debt crisis. (See Weiss Warnings of Financial Failures in Debt Crisis of 2008-2009.)

Separately, Weiss outperformed Standard and Poor's, Moody's, A.M. Best and Duff & Phelps (now Fitch) in warning of future life and health insurance company failures according to a landmark study by the U.S. Government Accountability Office (GAO), while also outperforming its competitors in identifying the strongest insurers, according to its follow-up study using the GAO's research methodology. According to a leading consumer publication's May 2009 study of life insurance ratings by Fitch, Moody's, S&P, A.M Best and Weiss Ratings, Weiss Ratings (formerly Ratings) "was the toughest grader with independent and objective ratings."

Thanks to its strong track record and independence, The New York Times wrote that Weiss
was "the first to see the dangers and say so unambiguously;" Barron's wrote that Weiss is "the leader in identifying vulnerable companies;" and Esquire concluded that Weiss Ratings is "the one company [that] ... provides financial grades free of any conflicts of interest."

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