Are Stillwater Banks in Trouble?
- February 27, 2010 - by Ben Goheen, in General, with no comments -
The FDIC has closed 161 banks since the beginning of 2009, nine of which were in Minnesota. A tight lip is kept on which banks are in serious trouble - find out if any Stillwater banks are on the list.
The Federal Deposit Insurance Corporation (FDIC) has closed 161 banks since the beginning of last year, nine of which were in Minnesota. A tight lip is kept on which banks are in serious trouble. BankTracker, a site run by MSNBC and American University, helps check their status.
While it is not an official FDIC statistic, nor is it intended as a definitive predictor of the likelihood of bank failure, the troubled asset ratio apparently is a strong indicator of severe stress inside a bank because it shows the bank’s ability to withstand loan losses.
A high ratio means a bank had more troubled loans than money set aside to cover potential losses. Nearly all banks that have failed had a troubled asset ratio of more than 100%.
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First State Bank & Trust Q4 Troubled Asset Ratio: 17.6% Q3 Troubled Asset Ratio: 19.8% Q2 Troubled Asset Ratio: 13.4% Q1 Troubled Asset Ratio: 17.3% Headquarters: Bayport, MN |
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Bremer Bank Q4 Troubled Asset Ratio: 19.6% Q3 Troubled Asset Ratio: 21.7% Q2 Troubled Asset Ratio: 22.4% Q1 Troubled Asset Ratio: 22.4% Headquarters: South St. Paul, MN |
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Central Bank Q4 Troubled Asset Ratio: 42.4% Q3 Troubled Asset Ratio: 42.3% Q2 Troubled Asset Ratio: 6.8% Q1 Troubled Asset Ratio: 8.6% Headquarters: Stillwater, MN |
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Lake Elmo Bank Q4 Troubled Asset Ratio: 51.0% Q3 Troubled Asset Ratio: 43.9% Q2 Troubled Asset Ratio: 45.3% Q1 Troubled Asset Ratio: 41.1% Headquarters: Lake Elmo, MN |
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Lake Area Bank Q4 Troubled Asset Ratio: 90.6% Q3 Troubled Asset Ratio: 90.8% Q2 Troubled Asset Ratio: 92.6% Q1 Troubled Asset Ratio: 54.7% Headquarters: Lindstrom, MN |
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Eagle Valley Bank Q4 Troubled Asset Ratio: 105.4% Q3 Troubled Asset Ratio: 83.6% Q2 Troubled Asset Ratio: 79.2% Q1 Troubled Asset Ratio: 44.1% Headquarters: St. Croix Falls, WI |
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Jennings State Bank Failed: Oct. 2, 2009 Q3 Troubled Asset Ratio: 489.8% Q2 Troubled Asset Ratio: 411.3% Q1 Troubled Asset Ratio: 254.6% Headquarters: Spring Grove, MN |
The National median ratio is around 15% – 20%. So First State Bank & Trust and Bremer are the only local institutions in this range.
Not all banks with a high troubled asset ratio fail – they must be evaluated separately. In some cases the owners can inject additional capital to strengthen the bank. Other times they’re able to bring loans current and repay them.
What should you do if your bank has a high troubled asset ratio? The short answer is “nothing.” The FDIC covers all deposits up to $250,000 and no investor has lost any insured deposits since the FDIC went into business in 1935.
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What are you thoughts about local banks?