When the FDIC evaluates a bank’s heath they use the CAMELS rating system. CAMELS stands for Capital adequacy, Assets, Management, Earnings, Liquidity and Sensitivity. The FDIC’s CAMELS scores are confidential between the regulator and the banks. Below a certain rating the FDIC determines that it’s better to close an institution rather than keep them open.
I decided to run two queries against the database to detect banks that have a high likelihood of failing in the next few quarters. The first was for banks that were losing money and had inadequate capital levels. I looked for banks with extremely inadequate capital levels. The banks I found are all struggling with bad loans and high charge-offs:
The second was a query of holding companies looking for ones with less than 3% in capital, non-performing assets to assets greater than 5%, and a Texas ratio greater than 140%. The search came back with 30 holding companies that met this criteria. These companies are shown below:
These are just lists of banks with low capital levels and problem loans. Some of these banks might recover and disappear from a problem bank list. Others might raise outside capital and live to fight another day.