Wachovia Bank is no more

[Count Chocula]

Bob Steel, Wachovia president, sent out a rah-rah letter in July before everything went kablooie. For shits and grins, here's a link to his letter. The funniest statement: "Wachovia is on solid footing and is strong at the core." I guess the core was only about 3% of the whole apple.

As far as a list of troubled banks goes, publicly available data seems to be unavailable and any Google-fu links are based on analysis of various factors. That said, here's a list of ten banks from this site:

Written by nickel - 7 Comments
Did you know that the FDIC maintains a list of troubled banks that are at greatest risk of failure? While the contents of that list are a secret, the data used to create it are publicly available. As such, a number of private research groups and analysts have compiled lists of their own. Such lists typically use the so-called “Texas Ratio,” which compares a bank’s assets and reserves to its non-performing loans, to identify risky banks.

Based on what happened during the Savings and Loan debacle in Texas back in the 1980s, analysts consider banks with a ratio over 100% to be at greatest risk. Here’s a rundown of the ten riskiest banks* according to Research Associates of America.

Colorado Federal Savings Bank (Greenwood Village, CO; 244.8 )
Eastern Savings Bank, FSB (Hunt Valley, MD; 222.7)
Integrity Bank (Alpharetta, GA; 191.6)
Ameribank, Inc. (Welch, WV; 153.7)
First Priority Bank (Bradenton, FL; 122.6)
First Security National Bank (Norcross, GA; 112.1)
Magnet Bank (Salt Lake City, UT; 110.4)
Security Pacific Bank (Los Angeles, CA; 102.8 )
First National Bank of Brookfield (Brookfield, IL; 102.1)
The State Bank of Lebo (Lebo, KS; 100.6)
While the Texas Ratio isn’t an absolute predictor of trouble, the former leader on this list (ANB Financial National Association, with a score of 344) failed earlier this year and has since been taken over by another bank. The good news is that all of the banks on this list are insured by the FDIC, and there aren’t any really big name banks listed here. Nonetheless, it appears that bank failures are rise so, if you have money at a listed institution, you might want to consider moving your money to a safer bank.

*Based on FDIC data from March 2008.

Source: ABC News via My Two Dollars

CNNMoney.com reported in late August that

Problem bank list keeps growing

FDIC says list of troubled banks in 2nd quarter grows to 117 with $78 billion in assets - up from 90 banks, $26 billion in assets in 1st quarter.

link.

Of course, the FDIC won't say who those banks are! Fuckers.

[Ekiqa]

The Charlotte, N.C.-based bank reported a net loss after paying preferred dividends of $23.89 billion, or $11.18 per share, in the period ended Sept. 30, compared with earnings of $1.62 billion, or 85 cents per share, a year earlier.

They still paid dividends despite losing money? I thought dividends were posted only when the company turned a profit?

And how much of the loss was due to bonuses and salaries of executives?

[The Duchess of Zeon]

The Charlotte, N.C.-based bank reported a net loss after paying preferred dividends of $23.89 billion, or $11.18 per share, in the period ended Sept. 30, compared with earnings of $1.62 billion, or 85 cents per share, a year earlier.

They still paid dividends despite losing money? I thought dividends were posted only when the company turned a profit?

And how much of the loss was due to bonuses and salaries of executives?

Not in modern day America--the shareholders would be unhappy if they didn't get their dividends! Ra Ra Capitalism!

[Gerald Tarrant]

The Charlotte, N.C.-based bank reported a net loss after paying preferred dividends of $23.89 billion, or $11.18 per share, in the period ended Sept. 30, compared with earnings of $1.62 billion, or 85 cents per share, a year earlier.

They still paid dividends despite losing money? I thought dividends were posted only when the company turned a profit?

J refers to Preferred stock dividends. Preferred stock and common stock are very different.

Preferred stock typically guarantees the payments of a certain value of dividends, it's almost like an interest payment. They're taxed differently, so preferred stock dividends aren't technically debt service; but most Preferred stocks have have some sort of arrangement whereby unpaid dividends are carried to the next year. Think of Preferred Stock as slightly lower yielding bonds (due to taxation of dividends) with a lower priority claim on assets (in the event of bankruptcy).

[phongn]

They still paid dividends despite losing money? I thought dividends were posted only when the company turned a profit?

Dividends can be declared at any time. They're just normally done when times are profitable.

And how much of the loss was due to bonuses and salaries of executives?

Why don't you look up the data? I mean, it's not like you can't find it on the Internet.

Not in modern day America--the shareholders would be unhappy if they didn't get their dividends! Ra Ra Capitalism!

This is a somewhat unusual case: the majority of the losses are essentially to get it in better shape for Wells Fargo's pending acquisition of the company.

[J]

Speaking of Wells Fargo & Wachovia, we have this interesting tidbit...

Motley Fool link

Why Wells Fargo Really Wanted Wachovia
By Morgan Housel
October 21, 2008
Comment (1)
Recommend (9)

For Wachovia (NYSE: WB) shareholders, it may have seemed too good to be true. But it wasn't.

Just days after it essentially collapsed and Citigroup (NYSE: C) made an offer to buy its banking assets for $1 per share, Wells Fargo (NYSE: WFC) came out of nowhere, offering to buy the entire company for $7 per share with no help from the government. No backstop from the FDIC. No taxpayer intervention. Nothing. Just a good ol' fashioned buyout.

But why?

Why was Wells Fargo so eager to ante up a deal that was leaps and bounds sweeter than Citi was willing to pay? After all, Wells Fargo has a stellar reputation of keeping underwriting standards in check, so why would it want anything to do with a shoddy bank drowning in subprime mortgages?

Taxes. It was all about the taxes.

The day after Citigroup made its bid, the Treasury changed a tax rule that lets banks accelerate the losses and writedowns on banks they acquire against their own net income, offsetting the charges as tax write-offs.

Wells plans on writing off some $74 billion of Wachovia's $498 billion loan portfolio -- an insanely large amount that reflects just how poisoned Wachovia's books really were. With the new tax rules, it gets to use all of that $74 billion as a charge against its own net income, which means one thing: Wells Fargo's going to be a tax-write-off machine for years to come.

Just how much will it save? The Wall Street Journal, citing an independent tax analyst, estimates Wells Fargo could reap a tax savings of about $19.4 billion. To put that in perspective, the 0.1991 shares of its own stock Wells Fargo is offering Wachovia comes out to around $6.24 per share, or roughly $13.8 billion. Yes, Wells Fargo gets a $19.4 billion tax break for a company it'll pay just under $14 billion for (if the deal closed today).

In other words, Wells Fargo didn't pay anything for Wachovia: The IRS paid it more than $5 billion to take it. Who ever said you have to fear the taxman?

A couple implications of this: One, it's a good thing that at least some benefits are granted to companies willing to buy failed banks. After all, had Wells Fargo not stepped up to the plate, the existing deal with Citigroup could have stuck taxpayers with tens of billions of dollars in losses.

Nonetheless, let's keep in mind what these tax advantages are: yet another page in the bailout book. You might as well add these tax breaks as a stealth entry to the nearly $3.9 trillion or so already laid out to right the banking industry.

When will it ever end?

I knew something was fishy. It's basically another Bear Stearns bailout, the government pays the "chosen ones" to do their buyouts and "save the economy", all at taxpayer expense.

[Ekiqa]

Why don't you look up the data? I mean, it's not like you can't find it on the Internet.

Except that that page doesn't list what they spent on salaries, only what they lost to the A.G. Edwards merger, and the financial crisis. Nothing at all about how they are padding their pockets.

[phongn]

Except that that page doesn't list what they spent on salaries, only what they lost to the A.G. Edwards merger, and the financial crisis. Nothing at all about how they are padding their pockets.

Overall salary data is in there as well.