Thousands of US Banks Remain Vulnerable to Financial Difficulties Despite Federal Bailout

Twenty months after the $700 billion federal bailout designed to shore up the nation's largest banks, Weiss Ratings finds that thousands of US banks are still vulnerable to financial difficulties or even possible failure. The analysis considers banks' capital, asset quality, earnings, and other factors. Among the 2,259 US banks and S&Ls controlling $5.8 trillion, or 43.8% of the industry's total assets, 962 institutions are viewed as strong enough to be recommended to consumers, receiving a rating of B+ (good) or higher.

Key Takeaways:

Weiss Ratings has identified 2,259 US banks and S&Ls controlling $5.8 trillion, or 43.8% of the industry's total assets, as vulnerable to financial difficulties or possible failure, earning a Weiss Financial Strength Rating of D+ (weak) or lower.
Only 962 institutions, with $484 billion, or 3.7% of the industry's assets, are considered strong enough to be recommended to consumers, receiving a rating of B+ (good) or higher.
Martin D. Weiss, chairman of Weiss Ratings, stated that major US banks are plagued by toxic assets and an inability to raise capital, leading to 73 bank failures in 2010, more than double last year's pace.
The failure rate could rise sharply if the US experiences any further economic or financial adversity.
The largest vulnerable banks have $25 billion or more in assets, among which seven have $100 billion or more.
Among the strongest banks, there is only one with $100 billion or more in assets, State Street Bank & Trust, which does not generally accept consumer deposits.
Weiss Ratings recommends consumers avoid banks with a Weiss Rating of D+ or lower and seek to do business with banks meriting a rating of B+ or higher.

Statistics:

2,259 US banks and S&Ls, controlling $5.8 trillion, or 43.8% of the industry's total assets, are considered vulnerable to financial difficulties or possible failure (Weiss Ratings).
Only 962 institutions, with $484 billion, or 3.7% of the industry's assets, are considered strong enough to be recommended to consumers (Weiss Ratings).
73 bank failures in 2010 (Weiss Ratings).
1 year (2009) vs. 73 bank failures in 2010, more than double last year's pace (Martin D. Weiss, chairman of Weiss Ratings).
$700 billion federal bailout (various sources).
1994 GAO study: a Weiss Rating of D+ or lower is considered "vulnerable" (Weiss Ratings).

Sources:

Weiss Ratings Accepts No Payments for Its Ratings from Rated Institutions (Weiss Ratings).
Weiss Warnings of Financial Failures in Debt Crisis of 2008-2009 (Weiss Ratings).
GAO Study: Weiss Ratings Outperformed Competitors in Warning of Future Life and Health Insurance Company Failures (GAO).
Leading Consumer Publication Study: Weiss Ratings "Was the Toughest Grader with Independent and Objective Ratings" (Fitch, Moody's, S&P, A.M Best, and Weiss Ratings).
The New York Times: Weiss Was "The First to See the Dangers and Say So Unambiguously" (The New York Times).
Barron's: Weiss is "The Leader in Identifying Vulnerable Companies" (Barron's).
Esquire: Weiss Ratings is "The One Company That ... Provides Financial Grades Free of Any Conflicts of Interest" (Esquire).