Newspaper article THE JOURNAL RECORD

Undercapitalized Bank List Includes 2 OKC Institutions

Newspaper article THE JOURNAL RECORD

Undercapitalized Bank List Includes 2 OKC Institutions

Article excerpt

By Nancy Raiden Titus

Journal Record Staff Reporter

Two metro Oklahoma City banks were included on a list of 93 critically undercapitalized banks that would require federal action under new rules to become effective later this year.

First Security Bank Trust Co. in Oklahoma City and Exchange National Bank in Moore, along with three other Oklahoma banks, were on the list published in Bauer Communications Inc.'s Aug. 17 "Jumbo Rate News."

The list was compiled by Bauer Financial Reports Inc., of Coral Gables, Fla., using first quarter data and criteria in the 1991 Federal Deposit Insurance Corp. Improvement Act.

Only half of the Oklahoma banks that in July had received Bauer's lowest rating _ no stars _ were on the list, which also included two other banks that had been given higher ratings.

The reason for the discrepancy was partly attributed to Bauer's policy of projecting negative trends into the future in its star ratings to compensate for lag time in data from regulators.

"Our star ratings are more conservative than most people's," said Karen L. Dorway, Bauer director of research. "A zeroar bank might have capital in excess of the minimums, but due to the institution losing money or its nonperforming assets, we rate it lower."

On Dec. 19, the FDIC Improvement Act will require regulators to take action within 90 days of a bank becoming critically undercapitalized. It also requires that a receiver be appointed within nine months if the bank is still critically undercapitalized unless it is in compliance with a capital restoration plan.

The act categorizes critically undercapitalized banks as those with tangible equity ratios of less than 2 percent or leverage capital ratios of less than 65 percent of the required minimum level. Minimum levels are determined by regulatory ratings which are not disclosed for specific banks.

Bauer included banks on its list with tangible equity ratios of less than 2 percent or leverage capital ratios of 3.25 percent or less.

First Security and Exchange National both received zeroar ratings by Bauer and were included on its Troubled Bank List.

First Security had a leverage capital ratio of 2. …

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