Healthy Banks Stand Ready to PIck Up the Pieces After Mega Banks Fall


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EDITOR’S COMMENT: The lie is that if the mega Banks fail, so will the country. The Truth is that we have over 7,000 other Financial Institutions that can pick up the pieces and deliver banking services for a fraction of the cost now charged to customers. Here is a report on ten of them.

NEW YORK (TheStreet) — TheStreet has identified the 10 most efficient actively traded U.S. bank and thrift holding companies.

The list includes the 10 bank and thrift holding companies with the lowest third-quarter overhead expense — as a percentage of operating revenue — among industry names with three-month average daily trading volume of at least 50,000 shares. Data was provided by SNL Financial.

Back in November of 2010, we identified a similar list of efficient and profitable banks and thrifts, with the lowest (best) efficiency ratios, and while only three had positive stock market returns during 2011, six of the names beat the performance of the KBW Bank Index (I:BKX_) dropped 25% for the year.

Looking at the remaining four of our original list of 10 actively traded, efficient and profitable bank and thrift holding companies, the worst performer was Wilshire Bancorp (WIBC_) of Los Angeles, with shares declining 52% during 2011, as the company continued trimming its balance sheet and raised $109 million in common equity during the second quarter.

Right behind Wilshire was Hudson City Bancorp (HCBK_), with shares dropping 49%, following a first-quarter balance sheet restructuring that was forced by regulators, after the company’s long-term strategy of leveraging wholesale borrowings by investing in securities, backfired in the prolonged low-rate environment.

Meanwhile, Shares of New York Community Bancorp (NYB_) had a negative return of 30% during 2011, with the decline partly reflecting concerns of a high dividend payout ratio. The company has maintained its 25-cent dividend for 31 consecutive quarters, but it paid out 91% of what it earned, during the first three quarters of 2011.

Rounding out our previous list of 10 efficient banks and thrifts, Nara Bancorp of Los Angeles in December merged with its hometown competitor Center Financial to form BBCN Bancorp (BBCN_).

Our updated list of 10 efficient and profitable U.S. banks includes seven of the names featured on last year’s list. While we have seen that this method of picking bank stocks was a mixed bag, 2011 was a terrible year for most bank stocks, and half of the names on the new list had positive returns last year.

The efficiency ratio is, effectively, the number of pennies of overhead expense for each dollar of a bank’s revenue, with adjustments made for certain items. SNL defines the efficiency ratio as noninterest expense (before foreclosed property expense, amortization of intangibles, and goodwill impairments) divided by the sum of net interest income and noninterest revenues (excluding gains from securities transactions and nonrecurring items).

The 10 names on the new list reported decent or better operating earnings for the third-quarter, with seven of companies beating the industry’s aggregate return on assets of 1.03%, as reported by the Federal Deposit Insurance Corp. Several of the stocks feature attractive dividend yields.

Here’s the new list of 10 efficient and profitable banks, in descending order by efficiency ratio.

  1. Washington Federal
  2. Hudson City Bancorp
  3. Oritani Financial
  4. Signature Bank
  5. State Bank Financial
  6. Prosperity Bancshares
  7. Westamerica Bancorp
  8. Dime Community Bank
  9. Investors Bancorp
  10. BankUnited, Inc.


13 Responses


    That article was jaw-dropping to me for so many reasons, but the one that stands out the most is…the govt is now blatently setting investors to buy “dirty” titles. I really hope people do their homework on this one…

    Their best bet is to buy foreclosures directly from the homeowner with some hefty indemities… risky but it surely can’t be as risky as buying from an entity who was never a party to the transaction…

  2. Johngault or any other MERS experts- can an out-of-business entity be a MERS member? Hard as I tried, I can’t seem to find any relevant info.
    Next question- doesn’t an allonge have to be dated?

  3. Enraged,

    Nothing has been investigated or disclosed. Obama covering up — or agencies/officials are covering up to him.

    Fraud is deep and dark, and yet to be exposed.

  4. Anonymous,

    It will come to that. People are much too fed up. I’m getting there….

    And that would be the lesser of two evils. ‘Cuz if it ends up blowing up, it ain’t gona be pretty.

  5. Make It Happen,

    Think we need a class action against the Treasury Department, Federal Reserve, HUD, FDIC, Fannie Mae and Freddie Mac, with their conservator, the Federal Housing Finance Agency (FHFA).

    Any attorneys game?? Much information — not disclosed.

  6. chris

    What they count on is that no one will get the evidence. Government protects. Deregulation. They were not required to divulge anything they did not want to divulge. Not pretty. Have to show why it is not what they claim.

  7. Some of these — not so efficient. But, nice idea.

  8. Yes, I looked in the SEC Edgar Files, BK papers and audit of New Century. Cannot find my loan number anywhere. My loan closed on February 27, 2007, just after multiple cease and desist orders from various states and around the time of the BK filing.

    I am reasonably sure the loan was not funded, nor put in any trust, but I need evidence. So far, naught! Any ideas? Right now I am suing Ocwen and New Century…pending Federal Court case and they are trying to get an order in District Court, while this suit is in the system to foreclose. Friday; filed an injuction, restraining order and Lis Pendens. Keeping my fingers crossed, as my Federal Case could be thrown out.

  9. “Of all the big financial institutions, BoA is one of the most reviled—and if you want to know exactly why, there’s a new one-stop shop for all your grievances. Put together by the Rainforest Action Network in tandem with New Bottom Line, the “Bankrupting America” Tumblr is meant to highlight the worst of the worst, including your story (anyone’s invited to submit).”

  10. @chris

    Did state that you could not find you loan with New Century. I am having the same problem.

  11. We haven’t even seen the TBTF go down that the cycle seems to start again.

    Doesn’t that bother anyone that, even though the body isn’t even cold yet, banks start merging all over again? Nara Bancorps and Center Financial just merged to create BBNC? Why?

    I can remember in the early 1990s when local banks (Shawmut of Boston) started being absorbed by Bank of Boston, which merged with Bay Bank which merged with… etc. etc. And before we knew it, we were all engulfed in the S & L scandal and now, the mortgage scandal.

    And anyway, last year’s list isn’t even accurate anymore. $ banks from the list went down… a lot! Shouldn’t that tell us something?

    Bigger is NOT better! Let’s go back to small, local, where clients are both the investors and borrowers and where the only middleman is the credit mutual… owned by both as members!

    Then, the money keeps going round and round and round and it builds and strenghtens the community!!!

  12. Selling them again? Wow…I hope they discount mine to the bulk price…

  13. Government Set to Sell Foreclosures in Bulk

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