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These Banks Are Worth Saving

by Debra Borchardt

As many larger players sweat the details of the next phase of the government's bailout efforts, several regional banks that have better weathered the storm look more worthy of saving.

Investors in giants Citigroup and Bank of America will hang on every word Tuesday, when Treasury Secretary Timothy Geithner is expected to unveil the Obama administration's plans to shore up the banking system. Both banks sold $45 billion stakes to the government and received billions of dollars more in guarantees on bad assets, allowing them to potentially benefit greatly

Many regional banks, however, haven't made the bad decisions that led to Citi or BofA receiving the government's ample help. They were conservative and steady. Save them. Ditch the losers.

Bank Directors magazine's recent 2008 bank performance scorecard, covering 150 banks, ranks seven mid-sized banks with assets ranging from $3 billion to $11 billion in its top 10.

These top bananas shied away from many of the financial products with fancy names like collateralized debt obligations and credit default swaps and stuck to traditional lending. By extending credit to businesses with sound credit histories, instead of lending heavily in real estate and construction, some of these banks are coming through the credit crisis in much better shape than more well known competitors.

Glacier Bancorp , headquartered in Montana with 94 branches, ranked at the top of the list. First Financial Bancorp , with only $3 billion in assets, came in at number two by maintaining close ties to its local community, allowing it to sniff out trouble with customers before it becomes a crisis.

SVB Financial Group , Bank of Hawaii and Westamerica Bancorp also made the list.

The government should focus on helping the midsize players who made good decisions, and help them make it through this crisis and thrive when we come out the other end.


The two biggest institutions in the top ten are Capital One and State Street . The measurement criteria and analysis was provided by Sandler O'Neill & Partners in New York.

By comparison, Citigroup was ranked 132 out of 150 banks.

So is Citigroup really worth saving? It made terrible hedge fund bets and then when those hedge funds went under told the investors they'd help them out. A hedge fund is risky. It should be clear going into it that an investor could lose everything. Who offers to help pay for a loss? That's crazy. Why should that kind of decision-making be saved?

Or better yet, Citigroup has cut credit lines on people with good credit or initiated crazy fees, according to a letter to a customer shared with Then on Feb. 3 it turns around and offers special credit card programs that "include expanded eligibility for balance-consolidation offers, targeted increases in credit lines and targeted new account originations." This company seems to have no clue what it is doing from one month to the next.

The federal government placed giant home lenders Fannie Mae and Freddie Mac into conservatorship in September. It may be time to do the same with Citi and BofA.

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