EvaBank in Eva, Alabama currently has a terrific 2.84 percent on a five year CD, but they've also got a zero star rating from Bauer Financial.

Speaking to several bank employees, including the CFO, underscored about what I thought was going on--it's all an issue of capital. Between development loans in the real estate bubble that went sour and an ongoing loss of capital due to the souring of the rest of the market, EvaBank is venting capital.


All lending is down on the year. Real estate loans down six percent, commercial down a crippling twenty four, individual down nineteen and agricultural down about ten. Real estate, however, did see a tiny hike this quarter, about half a percent.

Savings is pretty much up on the year--demand deposits, now and ATS accounts and other savings deposits are up, but money market deposit accounts are down. This is given them a bit of a cash cushion but at the same time represents a serious liability. If those balances were pulled it'd be death for this bank.

But the biggest problem here seemed to be on the balance sheet, average assets during quarter. It was down four and a half percent on this time last year, and that, at least to me, suggests a much more systemic problem. This Alabama bank didn't run amok on excessive real estate lending it can't collect (oh, that does play a role here, just not as big a role as many had to face), it's just slowly getting bled dry by loss of asset.

However, EvaBank tells me they're readying prospectuses to drive some new capital in place, although even this is tinged by the ongoing but largely unknown threat of the recent oil spill. But with growth falling and income falling with it, that goes a long way to suggesting why EvaBank of Eva, Alabama is a zero star bank. Still, even with this ranking, it's important to remember that EvaBank is an FDIC member, and thus, account holders are insured by the federal government for two hundred fifty thousand dollars.

We've been talking about First City Bank for some time now--they've had some nice rates on the Best Cash Cow CD and Savings lists--but their clearest problem is their abysmal rating on Bauer Financial. Bauer rates them a zero star, their lowest possible rating, and ranks First City Bank on their "Troubled and Problematic" Report.

I personally spoke to First City Bank's President and Chief Operating Officer, Robert E. Bennett Jr, who was willing to give me a quote about First City's poor ratings:

"I don't care about Bauer's rating; it's based on several ratios. They've never been in our bank or spoken to our people and I assure my customers on a daily basis that First City is a safe bank to work with."

Bennett is clearly optimistic about the bank, despite the poor ratings and accompanying numbers. What exactly drives his thinking on this score is unclear--he wasn't terribly willing to elaborate. But looking at the financials suggested a picture: their noncurrent loans made up roughly 20% of their loan portfolio.

We all know that Florida's been taking the deflation of the housing bubble hard, and it's showing in bank loans. Assets past due have grown from 5 million to 19 million over the past year.

But First City isn't relying on brokered deposits to fund its balance sheet. Those decreased over the past year from $21 million to $5 million. What stepped in instead were transaction accounts, presumably, interest bearing checking accounts. A look at their website shows low rate checking accounts, so First City isn't paying big rates on this funding. CDs also went up, and while this requires more cash to service in the form of higher rates, it also guarantees most of the money will stay for the term of the CD.

They're getting great new sources of funding, but with that boat anchor called real estate lending around its neck they're in a world of hurt. Unless they can stop those loan portfolio losses, the FDIC will likely have to step in. Thankfully, First City is FDIC insured--depositors are covered up to $250,000 per person regardless of what happens.

Allstate Bank (NYSE: ALL) is offering a huge array of CDs at decent rates.

Though none of them land on the BestCashCow CD Rates lists, they are still noteworthy in that they offer decent rates, low minimums (none of them require over a thousand dollars to start) and some unusual time lengths.

For instance, they offer a thirty day CD at .20 percent APY, which is a comparative rarity. Other more standard rates include a ninety day CD at .40 percent APY, a six month at .60 percent APY, one year at 1.10 percent APY, two year at 1.25 percent APY, three year at 1.60 percent APY, and five year at 2.30 percent APY.

You can get these by opening accounts with a "STAR" ATM, via ACH wire transfer, via direct deposit with Allstate Bank's routing number, contacting a local Allstate agent, going to www.allstatebank.com, or calling their toll free number on their website. Allstate Bank carries a "Good" three and a half star rating with Bauer Financial and is FDIC insured.

Credit for this find goes to www.bankvibe.com.