Aug. 10--With a large California regional bank failing and two other Western ones saved from closure through a forced sale brokered by the Federal Deposit Insurance Corp., it's understandable that people might worry about the stability of their own bank.

Texas has seen it all before, with scores of institutions going under during the infamous savings-and-loan crisis of the mid-1980s.

But this time around, the Lone Star State is giving every appearance of being one of the more solid regions when it comes to down-home banking.

"This state and bordering states like Oklahoma and Louisiana are to a large extent escaping the worst of the subprime mortgage and [tight] credit impact," said John Blaylock of Sheshunoff & Co., an Austin investment bank that consults in mergers and acquisitions involving commercial banks and S&Ls.

"In Texas, what a difference 20 years makes," Blaylock said.

"In 1988, there were a couple of hundred bank closures with about $150 billion in assets. Two decades later, we're in what I'd have to say is the diametric opposite position because the state's economy is strong.

"Energy is doing well and, because of tremendous in-migration, the economy has become much more diversified," he said.

To be sure, however, there are pockets of softness like housing in the Metroplex and high foreclosures. And there is always the odd bank out there that did everything wrong, he said.

But the quality of bank assets appears consistently strong throughout the state, Blaylock said.

"To sum it up, the banking industry in this state is probably the healthiest in the nation."

'How to adjust'

Frost Bank, owned by publicly traded Cullen/Frost Bankers, reported solid second-quarter earnings last month, although down slightly in comparison with the same period last year, $52.5 million in net income versus $53.6 million.

Fortuitously, the San Antonio-based bank left the troubled mortgage industry seven years ago and its home-builder portfolio is limited to Texas developers with just 10 percent committed to the "starter home" market.

"While we're feeling some pressure on the housing front, Texas has been somewhat insulated from the housing crunch felt across the nation, partly because our economy continues to grow here, partly because Texas builders have been through harder times than this and we both know how to adjust," Chief Executive Richard Evans told analysts late last month.

Are your assets safe?

Not all banks are created equal. And should yours prove to be the exception in Texas, depositors are covered for up to $100,000 by the Federal Deposit Insurance Corp.

Depending upon how the accounts are set up, the FDIC will insure up to that amount regardless of how many different accounts are held at a single bank.

Scott MacDonald, director of Southern Methodist University's graduate school of banking, said that state banks operate quite differently from the big national players that have gotten burned on a number of fronts.

"A bank is not a bank is not a bank," MacDonald cautioned. "The Citis, Bank of Americas and Wells Fargos operate under different banking models from state banks. These average banks were not heavily involved in the securitization [of subprime mortgages]."

"There's no question that some banks are more heavily dependent on mortgages and real estate development, but not all, not the majority. For those that did, these loans were a small percentage of their balance sheet. So they've been able to weather the storm."

And there are exceptions, he said, citing a northwest Arkansas bank that dabbled in the Las Vegas market, "which it didn't understand."

"I am not worried about the average bank in the state of Texas," MacDonald said. "A few might have some problems because it's not the greatest time for the country, but not anywhere close to what we saw in the '80s."

Limits on FDIC coverage of different types of deposits explained

Can I increase my insurance coverage by dividing my deposits into several different accounts at the same insured bank?

Maybe. Deposit insurance coverage can be increased only if the accounts are held in different categories of ownership. These categories include single accounts, retirement accounts, joint accounts and revocable-trust accounts.

Can I increase coverage for my joint accounts by using a different co-owner's Social Security number on each account or changing the way the owners' names are listed on the accounts?

No. Using different Social Security numbers, rearranging the order of names listed on accounts or substituting "and" for "or" in joint account titles does not affect the amount of insurance coverage available to co-owners of joint accounts.

Does FDIC insurance protect creditors and shareholders?

No. FDIC insurance only protects deposits. Shareholders usually are wiped out in a bank failure, and creditors are paid based on the bank's available assets.

Does the FDIC insure all investments sold by an insured bank?

No. The FDIC does not insure the money invested in stocks, bonds, mutual funds, life-insurance policies, annuities, or municipal securities, even if they were bought from an insured bank. It also does not insure U.S. Treasury bills, bonds or notes, but those are backed by the full faith and credit of the U.S. government.

Can I increase my insurance coverage by placing deposits with different insured banks?

Yes. Deposits with each FDIC-insured bank are insured separately from deposits at another insured bank. However, all branches of a bank are considered one; a depositor cannot increase insurance coverage by placing deposits at different branches of the same insured bank.

What if I also have money deposited in my bank's Internet unit?

Deposits held with the Internet division of an insured bank are considered the same as deposits with the "brick and mortar" part of the bank, even if the Internet division uses a different name. If two banks are affiliated, such as having a common holding company, but are separately chartered, deposits in each bank would be separately insured.

Does the FDIC insure an unpaid cashier's check, interest check, money order or expense check issued by an insured bank?

If a depositor holds one or more of these items from an insured bank, and the insured bank fails before the item is cleared, the FDIC will add the item to any other deposits held in the same ownership category at the same insured bank. For example, an outstanding interest check payable to a depositor will be added to the depositor's other single ownership accounts, if any, and the total insured up to $100,000.

Does the FDIC insure safe-deposit boxes if a bank fails?

No. The FDIC does not insure safe-deposit boxes or their contents. In the event of a bank failure, the FDIC in most cases arranges for an acquiring bank to take over the failed bank's offices, including locations with safe-deposit boxes. If no acquirer is found, box holders would be sent instructions for removing the contents of their boxes.

Source: Federal Deposit Insurance Corporation

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Story Source: Fort Worth Star-Telegram (Fort Worth, Texas)