A couple of the largest banks on the Unofficial Problem Bank List – in terms of assets – are in Puerto Rico. We haven’t seen any bank failures in Puerto Rico yet this cycle, but according to the following report that is about to change …

From José Carmona and John Marino at caribbeanbusinesspr.com: Feds expected to take action against island banks next month

Federal regulators are likely to begin taking action against troubled island banks sometime next month, government and industry sources told CARIBBEAN BUSINESS.

Since the beginning of the year, the Federal Deposit Insurance Corp. (FDIC) has been beefing up its local ranks, recruiting accountants and auditors, leading to speculation about imminent action during this year’s first quarter.
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There are three local banks operating under FDIC cease & desist orders—R-G Premier Bank, Eurobank and Westernbank.
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According to reliable industry sources, one of the three local institutions under cease & desist orders will most likely fall into receivership status under the FDIC due to its inability to raise capital, while the other two will probably survive through consolidation.

As of Q3 2009, Westernbank had $13.4 billion in assets, R-G Premier Bank had $6.4 billion and Eurobank had $2.8 billion in assets.

And from David Johnson at Contrarian Pundit: Tamalpais Bank Update

The bad news has continued for Tamalpais Bank since I broke the story last December that the institution had lent the equivalent of almost all its capital to the highly leveraged, publicly excoriated, and increasingly broke Lembi Group in the middle of the 2008 real estate crash. In January, the Federal Reserve took enforcement action against the parent company, following up on the bank’s cease and desist order from the FDIC last September. And on February 16, the bank announced total losses of $26.2 million for the last quarter and $37.6 million for 2009.

As grim as the news has been, the bank may be in even worse shape than acknowledged in media reports.

… the bank is currently in violation of the terms of the FDIC’s cease and desist order.

And in an update, David points out the bank has just received a “Prompt Corrective Action” giving the bank a March 21st deadline. Tamalpais had about $700 million in assets as of Q3.