Hi All,

Yesterday afternoon I went by the bank to take of some business with our safety deposit box. Now, just to give you some background on why this is relevant – we bank with PNC. Its recently been having some problems in the DC area. By problems, I mean that its closing branches and having problems getting new depositors.

Well, when I went in there, they’d lost the paperwork for our box. It took the better part of 40 minutes to get things straightened out. Now, I’m not an expert but that’s a bad sign for PNC. – And more importantly its given me some cause for thinking about how to recognize a company that’s struggling. We don’t know much about retail banking but I think our experience with PNC bank and Washington Mutual(WaMu) shows that struggling banks can be identified by at least three factors.

1) Closing Branches:

We’ve banked with both PNC and Washington Mutual. Both of them have recently closed branches in the DC area. WaMu doesn’t have any retail places inside the beltway, but they have closed some of their mortgage lending branches.

2) Can’t Deliver Basic Services:

Case in point, my local PNC branch can’t keep their safety deposit records straight. While they were good enough to check my ID, its BAD when a bank can’t do basic stuff like that. Either the staff is not skilled or the management isn’t properly exercising oversight. Its the same story with Washington Mutual. We’ve had serious problems trying to get WaMu to do basic customer service: here, here and here.

In fact we’ve had so many problems with WaMu we might as well call this blog the “we hate Washington Mutual” blog rather than Dinksfinance.com…but I digress.

3) Slipping Stock Price:

Stock markets are meritocracies. All things being equal, companies which bring in more earnings have their share prices increase. In so far as earnings are a reflection of management’s ability to realize profits, declining share prices are indicative of a company with problems. Not surprisingly, both PNC and Washington Mutual have seen the value of their shares slip.

Food for thought, perhaps you can suggest additional criteria.

Best,

James

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