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Monday, September 26, 2011
One bank, Commerce Bank of Arizona, saw its rating drop from 5 stars, or "superior," to 4 stars, or "excellent."
Bauer, a Florida-based firm, rates financial institutions on a scale from 0 to 5 stars using quarterly reports filed with the Federal Deposit Insurance Corp.
The firm examines ratios of capital to risk-weighted assets, along with other factors.
In a statewide comparison of banks, Arizona had the second-highest percentage, 38.9, of troubled and problematic banks, according to Bauer. Only Florida, with 40.3 percent of its banks ranked troubled or problematic, was higher.
Randall Yenerich, the president and CEO of Commerce Bank, said most of the state's troubled banks are in the Phoenix area. While their financial problems stem from a variety of factors, a lot of it has to do with real estate loans that went bad when the market crashed.
"The primary problems were in the land development loans and the construction loans for either retail or commercial," Yenerich said.
Local banks have fared better during the downturn in the real-estate market because Tucson didn't see as much rapid growth as Phoenix. And the large developments here weren't usually funded by Southern Arizona banks.
As for Commerce Bank losing one star in its rating, Yenerich said it could have come from the purchase of Mesa's Towne Bank from the FDIC last year and because of costs incurred from opening an office in Scottsdale.
At the end of the second quarter, Commerce Bank had $269 million in assets, showed a loss of $408,000 for the quarter and had 7 percent nonperforming assets, according to Bauer.
Nonperforming assets include delinquent loans and repossessed real estate.
Bank of Tucson, which recently merged with Southern Arizona Community Bank, kept its "good" rating of 3 1/2 stars. It had $288 million in assets, a quarterly income of $148,000, and 1.8 percent of its assets nonperforming.
National Bank of Arizona - which showed $4.4 billion in assets, a quarterly income of $8.5 million and 4.2 percent nonperforming assets - kept its "adequate" rating of 3 stars.
The largest credit unions based in Tucson didn't see changes in their Bauer ratings. Vantage West retained a rating of 4 stars, or "excellent."
Hughes Federal and Pima Federal both kept their ratings of 5 stars, which is Bauer's highest.