Bank and Credit Union Safety Ratings Continue to Improve

Bank and Credit Union Safety Ratings Continue to Improve

The financial health of the nation’s banks and credit unions ended 2012 at the highest level since the recent economic downturn began five years earlier, new figures show.

Bank and credit union ratings from Bauer Financial, a Florida-based bank research firm, found that 69.5 percent of banks were recommended by Bauer, receiving four or five stars. That is the highest percentage since the fourth quarter of 2007.

Only eight banks failed during the fourth quarter of 2012, while 43 improved enough financially to be removed from Bauer’s troubled and the problematic designations (one or two stars). Excluding three banks that have failed so far in 2013, the number of banks labeled by Bauer as “troubled and problematic” now stands at 663, the lowest level since the fourth quarter of 2008.

The financial safety ratings of banks vary widely based on the state.

In North Dakota, 87.8 percent of banks were recommended (4 or 5 stars) by Bauer, while only 1.1 percent were labeled troubled and problematic (1 or 2 stars). In New Hampshire, 95 percent of banks were recommended by Bauer while 0 percent were troubled or problematic.

On the flip side, only 37.9 percent of banks in Arizona received 4 or 5 stars, while 20.7 percent were troubled or problematic. In Florida, a state hit hard by bank failures, 38.5 percent of banks were recommended while 34.1 percent received 1 or 2 stars. In Georgia, 35.2 percent of banks were recommended by Bauer while 33 percent were labeled troubled or problematic.

Credit unions continue to be in better financial shape than banks. About 76.1 percent of credit unions earned Bauer’s recommended status with four or five stars in the fourth quarter of 2012. This was the third straight quarter where the number of recommended banks exceeded 75 percent.

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