Safety Ratings of Banks Improving

Safety Ratings of Banks Improving

Good news for consumers who have their accounts at previously-troubled banks: bank safety ratings are improving, new figures show.

Bauer Financial, a Florida-based research firm that tracks the financial health of banks and credit unions, says the number of U.S. banks listed in its Troubled and Problematic Bank Report has fallen below 10 percent for the first time since 2008.

The report, based on September 30, 2012 financial data, rates banks on a five-star scale. Troubled banks have two or less stars.

While the vast majority of institutions retained the same rating as last quarter, of those that changed, more than 60 percent saw improvements. Over 68 percent of the nation's banks are now rated with either 5-stars or 4-stars, the highest ratings.

The number of bank failures is declining, but there have not been new charters to replace institutions that have merged. In fact, the last bank start-up charter was issued in 2010, according to Bauer.

In contrast, National Credit Union Administration chartered four new credit unions last year. In addition, four credit unions have acquired assets that were formerly held by a bank.

The number of banks and credit unions continues to decline--banks fell 3.5 percent last year while credit unions declined 4 percent--but they are also getting stronger, according to Bauer.