Arizona’s banks are entering the new year in good financial shape, judging from the latest ratings from Florida-based Bauer Financial.

Bauer ratings for all banks and credit unions operating in Southern Arizona were unchanged in the third quarter, while two previously troubled Tucson-area banks, Canyon Community Bank and Commerce Bank of Arizona, retained their three-star, “adequate” Bauer ratings.

As of the end of the third quarter of 2018, about 73 percent of banks operating in Arizona were “recommended” by Bauer — earning the top ratings of “superior” or “excellent” — down slightly from the same period in 2017, while none were rated “troubled” or “problematic” in Bauer’s closely watched ratings.

Nationally, 90.5 percent of banks were recommended, while 2.1 percent were troubled or problematic.

For the first time in 12 years, no U.S. banks failed last year, Bauer said.

Arizona’s credit unions showed improved strength, with 83 percent top-rated in the third quarter compared with 81 percent a year ago.

Among locally based banks, Canyon Community Bank kept its three-star, adequate rating despite posting a $236,000 third-quarter net loss.

Canyon had Bauer’s one-star rating as recently as 2016 but has recovered after raising $9.5 million from a Texas investment holding company to meet a regulatory order to raise capital reserves. Canyon is one of the state’s most highly capitalized banks and has one of the lowest percentages of nonperforming assets.

Commerce Bank of Arizona, Tucson’s only fully locally owned bank, also kept its three-star rating after posting income of $404,000 in the third quarter.

Commerce had sunk to zero stars in 2016 under Bauer’s rating system, but the bank raised $13 million from local investors to satisfy regulatory orders by state and federal regulators.

Meanwhile, Southern Arizona credit unions remained sound, with locally based Vantage West, Hughes Federal, Pima Federal, Tucson Federal and Pyramid Federal all keeping their five-star, superior ratings.

About 5 percent of the state’s credit unions were rated troubled or problematic, with First American Credit Union in Casa Grande and Ray Federal Credit Union in Kearny rated two stars by Bauer.

Contact senior reporter David Wichner at dwichner@tucson.com or 573-4181. On Twitter: @dwichner. On Facebook: Facebook.com/DailyStarBiz

Senior reporter covering business and technology for the Arizona Daily Star/Tucson.com