Arizona banks and credit unions showed continued strength in the first quarter, though one Tucson-based bank posted a net loss, according to the latest bank ratings from Bauer Financial.
At the end of the first quarter, 73.3 percent of the 73 banks doing business in Arizona were “recommended” by Bauer after earning either the four-star “excellent” or the top, five-star or “superior” rating from the Florida-based research firm.
That’s up from 70.6 percent recommended in the first quarter of 2017 but still lags the 89.9 percent of banks nationally that are recommended by Bauer.
But Arizona had no banks rated “troubled” or “problematic,” compared with 1.8 percent of banks nationally that carry those one- or two-star Bauer ratings.
Arizona credit unions also got stronger overall in the first quarter, with the percentage of recommended institutions rising to 83.3 percent from 81.4 percent in the same period in 2017.
The Tucson area’s five biggest credit unions — Vantage West, Hughes Federal, Tucson Federal, Pima Federal and Pyramid Federal — maintained their top, five-star Bauer ratings.
Bauer rates banks based on their regulatory filings on factors including assets, reserve capital ratios and percentage of nonperforming assets such as delinquent loans.
Two Tucson-based banks that had slipped to Bauer’s lowest ratings after coming under regulatory orders to raise their capital reserves, Canyon Community Bank and Commerce Bank of Arizona, maintained their three-star “adequate” ratings.
Canyon Community Bank was one of two Arizona banks that reported losses in the first quarter, reporting a loss of $156,000 after posting a loss of $97,000 for all of 2017.
After raising $9.5 million from a Texas investment holding company in 2015, Canyon has the highest risk-based capital reserve in the state, and has maintained a low percentage of non-performing assets at 0.2 percent.
Canyon is still subject to a 2013 consent order from the Office of the Comptroller of the Currency, though its capital reserves exceed levels required by the order.
Canyon President and CEO Lauren Kingry said the bank had a “very successful” 2017 with a modest loss at the end.
Kingry, a former state banking regulator, said the majority of the first-quarter loss resulted from the cost of building two distinct loan programs, one for residential mortgages and one for small-business lending.
“We have a budget that anticipates a break-even or modest profit by year-end,” he said, adding that he expects the regulatory order to be lifted towards the end of this year.
The other Arizona bank that lost money, Goodyear-based West Valley Bank, reported a first-quarter loss of $230,000 but maintained its three-star Bauer rating.
Commerce Bank of Arizona, Tucson’s only locally owned bank, earned $421,000 in income in the first quarter after earning $1 million in all of 2017.
Since 2015, Commerce raised more than $13 million from local investors, prompting the Federal Deposit Insurance Corp. and the Arizona Department of Financial Institutions last year to lift a 2013 consent order to raise more capital.
Bank of Tucson parent Grandpoint Bank, which recently announced it would be acquired by California-based Pacific Premier Bank, kept its five-star Bauer rating as it reported income of $9 million in the first quarter.
For more information, visit Bauer Financial online at www.bauerfinancial.com.