Banks are often placed on a pedestal, but they are like any other kind of business; some are stronger and better managed than others. And also like other types of businesses, many were hurt by the Great Recession.
It’s been a while since we visited the local banking situation, so we offer this update.
One publicly available bank rating service is Bankrate.com. This system employs more than 20 tests to measure the capital adequacy, asset quality, profitability and liquidity of each rated financial institution. Individual performance levels are determined from publicly available regulatory filings and are compared to asset-size peer norms, industry standards and key benchmarks. Combined results form the basis for the star ratings.
Bankrate.com assigns a 1-to-5 star rating with five stars representing the highest rating. Institutions with satisfactory performance will generally receive a rating of three or better stars with the majority of banks falling into the three- to four-star range. Ratings are believed to be reliable but the information is not guaranteed. In addition, events since the information was collected may have altered an institution’s financial condition.
These results for Mobile and Baldwin Counties, Alabama, just released by Bankrate.com, are based the banks’ financial statements as of June 30, 2012:
5 Stars (superior, top rated):
- Bank of the Ozarks
- Wells Fargo Bank
4 Stars (sound, indicative of a sound financial condition):
- Centennial Bank
- Century Bank
- Citizens Bank
- First Federal Bank of Florida
- Hancock Bank
- Iberia Bank
- National Bank of Commerce
- PNC Bank
- State Bank & Trust
- Woodforest National Bank
3 Stars (performing, indicative of a generally satisfactory financial condition):
- Bancorp South
- Bryant Bank
- Coastal Bank & Trust
- Community Bank
- First Community Bank
- Merchants Bank
- Regions Bank
2 Stars (below peer group, indicative of a below average financial condition):
- Southpoint Bank
- United Bank
1 Star (lowest rated, indicative of a significantly below average financial condition):
- Bay Bank
- BankTrust (being acquired by 4-Star rated TrustMark of Mississippi)
- Commonwealth National Bank
- First National Bank of Baldwin County
The foreign owned BBVA Compass is unrated.
Again, keep in mind that these ratings are based on information furnished by the banks as of June 30 of this year. Things could have changed since then. And there are other bank rating services whose rankings may differ.
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William Bruce is a business broker and appraiser. He consults nationally on issues involved in business transfers and valuation. He may be reached at WilliamBruceOnline@gmail.com or (251) 626-4949. His business brokerage website may be viewed at www.WilliamBruce.net.