Arizonaโs banks and credit unions head into 2020 stronger than ever since the Great Recession, according to the latest ratings from Florida-based Bauer Financial.
In the third quarter of 2019, 69 of 75 banks operating in Arizona received top ratings of five stars (โsuperiorโ) or four stars (โexcellentโ) from Bauer.
No Arizona banks were rated below three stars (โadequateโ) and none were downgraded in the quarter.
Bauer upgraded its ratings for two banks โ industry giant JPMorgan Chase and Armed Forces Bank, which has one branch at Fort Huachuca โ to five stars from four.
Arizona credit unions also maintained their financial strength and Bauer ratings in the third quarter, with most rated five or four stars.
Two Southern Arizona banks that had received Bauerโs lowest ratings just a few years ago continued their recovery.
Tucson-based Commerce Bank of Arizona retained its 3ฦ-star โgoodโ rating and was on pace to top its annual profit of $1.9 million last year, after posting net income of $564,000 in the third quarter.
Canyon Community Bank posted a third-quarter net loss of $99,000 and a loss of $217,000 through the first three quarters of 2019 โ on track to substantially narrow its annual loss of $771,000 in 2018.
Canyon, which is based in Tucson but majority owned by a Texas investor group, is still operating under a 2013 order from the Office of the Comptroller of the Currency to boost its reserves.
But Canyon has the highest risk-based capital ratio โ a key measure of a bankโs financial strength โ of any bank in the state, and it reports zero โnonperforming assetsโ like delinquent loans, according to Bauer data.
Meanwhile, three of the biggest Tucson-based credit unions kept their five-star Bauer ratings as they surpassed or were on pace to top their 2018 earnings.
Vantage West posted third-quarter net income of nearly $5 million and $14.8 million through the first three quarters of 2019, compared with a profit $13.2 million for all of 2018.
Pima Federal reported net income of just over $2 million in the third quarter and $6.2 million through the first three quarters, on pace to top its full-year 2018 profit of $6.7 million.
Tucson Federal posted quarterly net earnings of nearly $1.5 million and just shy of $4 million through the third quarter, nearly matching its net income of $4.1 million for all or 2019.
Meanwhile, Hughes Federal Credit Union kept its top Bauer rating after posting net income of $2.2 million in the third quarter and $5.1 million through the first three quarters of 2019, a little off pace to match its full-year 2018 earnings of $8.2 million.
Bauer noted that bank failures and acquisitions have shrunk the number of federally insured banks and credits in the U.S. from more than 16,000 a decade ago to about 10,000 now.
But the remaining institutions are much stronger, Bauer said.
Ten years ago only about 40% of U.S. financial institutions won Bauerโs top five- or four-star ratings, while today about 90% are in that top tier and only about 2% are rated lower than three stars.
The Federal Deposit Insurance Corp. reported only four bank failures nationwide in 2019, down from a peak of 157 in 2010.
Fifteen Arizona-based banks failed between 2009 and 2013, but none have failed since 2013, FDIC data show.
