A dozen banks in the state have had their ratings cut from levels defined as good or adequate to problematic or troubled over the past year, according to BauerFinancial.
Another two Colorado banks went from problematic to troubled ratings over the period, according to the Florida firm, which rates banks and credit unions.
BauerFinancial looks at the percentage of a bank’s loans in serious default, its net income and the capital cushion available to absorb loan losses to determine a rating.
Of the 195 banks BauerFinancial rated in the state during the third quarter, 19, or 9.7 percent, had a star rating of two or lower. Nationally, 11.1 percent of banks were rated two stars or lower, up from 6.2 percent of the total in the third quarter of 2008, according to BauerFinancial.
Nationally, 57 percent of banks have a four- or five-star rating, the highest available. In Colorado, 43 percent of the banks had the two highest ratings.
“Given what the whole economy has been through, banks are actually in pretty solid shape,” said Don Childears, president and chief executive of the Colorado Bankers Association.
Borrower defaults are straining some banks, Childears said. But “overreactions” by regulators have made the situation worse, forcing some banks to write off performing loans, he said.
The Colorado bank that suffered the sharpest decline in its rating was FirsTier Bank of Louisville. FirsTier’s nonperforming assets, a reflection of loans 90 days or more overdue, soared to 8.8 percent of the total from only 0.8 percent of assets a year ago.
The bank, which made a profit of $3.7 million last year, is running $8.8 million in the red through the first three quarters. Its rating has tumbled from adequate to troubled.
Other one-star Colorado banks considered “troubled” by BauerFinancial include Signature Bank, Native American Bank, Peoples National Bank of Monument, Park State Bank & Trust and Premier Bank.
Hillcrest Bank of Overland Park, Kan., which has a branch in Denver, was the only bank operating in the state rated zero. That bank received a cease and desist order from regulators in late October and has reported $42.5 million in losses this year.
The figures do not include the three banks in Colorado that regulators seized this year through Dec. 10.
Aldo Svaldi: 303-954-1410 or asvaldi@denverpost.com
