• Half of local-based Valley banks earn a top five-star rating from BauerFinancial, a Florida bank-analysis firm.
• Eleven of 15 Valley-based credit unions received a five-star BauerFinancial rating.
• Nationally, community banks financially outperformed some of the country’s largest institutions.
Banks and credit unions headquartered in the central San Joaquin Valley tended to shine in the latest ratings issued by BauerFinancial Inc., a bank rating and analysis firm in Florida.
Among the community banks and credit unions based in Fresno, Kings, Madera and Tulare counties, all but three were deemed as “recommended” institutions with either four or five stars on BauerFinancial’s five-star rating scale.
The ratings for the fourth quarter of 2014 are based on the firm’s analysis of financial information provided by the institutions to their federal regulatory agencies including the Federal Deposit Insurance Corporation and the National Credit Union Administration. That data includes total assets, quarterly and annual earnings, capital ratios, and the proportion of assets that are nonperforming (such as loans for which borrowers have ceased making payments).
Of 10 local banks, half earned five-star ratings. They are Finance and Thrift Company of Porterville, Fresno First Bank, Murphy Bank of Fresno, Suncrest Bank in Visalia, and Valley Business Bank in Visalia.
Across the industry at the end of 2014, loans and leases by banks were up 5.3% over a year earlier. “That’s the highest year-over-year growth since mid-2008,” BauerFinancial reported. “Over 61% of banks reported year-over-year growth in quarterly earnings and, for the first time since 2005, fewer than 10% were unprofitable in the fourth quarter.”
Nationally, about 5% of banks received two or fewer stars to fall into BauerFinancial’s “problematic” category of troubled institutions. No Valley banks or credit unions fell below three stars in the ratings.
Among 15 local credit unions, all but four received five stars on the BauerFinancial scale. They are Families and Schools Together (FAST) Federal Credit Union and Kings Federal Credit Union, both in Hanford; Tucoemas Federal Credit Union in Visalia; Tulare County Federal Credit Union in Tulare; Valley Oak Credit Union in Three Rivers; and Educational Employees Credit Union, First California Credit Union, Fresno County Federal Credit Union, Fresno Fire Department Credit Union, Fresno Grangers Federal Credit Union, Greater Valley Credit Union, San Joaquin Power Employees Credit Union, and United Local Credit Union, all of Fresno.
BauerFinancial, in a March advisory, noted that Federal Deposit Insurance Corporation chairman Martin Gruenberg praised smaller community banks and institutions for outperforming the banking industry nationally. “Community banks’ net income, net interest income, noninterst income and loan balances all grew at a faster pace than the industry as a whole,” Gruenberg said.
Gruenberg added that “results from the fourth quarter were generally positive for the banking industry, and for community banks in particular.”
BauerFinancial reported that 2014 fourth-quarter earnings at community banks were up 28% from a year earlier, but that overall industry profits fell by 7.3%. The company attributed the decline to the costs run up by three of the nation’s largest banks, JPMorgan Chase, Bank of America and Citibank, for lawsuits and settlements. “The big banks had a $4.4 billion increase in litigation fees,” the advisory stated. Chase, B of A and Citi “have all been paying multibillion (dollar) settlements over the past couple of years for their alleged parts in the mortgage debacle. That hurt the industry as a whole.”