Ratings recently released by Coral Gables, Fla.-based BauerFinancial Inc. show no troubled banks in St. Mary or Assumption parishes.
A majority of the banks operating in the area hold five-star ratings from the bank rating company, including St. Mary-based M C Bank, Morgan City Credit Union and Cabot Employees Credit Union in Franklin.
Morgan City Bank President and CEO Larry Callais said that the bank has received the five-star rating for many quarters.
“It’s a reflection on the board of the directors, on everybody who works for the bank when you receive a rating from an independent agency” like this, Callais said. He noted that this agency has no ties to the banking industry.
The rating, he said, measures internal strength of a bank as well as an efficiency rating.
He noted that the bank’s efficiency rate is about 48 percent. Normally, he said the bank should stay within 45 and 65 percent with 45 being the best.
The other St. Mary-based bank, Patterson State, received a four-star rating.
Bill Marin, PSB chairman of the board and executive vice president, said the bank’s rating has improved from as low as 3.5 stars a few years ago.
In 2009, he said the bank, like many others, suffered a loss because of the international housing market crash.
However, he said it has rebounded and financial projections for 2012-14 already look really good.
“We’ve shown steady improvements,” he said. “I know the regulators have liked what they’ve seen.”
Marin also noted that the bank has just about doubled its size in roughly a five-year period and now is turning its attention from growth to continuing to take care of customer needs as well as make sound decisions.
Through these methods, he said that the bank hopes to achieve a five-star rating one day.
He said the difference between a four- and five-star bank likely involved ratios regarding earnings and asset quality and liquidities.
“It would probably get down to numbers,” Marin said.
Among the other banks operating in the area, Iberiabank, MidSouth, Teche Federal and Whitney, all with branches in Morgan City, hold five-star ratings. Riverland Credit Union received four stars, and Regions Bank received three stars.
First National Bank of Jeanerette, with a Franklin branch, and Capital One Bank, with Franklin and Pierre Part branches, both scored four stars in the ratings. For Pierre Part’s branch banks, First American Bank and Trust scored five stars, and Iberville Bank scored three stars.
The St. Mary Parish School Employees Credit Union is either too small to rate, or is not insured by the National Credit Union Administration.
The latest ratings, based on June 30, 2011, financial data, show the highest percentage of top rated banks since Sept. 30, 2007, with 40.7 percent earning its highest five-star rating. The percentage of recommended banks — those rated either five stars or four stars — is now at 62 percent of the industry.
On the other hand, the banks on Bauer’s Troubled and Problematic Bank Report — i.e. rated two stars or below — still represent more than 12 percent of the banking industry. Currently at 902 institutions, this category is also showing improvement.
Credit unions are looking good, as well, with 41 percent of the credit union industry earning the top five-star rating. Those with either a five-star or four-star rating represent 69 percent of all federally insured credit unions. Credit unions rated two-stars or below represent just more than 5 percent of the industry.
Financial data is compiled for U.S. banks and thrifts from all report data as reported to federal regulators. Although the financial data obtained from these sources is consistently reliable, the accuracy and completeness of the data cannot be guaranteed by BauerFinancial Inc.
All banks are subject to federal regulatory capital requirements, but those requirements vary among institutions and are dependent on many factors. In general, institutions are required to maintain a tangible capital ratio of at least 4 percent, a Tier 1 risk-based capital ratio of at least 4 percent and a total risk-based capital ratio of at least 8 percent.
In addition to the capital ratio, other criteria are used to determine BauerFinancial’s star ratings. Some of these include but are not limited to: profitability/loss trend, evaluating the level of delinquent loans and repossessed assets, the market versus book value of the investment portfolio, regulatory supervisory agreements, the community reinvestment rating and liquidity. Potential losses on available-for-sale securities, delinquent loans and repossessed assets are forecasted in assigning a star rating.