It’s been a year since we reviewed the local banking scene, so we offer this update.
Banks are often placed on a pedestal in the public mind, but they are like any other category of business in that some are stronger and better managed than others.
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 bank. 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 ranking with five stars representing the highest rating. Institutions with satisfactory performance will generally receive a rating of three or more 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. The current ratings are based on the banks’ financial statement as of December 31, 2015.
Since our last report two banks with local branches have improved their rankings. Community Bank and The First Bank, both based in Mississippi, have both moved up from from three stars to a four stars ranking. But two banks lost a star. Woodforest National Bank, found in some Wal-Mart stores, dropped from five to four stars. And First Community Bank moved down a notch to three stars.
One new bank that has entered the market since our last report is Birmingham-based Oakworth Capital Bank with a branch in downtown Mobile. Alabama Attorney General Luther Strange is a founder of the bank and serves as a director. The bank is top rated at five stars.
The following results for Mobile and Baldwin Counties, Alabama, are based on the banks’ financial statements as of December 31, 2015 as ranked by BankRate.com.
5 Stars (superior, top rated):
- Bank of the Ozarks
- Oakworth Capital Bank
- ServisFirst Bank
- Wells Fargo Bank
4 Stars (sound, indicative of a sound financial condition):
- Bancorp South
- BBVA Compass
- Bryant Bank
- Centennial Bank
- Century Bank
- Citizens Bank
- Coastal Bank & Trust (the trade name used by Synovus Bank in Alabama)
- Community Bank
- First Bank
- Hancock Bank (the trade name used by Whitney Bank in Alabama)
- Iberia Bank
- National Bank of Commerce
- PNC Bank
- RBC Bank
- Regions Bank
- Southpoint Bank
- State Bank & Trust
- United Bank
- Woodforest National Bank
3 Stars (performing, indicative of a generally satisfactory financial condition):
- First Community Bank
- Merchants Bank
2 Stars (below peer group, indicative of a below average financial condition):
- No banks in the local market were rated 2 stars
1 Star (lowest rated)
- Commonwealth National Bank
Again this year Commonwealth National Bank is the only local bank with the lowest ranking. The bank is headquartered at 2214 St. Stephens Road in Mobile. In the composite summary of the bank, the rating service said, “Bankrate believes that, as of December 31, 2015, this bank exhibited a significantly below average condition, characterized by substantially lower than normal overall, sustainable profitability, very questionable asset quality, below standard capitalization and near normal liquidity.”
The “very questionable asset quality” noted by Bankrate refers primarily, it is assumed, to Commonwealth’s loans receivable and most probably represents a significant problem for any stronger banks considering a rescue by acquisition of the troubled bank.
In summary, please keep in mind that these ratings are based on information furnished by the banks as of December 31, 3015. Things could have changed since then. And there are other bank rating services whose rankings may differ.
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