toledoblade.com --

Although banks in northwest Ohio and southeast Michigan have been unable to escape fallout from the nation's mortgage and credit crisis - and at least two have taken steps to raise cash to shore up balance sheets - none is on a prominent ratings agency's growing list of problem cases.

Twenty-eight banks with headquarters or major operations in the region were "middle-of-the-road" or better, according to a recent report by BauerFinancial Inc., of Coral Gables, Fla. Two-thirds were listed as "recommended" by earning the reporting service's four-star or five-star ratings.

The service considers factors including assets, profits and losses, and percentage of delinquent loans.

The list of recommended banks includes Signature Bank, of Toledo, and Charter One Bank, both with four stars, and First Federal Bank of the Midwest, Defiance, with five stars.

Two local banks, Waterford in Toledo and Bank of Maumee, are too new to be rated, the firm said.

The biggest banks operating in the area received 3 or 3 1/2 stars for ratings of "adequate." On that list are Fifth Third Bank, of Cincinnati; Huntington National Bank, Columbus; KeyBank and National City Bank, both of Cleveland; and Monroe Bank & Trust, Monroe.

Commenting on local bank ratings, industry consultant Craig Mancinotti, of Austin Associates in Sylvania Township, said such rankings are "not necessarily forward-looking." They typically cover past periods and don't account for steps taken by financial institutions to shore up balance sheets.

The report, released last month, was based on financial performance of banks in the April to June period.

The ratings for major banks in Toledo were unchanged from the first quarter except for Fifth Third, which was reduced from recommended to adequate.

Like many other banks, Fifth Third had a rough second quarter. It lost $202 million.

Executives took steps to raise additional cash by selling preferred stock, reducing the dividend on common shares, and announcing plans to sell some noncore assets.

Bank spokesman Karen Fraker declined to comment on the Bauer ratings, saying executives were unfamiliar with the firm.

At National City Bank, spokesman Todd Morgano said that the second quarter covered in the report was difficult. National City lost $1.8 billion. Mr. Morgano added, however:

"We're still a strong, stable, and well-capitalized company."

The bank raised $7 billion in April, he said, "giving us the financial flexibility to weather the current storm and keep serving our customers."

KeyBank, with 3 1/2 stars, also had a large second-quarter loss, $1.1 billion.

Many of the local banks that were rated highest by Bauer are small institutions in rural areas.

That isn't uncommon, said Karen Dorway, president of BauerFinancial. Big financial institutions tend to lend out a larger percentage of deposits and other capital. "The bigger banks … keep less capital on hand and deploy more of it," she said. That doesn't suggest, however, that large banks are undercapitalized.

The number of problem banks nationwide continues to grow. Bauer puts banks in the problem category if they have two stars or less. Those banks now represent 5 percent of the nation's total, the rating firm said.

No local banks or major out-of-town banks doing business in the area are in that category.

The Federal Deposit Insurance Corp., which insures accounts up to $250,000 for each depositor, maintains a separate "watch list" of troubled banks.

But that list is not public out of concern that it would cause depositors to shun listed institutions. In recent weeks, federal officials have taken additional steps to shore up financial institutions and thaw frozen credit markets.

Even before those actions, however, BauerFinancial said 63 percent of U.S. banks were in the recommended category. An additional 28 percent were rated as adequate, and 4 percent were too new to be rated, the firm said.

Contact Gary Pakulski at:
gpakulski@theblade.com
or 419-724-6082.

Permanent Link