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Five credit unions and one bank in northwest Ohio saw their financial ratings drop in the first quarter of 2018, including one credit union that was downgraded two rungs, a new report by a Florida financial data firm shows.
Meanwhile, the ratings of four credit unions and three banks in southeast Michigan remained unchanged, according to BauerFinancial Inc., an independent research firm based in Coral Gables.
The firm assesses the stability and strength of banks and credit unions nationwide, then gives each a rating of zero to five stars, with zero being the lowest and a “superior” five-star rating the highest.
In its recently released first quarter ratings, BauerFinancial dropped Toledo Metro Federal Credit Union of Toledo from a previous four-star “excellent” rating to a two-star “problematic” rating.
“In the last few quarters they had been having trouble with delinquent loans. They actually improved in that area,” Caroline Jervey, BauerFinancial vice president, said. “But they lost a lot of money this year and had an annual loss last year.”
As a result, Ms. Jervey said Toledo Metro’s capital ratio — the amount of core capital compared to risky assets, such as outstanding loans — dropped to 7.21 percent in the first quarter from 9.44 percent in the fourth quarter. The higher the ratio, the easier an institution can absorb a reasonable amount of losses without risk of failure.
Toledo Metro lost $1,017,000 in the first quarter after losing $27,000 in the fourth quarter. “It’s quite a big loss for such a small credit union,” Ms. Jervey said.
A second credit union also dropped to two stars.
Great Lakes Credit Union of Sylvania previously had been rated as a three-star “adequate” institution. It too had losses in the fourth quarter of last year and again in the first quarter of this year.
Erie Community Federal Credit Union of Sandusky, Nickel Steel Federal Credit Union of Lima, and Sylvania Area Federal Credit Union of Sylvania dropped to four stars from five stars.
Among area banks, frequently low-rated Resolute Bank of Maumee dropped to a one-star “troubled” rating, slipping from a previous two stars.
BauerFinancial rated 43 credit unions and 27 banks in northwest Ohio, plus four credit unions and three banks in southeast Michigan.
In northwest Ohio, the firm gave 23 credit unions its five-star “superior” rating, nine a four-star “excellent” rating, two a three-star “adequate” rating, five a two-star “problematic” rating, and one a one-star “troubled” rating. Three credit unions had insufficient assets to be rated.
Twenty banks got a five-star rating, six a four-star rating, and one a one-star rating.
In southeast Michigan, there were two credit unions with five-star ratings and two with four-star ratings. All three banks in southeast Michigan had five-star ratings.
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