The five stars signify “superior” performance and are the highest grade awarded by the independent financial analysis and reporting agency based in Coral Gables, Fla. Consistently strong performance, profitability and capital levels twice those required by regulators are necessary to achieve a five-star rating, Bauer says.
The most recent ratings are for the second quarter ending June 30.
For Jackson’s Trustmark and Gulfport’s Hancock the five stars signal the two regional institutions are headed out of the industry-wide banking slump of the past several years. Both banks had a four-star grade from Bauer last quarter, an assessment that denotes “excellence.”
In the most recent quarter, Bauer reported 2.3 percent of Mississippi banks as “problematic,” while designating 11.1 percent of Arkansas’ banks as problematic and Tennessee and Alabama’s as 15.2 percent and 12.2 percent, respectively.
Even worse are the percentage of problematic banks in Georgia (35.7 percent) and Florida (38 percent). Bauer deemed 10.5 percent of banks nationwide as problematic at the end of the second quarter, down from 12.3 percent in the same quarter of 2011.
“Our banks overall have done really well,” said Mac Deaver, president of the Mississippi Bankers Association. “We have traditionally been strong. But even in these tough economic times we have had some great performing banks.”
Deaver said he thinks Mississippi’s banks can have an even larger role in the state’s economic recovery but businesses must be willing to do more as well. “It’s frustrating that the confidence of the business community and others is just not there,” he said in an interview after the mid-September release of the Bauer ratings.
The performance of Mississippi banks has gained recognition nationally, according to Deaver, with the nomination of a second Magnolia State banker to the executive board of the American Bankers Association. The appointment of Huey Townsend, president and CEO of Belzoni’s five-star rated Guaranty Bank and Trust, to the ABA executive board at its upcoming convention will mark the first time the state has had two representatives on the governing body. Townsend will join John Hairston, co-CEO of Hancock Bank, on the board.
Bauer’s ratings are based on analysis of detailed financial reports banks file with federal regulators four times a year. Bauer says it obtains the data in its raw form and does an analysis that includes comparison with historical data for consistency. “Upon completion of the analysis, a star-rating is assigned based on a scale of zero to five stars with five stars being the strongest,” Bauer says.
In awarding its “superior” rating to Trustmark, Bauer reported the regional bank’s non-performing assets as a percentage of tangible assets at 2.4 percent. It reported Hancock’s at 1.86 percent.
The $9.7 billion Trustmark ended the quarter with $7.8 billion in deposits. In the distressed loans category, Trustmark reported $147.8 million in non-current loans and leases, of which $39.8 million were government guaranteed, largely from the bank’s FDIC-assisted bank acquisitions, according to the FDIC.
Trustmark’s tier 1 risk-based capital stood at 9.52 percent at the close of the quarter, the FDIC reported.
The $6.7 billion Hancock last year took over Louisiana’s Whitney Bank, a $12.5 billion banking company that continues to operate under the Whitney name in Louisiana and Texas. Whitney received a four-star rating from Bauer in Q2.
Hancock reported $5.1 billion in deposits for the second quarter and non-current loans and leases of $54.9 million, according to the FDIC. It had tier 1 capital of 8.47 percent at the quarter’s end, the FDIC said.
In general, regulators require institutions to maintain a tier 1 risk-based capital ratio of at least 4 percent.
Occupying the low-end of the Bauer ratings for banks operating in Mississippi were South Bank of Corinth with two stars and Omni Bank of Mantee with one star. Bauer designates a two-star bank as “troubled” and a one-star bank as “problematic.”
South Bank is a $188 million-asset federal savings bank based in Huntsville, Ala., with two offices in Corinth.
The $73 million Omni Bank of Mantee in Webster County changed its name to OmniBank in early September. It has four locations.