Quarter of NW Banks Problematic, say Rating Agencies

Over the last quarter nearly a quarter of Northwest banks are still considered problematic, according to ratings agency numbers.

The Association compared ratings from Bauer Financial and Highline Financial, a division of Thompson Reuters, and found that nearly 26 percent of Washington-based banks and 20 percent of Oregon-based banks are considered problematic or troubled. This is about a 3 percent improvement since last quarter.

These rates, which take into account capital levels, asset quality, earnings ratios, and liquidity, were based on data released by federal regulators.

Credit unions continue to remain strong with over 91 percent of credit unions in Oregon and Washington to be considered strong or adequately capitalized according to Bauer and Highline.

Some place the number of troubled banks much higher. For example, the Portland Business Journal reported that the 42 percent of Oregon’s banks were undercapitalized, after a two-year stress test.

During the second quarter there were two bank failures in Washington: First Heritage Bank in Snohomish, and Summit Bank in Burlington.

Since 2008, 373 banks have been closed by the FDIC—22 of which have been based in Oregon or Washington.

By contrast, there have been only two credit union closures in Oregon and Washington since 2008.

The banking industry is also being hit with more lawsuits. The NCUA recently filed civil lawsuits against two big banks for convincing several large corporate credit unions into buying mortgage bonds that were doomed. Also, Bloomberg reported banks were negotiating with state attorneys general over foreclosure practices and if no settlement is reached they will be going to court. These lawsuits do not fare well for the banking industry, and could lead to an increase in more problematic and troubled banks.


Questions or Concerns? Contact the Anthem Editor: Editor@nwcua.org.

Posted in Advocacy News, Economy.