Despite steady improvement since the financial crisis, the percentage of troubled banks in Florida is still nearly three times the national average, a new analysis indicates.
In its latest quarterly report, financial ratings agency Bauer Financial estimates 18.3 percent of some 270 Florida banks it tracks are troubled and problematic, a rating that signifies an institution is vulnerable to failing. That compares with a national average of 6.2 percent.
Only two states are in worse shape. In Georgia, 23.1 percent of banks rate as troubled and problematic; in South Carolina, it's 19.4 percent.
In a healthy economy, ideally no more than 5 percent of institutions would fall into the troubled category, said Karen Dorway, Bauer's president and director of research.
Dorway gave credit to Florida for making strong progress considering the depths of its credit and lending problems.
"The situation was so bad. It's not surprising it's taking longer to work out," she said. "It's a long process … with foreclosures. It's a very tedious situation to work out of the legacy repossessions, in particular."
Bauer, which is based in Coral Gables, rates banks and credit unions on a five-star system based on criteria such as capital ratios, liquidity and level of delinquent loans. Two stars or below puts institutions in the troubled tier. To be recommended requires a minimum of four stars.
Nationwide, 74.5 percent of all banks were recommended this past quarter, the highest level in seven years. Fewer than half of the banks made the cut in just three states: Georgia (42.2 percent), South Carolina (44.8 percent) and Florida (49.2 percent).
One reason for the overall higher ratings: Bank failures and industry consolidation have eliminated a lot of weak performers. There are fewer than 7,000 commercial banks today nationwide, down from nearly 8,000 a decade ago and more than 14,000 in the 1980s.
Rankings aside, Florida has come a long way.
Back in 2010, Florida led the country with 29 bank failures, followed by 13 failures in 2011. Only four Florida banks failed last year; none so far this year.
Another benchmark: Two years ago, there were 39 zero-star banks in Florida. Today, there are only 12. The closest one to Tampa Bay is in the Sarasota area.
Florida fared much better in Bauer's breakdown of credit union health. About 85 percent of the state's credit unions were recommended, while only 1.3 percent received the troubled label. That's better than the national figures, where 76.5 percent of credit unions were recommended and 3.5 percent were troubled.
For ratings on banks and credit unions, go to bauerfinancial.com.