Report: More than half of Arizona banks vulnerable to failure

Three out of five banks based in Arizona are considered “vulnerable” to failure, according to a new report from a Florida bank rating firm. Of the 45 banks analyzed by Jupiter-based Weiss Ratings at the request of the Phoenix Business Journal, 27 received letter grades of D-plus (weak) or lower, underscoring major liquidity and loan problems that continue to nag an industry upended by a housing bust, a global credit freeze and the watchful eye of federal regulators. If you look strictly at assets, the story is even worse, as 83 percent of the banks’ $15.8 billion total at the end of 2009 is considered vulnerable –– nearly double the 44 percent national average. “There are definitely a lot of weak banks that are as bad, if not worse, than the industry overall,” Melissa Gannon, vice president of Weiss Ratings, said of the situation in Arizona. After releasing the national data late last month, Chairman Martin Weiss said most vulnerable banks may not ultimately fail, but the failure rate could rise sharply if the U.S. experiences any further economic or financial adversity.

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