A Rebound for Banks

Number of highly rated banks is a sign of improved health in the industry, and should bode well for borrowers.

By Bruce G. Posner | 
 

If banks are being more receptive to loan applications these days, there are some good reasons for it. After a prolonged dip, the number of highly rated banks -- those showing financial strength that's measured by, among other things, equity-to-asset ratios of 5% or more and decent profitability -- has turned upward in the past year, according to Veribanc, a bank-rating company in Wakefield, Mass. While mergers and failures in recent years have reduced the overall number of banks, the improved health of the industry bodes well for borrowers, Veribanc research director Warren Heller says. "There should be more money to lend."

Highly rated banks Total banks
1989 11,292 13,472

1990 11,033 13,057

1991 9,429 12,699

1992 9,760 12,251

1993 10,100 11,867

Source: Veribanc, Wakefield, Mass., June 1993.


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