Tucson’s only locally owned bank has nursed itself back to financial health with the help of local residents who invested millions of dollars to shore up the bank’s balance sheet.
Commerce Bank of Arizona, which weathered huge losses on small-business loans following the Great Recession, announced recently that state and federal regulators had lifted a 2013 consent order requiring the bank to significantly raise its capital reserves.
After raising $3.5 million in new capital in 2015, Commerce’s parent, CBOA Financial Inc., raised about $10 million in capital earlier this year, boosting the bank’s capital-reserve ratios beyond the requirements in the consent order by the Federal Deposit Insurance Corp. and the Arizona Department of Financial Institutions.
About 130 local investors contributed to Commerce’s capital campaign, bank Chief Financial Officer Mike Sheneman said.
As a result of continued efforts to rid its balance sheet of bad debt, Commerce is on firm financial footing and continues to build its profits, Sheneman said.
“Through the first half of the year, we continue to earn positive profits, and increasing profits,” he said, noting that Commerce posted net income of nearly $500,000 for the first six months of 2017 compared with about $50,000 for the first half of 2016.
“Now that we’ve put some of these other issues behind us, were looking forward to growing the business,” Sheneman said.
Under the consent order, Commerce was required to raise its leverage-capital ratio — a key measure of a bank’s ability to weather loan losses — to 9 percent, and a key risk-weighted capital ratio to 13 percent.
As a result of the capital infusion, Commerce’s leverage-capital ratio improved to 11.7 percent at the end of the second quarter, from 6.7 percent in the first quarter, and boosted its risk-based capital…