Bank profits expected to skip Georgia

While several large regional and national banks have posted surprising profits in the past week, analysts aren’t optimistic that Georgia banks will follow suit.

Georgia’s biggest banks, including SunTrust and Synovus, are slated to release first-quarter earnings reports this week. The reports come on the heels of a disastrous fourth quarter for the state’s banking industry, which suffered big losses tied to the collapsed housing market.

Analysts expect more losses, though not as large as suffered in the fourth quarter.

The root of the problem remains bad real estate loans, said Jeff Davis, an analyst with Howe Barnes. Many Georgia banks bet heavily on metro Atlanta’s booming real estate industry and got burned when housing prices tanked.

Chris Marinac, an analyst with FIG Partners in Atlanta, said Georgia banks are still building up reserves to cover soured real estate loans.

“That’s definitely going to impact profitability,” he said.

In a possible preview of the news to come, Atlanta-based Fidelity Bank —- one of the state’s largest community banks —- reported a $3.4 million first-quarter loss last week.

That’s a big hit, equal to 43 cents per share, but less than half the bank’s fourth-quarter loss.

The state’s biggest bank, SunTrust, reports earnings Thursday. The consensus estimate among analysts tracking SunTrust is that the company will post a loss of about 65 cents a share, down from $1.08 a share in the fourth quarter.

Marinac is more bullish on SunTrust. He said rising income from the bank’s mortgage financing arm and other investment-related business could offset loan losses.

“I’d be disappointed if we see losses at SunTrust,” Marinac said.

Synovus, the second-largest bank based in Georgia, reports earnings Wednesday. Analysts expect a loss of 37 cents per share, a big step up from the fourth quarter, when the Columbus-based bank reported a loss of $1.93 per share.

Financial stocks tumbled Monday amid growing concern that the industry remains troubled despite the better-than-expected earnings reported by some banks.

SunTrust shares fell 18.5 percent to $14.71 per share. Shares in Synovus dropped nearly 26 percent to $3.82.