Georgia-based banks saw a 2.6 percent decline in profits in the third quarter compared to a year ago as interest income and the number of banks in the state continued to fall.
The state’s 199 banks reported total profit of $796 million in the third quarter, partly because there were 14 fewer banks than a year ago, according to the Federal Deposit Insurance Corp. In 2007, before the 2008 financial crisis led to a tsunami of bank crashes, Georgia had 350 banks.
However, most of the past year’s shrinkage in the number of Georgia-based banks was due to acquisitions by other banks inside and outside the state. Georgia also had one of the few bank failures in the country in the third quarter, with the closing of Peachtree City-based Bank of Georgia on Oct. 2.
The third-quarter drop in Georgia bank profits bucked the trend of higher bank income at the national level, as the industry continued to gain traction after years of post-Great Recession struggle.
At the national level, banks’ third-quarter income rose 5.1 percent compared a year ago, to $40.4 billion, according to the FDIC.
Banks “continued to show improvement,” said FDIC Chairman Martin J. Gruenberg, but he warned that there were signs that banks are taking more risks that “warrant attention.”
“History tells us that it is during this phase of the credit cycle when lending decisions are made that could lead to future losses,” he said.
A Georgia banking industry official said nearly 90 percent of the state’s banks are profitable.
“Georgia family and business finances continue to get stronger as the economy has grown slowly but steadily this year. The performance in Georgia’s banking industry mirrors that trend,” said Joe Brannen, president of the Georgia Bankers Association, a trade group. “We’re pleased to see increased loans and deposits, and it’s also good to note that past-due loans keep declining. These are all positive signals about our state’s economy.”
Georgia banks’ net income for the first nine months rose 11.6 percent, to almost $2.2 billion, compared to last year. Total bank loans hit their highest level since 2008, with a nearly 3 percent increase, to $208.5 billion.
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