Georgia’s banks turned a collective profit for the first 90 days of 2012, according to federal data released Thursday, marking the fourth straight quarter in the black for a wounded industry that’s still healing.
Earnings have improved over the past several quarters largely because institutions set aside less money to cover bad loans.
Interest earned from loans was down 4 percent compared to the first quarter of 2011, however the state’s banks saw a 26 percent increase in noninterest income -- largely trading gains and fees -- according to data from the Federal Deposit Insurance Corp.
The improving health of the banking industry and the industry's ability to lend is vital to Georgia and the nation’s economic recovery.
Nine out of 10 banks nationally were profitable in first quarter, according to the FDIC. In Georgia, it was nearly eight in 10.
The nation’s banks reported a cumulative profit of $35.3 billion, up nearly a quarter from last year.
The state’s banks reported net income of $423.3 million, compared to a net loss of $184.9 million in the quarter ended March 2011.
It was the first time Georgia’s banks reported a cumulative first quarter profit since 2008.
“As more of our banks return to profitability, it is a welcome sign that business and personal finances also continue to get better,” said Joe Brannen, president and CEO of the Georgia Bankers Association.
Loans charged off declined 41 percent and foreclosed real estate on banks’ books declined 20 percent.
Total loans were up 2 percent from first quarter last year. Total deposits were flat from a year earlier at $215.7 billion.
Georgia’s banking industry has been ravaged by the collapse of the housing industry and the Great Recession that followed. The state leads the nation in bank failures since mid-2008 with 78.
Also on Thursday, the FDIC said its list of “problem” banks declined nationally to 772 at the end of March, from 813 in December. The FDIC does not identify problem banks.
The pace of failures has tailed off substantially in the state and nationwide. Four small Georgia banks failed in the first quarter this year, compared to six in the same period a year ago.
Sixteen banks failed nationwide from January through March, the lowest total in one quarter since fourth quarter 2008.
FDIC Acting Chairman Martin Gruenberg, in an interview last week with The Atlanta Journal-Constitution, said he is seeing "general stabilization" among Georgia's banks.
“That’s not to say it doesn’t remain challenged, because I think it’s still, for the foreseeable future, a difficult environment,” he said.
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