More Georgia banks back in black

Georgia banks reported modest improvements in the second quarter, while nationally bank profits soared but the number of trouble institutions also grew.

According to data released Tuesday by the Federal Deposit Insurance Corp., just more than half of Georgia banks made money in the quarter ended June 30, up from 42.3 percent a year ago.

They still lost a collective $694 million in the period, though that was better than the $785 million loss a year earlier.

But that number is down from the first quarter, when nearly 60 percent made money, and the collective loss was $348 million. One reason for the wider second quarter losses could be an increase in bad loan write-offs from first quarter.

Georgia banks reported deposits of $216.15 billion, up 1 percent from a year ago, and up 5 percent from the first quarter of 2010.

Noncurrent loans, those slow to pay, grew to 5.95 percent from 5.54 percent last year, but that figure is down from 6.31 percent in first quarter. Nonperforming loans, those in default or in danger of defaulting, also grew slightly, though some improvement was seen since the first quarter of the year.

“We are seeing some encouraging trends here,” said Joe Brannen, president and CEO of the Georgia Bankers Association.

Nationally, bank profits roared back. The nation’s lenders reported net income of $21.6 billion in the second quarter, compared to a $4.4 billion loss a year ago. Nearly two-thirds of the nation’s banks posted better year-over-year earnings, the FDIC said.

Improvements nationally were credited to reduced cash reserves set aside for loan losses.

"Without question, the industry still faces challenges,” FDIC Chairman Sheila Bair said in a news release. “Earnings remain low by historical standards, and the numbers of unprofitable institutions, problem banks and failures remain high. But the banking sector is gaining strength.”

The national tally of “troubled banks” climbed to 829, the highest total in 16 years, and up from 775 at the end of first quarter. That is despite 45 failures nationwide in that time frame.

The FDIC does not identify troubled institutions banks or where they are located. It is not clear how many of those institutions might be in Georgia, which has led the nation with 41 failures since August 2008. But industry observers have said at least half of the state’s banks are under some form of regulatory order.