Georgia-based banks’ profits grew at an accelerating pace in the second quarter thanks to rising loan demand and healthy loan performance that beat national averages.
The state’s 192 banks reported net income of almost $800 million in three months ended June 30, an increase of 16.5 percent over the year-earlier period, the Federal Deposit Insurance Corp. said Tuesday. The agency insures bank customers’ deposits to certain levels against losses from bank failures.
The higher profits beat the first quarter's pace, when the banks earned $721 million, a 9.3 percent increase over 2015.
“The economy continues to steadily grow and that equates to continued good momentum for our state’s banks” said Joe Brannen, president and CEO of the Georgia Bankers Association, a trade group. He said the state’s banks “have money to lend and are eager to compete for family and business loans and accounts.”
The industry’s total loans grew to $218 billion, 6.7 percent higher than a year ago.
Banks’ profits are a snapshot of the economy’s health, in that they are an indicator of both companies’ and consumers’ appetites for borrowing, and of their ability to pay.
And from that angle, Georgia banks seem to look pretty good compared to their national counterparts. Second-quarter income at the nation’s 6,000-plus banks and other financial institutions increased 1.4 percent compared to a year ago, to $43.6 billion, according to the FDIC.
The weaker showing by the nation’s banks was partly because many of them boosted their reserves for expected loan losses, cutting into reported profits.
The 44 percent increase in the loan loss reserves, by $3.6 billion, was because of the banks’ rising levels of troubled loans, especially to oil producers, drillers and other service companies.
Georgia banks have relatively little exposure to that industry, which has hit hard by a self-inflicted glut of crude oil and relatively low prices.
