Georgia’s banks reported almost $2.3 billion in profits in the first nine months of 2016 — a 6 percent increase over the previous year — from higher interest income and growing loan portfolios.
Georgia banks’ performance topped U.S. banking industry’s, where profits grew by about 4 percent over the first three quarters of 2016, to $127.8 billion, according to the quarterly banking profile by the Federal Deposit Insurance Corp.
Reflecting an improving economy and slowly rising interest rates, banks have been doing better as businesses and consumers have borrowed more and paid higher interest rates. But banks also face growing competition from online and other non-bank lenders, and higher regulatory compliance costs.
“We’re pleased to see continued steady growth in earnings, loans and deposits for Georgia’s banks,” said Joe Brannen, president of the Georgia Bankers Association. “The performance of our banks is reflecting the continued positive traction for the state’s economy.”
He noted that total loans and deposits in the state’s financial institutions also increased by almost 6 percent. The percentage of profitable banks in the state grew to 93 percent, from 88 percent a year earlier.
Despite the improving financial performance, the industry continues to shrink in Georgia, as larger banks gobble up smaller ones and shed employees.
The quarterly FDIC report showed that Georgia had 187 banks and other financial institutions at the end of September, down from 199 a year earlier and 213 in 2014.
Consolidation was fiercest among the smallest institutions, which fell by 16, while the number of larger banks grew slightly.
Banks have also been closing branches at a steady pace as more customers do their banking online with their smart phones or home computers.
Likewise, industry employment dropped by more than 2 percent, to 42,081 at the end of September, according to the FDIC. The state’s financial institutions employed 44,442 two years earlier.