Georgia’s banks posted healthier earnings in the first 90 days of 2013 than last year, notching a cumulative profit for the eighth straight quarter after nearly three years of losses, according to data released Wednesday.
The state’s industry was battered by the housing collapse and financial crisis that started in 2007, as well as having too many eggs in the real estate lending basket. Scores of borrowers were unable to pay their loans.
The state also has led the nation in bank failures since mid-2008 with 87, but the pace has slowed dramatically as the economy has returned to better days. Customers’ financial affairs have improved and banks have gradually shed bad loans.
The condition of the banking industry and the industry’s ability to lend is vital to Georgia and the nation’s economic recovery. Credit is a key fuel of economic progress. Eighty-six percent of the state’s banks were profitable in the first quarter, compared to nearly 92 percent nationwide.
Cumulative profits for the state’s banks grew to $503.9 million in the first quarter, up 18 percent from the January-March period of a year-ago, according to data from the Federal Deposit Insurance Corp. Atlanta giant SunTrust made up two-thirds of the state industry’s profits.
Foreclosed real estate held by the state’s banks have declined 20 percent to $2.08 billion.
Joe Brannen, president and CEO of the Georgia Bankers Association, said loans that aren’t current have declined for 12 consecutive quarters, and charge-offs of soured loans have dropped by nearly half compared to the first quarter of last year.
One sign of caution is that net loans dipped in the first quarter by about 2.6 percent to $180.85 billion.
“While banks are looking to make all the new loans they can, demand remains soft and that’s reflected in the decline in total loans,” Brannen said. “Overall, the state’s banking industry continues to recover along with the economy, and that’s good news for everyone.”
The total number of banks in the U.S. that the FDIC labels as “problem” institutions declined to 612 from 651 at the end of 2012. Those institutions are not identified by state.