More Mississippi financial institutions stepping into profit column

by Ross Reily

Published: September 6,2013

Tags: banking, FDIC, finance, Mississippi

bank-vaultMississippi‘s 87 banks and credit unions accounted for $271 million of the $42.2 billion in profits federally insured institutions earned in the second quarter.

Magnolia State financial institutions achieved growth in workforce, deposits, loans, assets and equity capital, while lowering their totals in the trouble categories of Real Estate Owned properties and non-current loans and leases from the same quarter of 2012.

The increase in operating income helped to keep the percentage of unprofitable institutions at 3.45 percent, the same as the second quarter of 2012 but significantly improved from the same quarter of 2011, when 13.48 percent of the state’s FDIC-insured institutions lost money, the FDIC reported in its State Banking Performance Summary.

Red ink continued to be most prevalent among Mississippi’s small banks, with 11.76 percent of banks with assets under $100 million ending the quarter in the unprofitable category. Last year’s second quarter ended with 10 percent of the state’s small banks in the unprofitable column. While a double-digit percentage of small banks remain unprofitable, Mississippi’s small community banks have erased significant red ink since Q2 2011, when 39.13 percent of them lost money.

Profit improvement has been significant for Mississippi banks of all sizes in the 2011-to- 2013 period. They ended the second quarter of 2011 with 13.47 percent of them failing to earn a profit compared to the 3.45 percent for the same quarters of this year and last year.

Nationally, a drop in bad loans helped U.S. banks to earn more from April through June than in any quarter on record, the Associated Press reported soon after the close of the second quarter. Across the United States, bank losses on loans fell 30.7 percent from last year to $14.2 billion.

For Mississippi’s banks and credit unions, the net income of $271 million marked a second year of increased profits in the second quarter, starting with a rise from $206 million in Q2 2011 to $263 million in the same quarter of 2012.

Beyond the nearly 33 percent jump in income, the second quarter also brought a resumption of asset growth for Mississippi’s financial institutions. The $60 billion in assets reported in Q2 2011 dipped to $59.8 billion in the same quarter 2012. In the most recent quarter, assets grew to $62.8 billion.

Earning assets increased to $55.5 billion from $53 billion a year earlier.

Total lending climbed 3.5 percent, from $37.4 billion in the second quarter of 2012 to $38.6 billion in the recent quarter.

Meanwhile, employment in Mississippi’s banks climbed to 17,841 in Q2 from 17,528 in Q2 2012 and 17,308 in Q2 2011. For the same periods, total deposits reached $52.1 billion compared to $49.1 billion in 2012 and $48.8 billion in 2011.

That deposit growth helped to push core deposits-to-total liabilities to 79 percent in Q2 from 77.3 percent the previous year and 73.9 percent in 2011.

The dollar amount of real estate owned properties — buildings and land that banks have had to take back after mortgage loan defaults — continued a two-year drop. At the close of Q2 2011, Mississippi‘s federally insured institutions had a total REO of $683 million. The REO level dropped to $652 million in Q2 2012 and to $539 million in this year’s most recent quarter. Mississippi’s banks of over $100 million in assets accounted for $532 million of the REO.

Nationally, fewer banks are at risk of failure, the FDIC said in reporting a drop in its “problem” list to 553 banks from 612 in the first quarter.

Through the half year mark, only 20 banks had failed compared to 51 closures in 2012, 92 in 2011 and 157 in 2010.

 

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