Mississippi banks continue gains in operating income
by Ted Carter
Published: March 28,2014
Mississippi’s 86 FDIC-insured financial institutions ended the final quarter of 2013 with a year-over-year quarterly gain in operating income of $16 million, joining their counterparts nationally in making gains the FDIC attributed to lower expenses for loan-loss provisions and money put aside for litigation.
While the $16 million may seem insubstantial, the $538 million total in net income marks a significant improvement over the final quarter of 2011, when the tally for net income came in at $416 million, the FDIC reported in its State Banking Performance Summary for the fourth quarter of 2014.
The summary shows 1.18 percent of Mississippi’s banks, savings institutions and credit unions failed to make a profit. That percentage marks a huge improvement over the close of 2012, when 6.90 percent of the state’s FDIC insured institutions did not earn money.
The year-end profitability picture was vastly brighter than as recently as the second quarter of 2011, when 13.47 percent of all Mississippi banks failed to earn a profit.
The profitability of Mississippi banks also looks strong in comparison with banks nationally. The close of 2013 showed 7.84 percent of U.S. banks in the red, with 12.89 percent of community banks with assets under $100 million failing to make money. Nationally, 5.66 percent of banks with assets over $100 million finished 2013 in the red.
In the meantime, earnings gains for Mississippi’s banks slowed in 2013’s fourth quarter. While the third quarter of 2013 ended with 65.12 percent of the state’s institutions having higher earnings, 64.71 percent of the state’s banks had higher earnings in last year’s final quarter.
However, the fourth quarter percentage was a significant improvement over the final quarter of 2011. A year-over-year quarterly comparison shows only 61.36 percent of Mississippi’s banks, savings institutions and credit unions had earnings gains in Q4 2011.
Mississippi’s banks showed continued dips in yields on earnings assets in year over year fourth quarter comparisons with 2012 and 2011 along with declines in net interest margins. Subsequently, the cost of funding earnings assets continued a three-year fall, going from 0.86 percent in the fourth quarter of 2011, to 0.58 percent in 2012’s final quarter and to 0.42 percent in the last quarter of 2013.
On the other hand, non-interest expense to average-income assets rose slightly to 4.08 percent in 2013’s final quarter. The final quarter of 2012 showed non-interest expenses totaled 4.03 percent and ended 2011 at 3.88 percent.
As noted by the FDIC in its summary for banks nationally, fewer dollars put toward loan-loss provisions helped Mississippi’s banks to achieve a nearly 31 percent growth in income in the 2013’s last quarter. The state’s banks ended 2012 with a loss allowance of 1.69 percent and 2013 with a loss allowance of 1.51 percent. As recently7 as the fourth quarter of 2011, Mississippi’s banks had a loss allowance ratio of 1.84 percent.
The Other Real Estate Owned category, which includes mortgage defaults, dropped to $30.2 million in the fourth quarter from $38.4 million at the end of 2012. Mississippi banks closed 2011 with OREO of $48 million.
The workforce of Magnolia State financial institutions declined from 17,633 at the close of 2012 to 17,620 at the end of 2013. Mississippi banks employed 16,827 people at the end of 2011.
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