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Financial Institutions Services Advisory - Florida Banks Aggregate Profit Grows But Problem Loans Remain High

Wednesday, November 30, 2011 - Frank Gonzalez, CPA / CFF

Frank Gonzalez

The Florida banking industry continued its trend of moderate increases in aggregate profits during this year's third quarter. But the noncurrent loan ratios for Florida-based banks were still significantly higher than the national averages and the averages for banks based in New York State, according to data the Federal Deposit Insurance Corporation released on November 22.

In its Quarterly Banking Profile and related data base, the FDIC reported that the 233 Florida-based banks had aggregate net income of $86 million during the quarter ended September 30, 2011.

That was the third consecutive profitable quarter for the Florida industry, and follows its aggregate net income of $58 million in this year's second quarter. Florida-based banks had an aggregate loss of $246 million in 2010's third quarter.

The year-over-year improvement was attributable partly to a decline in additions to loan loss reserves, Florida-based banks added $307 million to their reserves during this year's third quarter, compared with $635 million in 2010's third quarter.

However, the Florida industry's overall noncurrent loan ratio fell only from 7.53 percent on September 30, 2010 to 7.06 percent on September 30, 2011.

Highlights from the new reports include:

  • The country's banking industry increased its net income from $23.8 billion in 2010's third quarter to $35.3 billion in this year's third quarter. Provisions for loan losses fell from $35.1 billion in last year's third quarter to $18.6 billion in this year's third quarter.
  • At banks based in New York State, net income increased from $1.4 billion in last year's third quarter to $1.7 billion in this year's third quarter. Provisions to loan loss reserves declined from $420 million to $197 million for those quarters.
  • On September 30, 2011, overall noncurrent loan ratios were 4.22 percent for the national banking industry and 2.50 percent for New York-based banks.

The noncurrent ratios for real estate loans were 6.50 percent for all banks, 8.11 percent for Florida-based banks and 3.40 percent for New York-based banks.

In a news release, the FDIC said the number of banks on its "Problem List" fell from 865 to 844 during the three months ended September 30, 2011. That was the second consecutive quarter with a reduction in the number of problem banks.

The FDIC does not identify those banks, which have CAMELs ratings of 4 or 5--the two lowest under that system.

If you would like additional information on the FDIC data for September, 2011, do not hesitate to contact our Financial Institutions specialists, or call us at 1-800-239-1474.