Maryland banks bounce back in new report 

Posted: 8:29 pm Tue, August 31, 2010
By Ben Mook
Daily Record Business Writer

Maryland’s banks showed increasing profitability on the whole for the second quarter of 2010, according to a report released Tuesday by the Federal Deposit Insurance Corp.

The FDIC reported that the 89 institutions headquartered in Maryland had a $3 million net loss through the end of June. This was down from a $73 million net loss for the same time in 2009 and a $7 million net loss in the first quarter of 2010.

State banks also reported increases in total assets with $35.2 billion, compared to $35.16 billion the previous year. The industry statewide also showed an uptick in the number of employees over the course of 2010. The FDIC reported there were 8,083 full-time employees at the end of June, compared to 7,954 at the end of March.

“This is a very positive improvement over the previous quarter,” Kathleen M. Murphy, president and CEO of the Maryland Bankers Association, said. “The results are showing that we’re in a trough, and we’re beginning to find our way out of it.”

The number of unprofitable institutions remained relatively unchanged with 34.8 percent of institutions unprofitable, compared to 34.41 percent in 2009.

However, the number of banks in the state reporting year-over-year income increases more than doubled. Mirroring the national figures, 67 percent of state banks reported earnings gains, compared to 30.1 percent in 2009.

“Clearly, what we’re seeing is the economy, while we still have challenges in Maryland, is beginning to stabilize,” Murphy said.

Nationwide, the FDIC said there was an aggregate profit of $21.6 billion in the second quarter. This marked a $26 billion improvement over the $4.4 billion net loss posted in the second quarter of 2009. The report also showed that one in five institutions reported a net loss for the quarter, compared to 29 percent a year earlier

“This is the best quarterly profit for the banking sector in almost three years,” FDIC Chairwoman Sheila C. Bair said. “Nearly two out of every three banks are reporting better year-over-year earnings. As long as economic conditions remain supportive, most institutions should maintain profitability and increase their capacity to lend.”

Nationwide, net charge-offs totaled $49 billion in the second quarter, a $214 million decline from 2009 and the first year-over-year decline since the fourth quarter of 2006. Charge-offs were also down in most major loan categories except for credit cards and real estate loans secured by nonfarm nonresidential properties.

The bottom line of many banks was affected again in this most recent quarter by the amount set aside to cover bad loans. Nationally, banks added $40.3 billion in provisions to their loan-loss allowances in the second quarter. This was the smallest total since $37.2 billion was set aside in the first quarter of 2008. It is also a $27.1 billion decrease from the second quarter of 2009.

But, the FDIC did report that some banks still had pressing problems, with institutions on its “Problem List” increasing from 775 to 829 in the quarter.