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Tuesday, February 25, 2020
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Banking & Finance

Local Banks Report 2nd Quarter Results

The financial results for several of the banks operating in our area were released at the end of last week.
Synovus Financial Corp., the holding company of Sea Island Bank, core operating results for the 2nd Qtr. ended June 30, 2009 improved, but Synovus posted a large 2nd Qtr. loss of $ 631.5 million due to an increase in non-interest expenses of $396.3 million, and increased loan loss provisions.
The company believes it has the opportunity to return to profitability during 2010. Pre-tax, Pre-credit Costs Income was $144.8 million, up $15.6 million over the first quarter of 2009, and net Interest margin was 3.23 percent, up 18 basis points from 3.05 percent in the first quarter of 2009.
The net loss for the quarter was $586.9 million, $1.82 a share, compared with net income of $12.1 million last year.  Reuters news service reported on Friday that analysts had been expecting a loss more in the 55 cents a share range.
The bank company increased its provision for loan losses rose to $631.5 mil, up from $93.6 million just a year ago, and lost six percent of its interest income.
“During the quarter, Synovus took aggressive steps with its asset disposition program and reserve build,” the company stated on Friday. 
Total credit costs for the second quarter were $807.8 million, including provision expense of $631.5 million and foreclosed real estate costs of $172.4 million. These costs were largely driven by a significant increase in the allowance for loan losses as well as the impact of losses on liquidations of non-performing assets.
Non-performing Assets were down $15.0 million from the first quarter of 2009, as dispositions of non-performing assets reached $404 million in the second quarter, good news for the bank company.
Its allowance for loan losses increased $276.3 million in the quarter to 3.33 percent of total loans, and total past due loans and “still acquiring” loans were down $255.3 million in the quarter to 1.20 percent of loans outstanding, compared to 2.12 percent in the first quarter of 2009.
“Our aggressive approach of charging down and disposing of non-performing assets led to a reduction of these problem assets in the quarter,” said Richard Anthony, Chairman and CEO.
It was a similar story for Colony Bankcorp, Inc. (Nasdaq:CBAN) which showed growth in net income over 2nd Qtr. 2008, from $ 4.363 million to $6.959, but was required t significantly increase its provision for loan losses, which threw the banks’ performance to a loss for the Qtr of $6.747 million for shareholders.  The decrease in net income for both periods is attributable to increased loan loss provisions, credit related charges and an increase in FDIC insurance assessments which are hurting all banks, “just at the wrong time,” in the opinion of Brian Foster, president of First Chatham Bank and a board member of the Georgia Economic Development Authority.   "Challenges in the housing and real estate market, particularly further deterioration in property valuations of non-performing assets, continued to have a significant impact on our loan portfolio and earnings in the second quarter. Credit quality issues and a slowing economy have created an unprecedented operating environment for the banking industry. While we remain committed to aggressively working through this down economic cycle in a timely and prudent manner, our efforts have been hampered by this difficult environment," said Al D. Ross, president and CEO of Colony Bankcorp, Inc. 
Non-performing assets decreased to $46.3 million, or 4.74 percent of total loans and other real estate owned as of June 30, 2009, another positive sign for the banking company. This compares to $53.1 million, or 5.45 percent as of March 31, 2009.
"The increase in loan loss provisions during second quarter 2009 was primarily driven by decreased property valuations of non-performing assets in coastal Georgia and Gulf coast properties. Until we see stabilization in the economy and the housing and real estate market, we expect problem assets and charge-offs to be elevated above historical levels as we work through our problem assets, but our strong capital position enables us to absorb losses without impairing the company's financial soundness,” said Ross.
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