GEORGIA STATE UNIVERSITY ECONOMIC FORECASTING ECONOMIC FORECASTING - - PowerPoint PPT Presentation

GEORGIA STATE UNIVERSITY ECONOMIC FORECASTING ECONOMIC FORECASTING CONFERENCE

Marlon G. Cook Regional Manager Division of Insurance and Research Atl t G i Atlanta, Georgia August 26, 2009

Disclaimer: Disclaimer: The views expressed herein are those of the author and presenter

and do not necessarily reflect official positions of the Federal y p Deposit Insurance Corporation.

All of the information used was obtained from FDIC call reports. Media should consider these comments off the record.

Georgia Banking Performance Georgia Banking Performance

Earnings Remain Weak among Insured Institutions

1 500 45 000

g g

Net operating income Millions ($) Net operating income Millions ($) 1,000 1,500 30,000 45,000

• 500
• 15,000

(1,000) (500) (30,000) (15,000) Atlanta Metro (Left) Georgia (Left) National (Right) (1,500) ( , ) Q1.06 Q1.07 Q1.08 Q1.09 (45,000) ( , ) National (Right) Source: FDIC, all insured institutions included.

Profitability is Below the National Trend in Atlanta and Georgia Profitability is Below the National Trend in Atlanta and Georgia

Net operating income-to-Assets Aggregate

1.0 2.0 1 0 0.0

• 2.0
• 1.0

Atlanta Metro Georgia National

• 3.0

Q1.06 Q1.07 Q1.08 Q1.09

Source: FDIC, all insured institutions included.

The Number of Institutions Loosing Money has Increased

100 Institutions reporting a loss in net operating income Percent 81 80 100 60 Atlanta Metro Georgia National 11 20 40 Q1.05 Q1.06 Q1.07 Q1.08 Q1.09

Source: FDIC, all insured instituitons included.

Established Institutitions in the Atlanta Metro area Comprise an Increasingly Larger Share of the Banks and Thrifts that are Loosing Money

100

Established (>= 3 years old)

Larger Share of the Banks and Thrifts that are Loosing Money

Percent of total that lost money

80

Established (>= 3 years old) Denovo (< 3 years old)

40 60 20 40 Q1.03 Q1.04 Q1.05 Q1.06 Q1.07 Q1.08 Q1.09

S FDIC ll i d i tit ti Source: FDIC, all insured institutions.

M i C i h b Wid d A I d I tit ti Margin Compression has been Widespread Across Insured Institutions

Net interest margins Median percentage

4.4 5.5

Atlanta Metro Georgia National

3.3 1.1 2.2 0.0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Source: FDIC, data as of March 31st for all insured institutions.

Net Charge-offs Peaked in Fourth Quarter 2008 g

Quarterly Annualized Net Charge-offs to Total Loans Median (%) 1.80 Median (%) 1.20 Atlanta Metro Georgia National 0.60 0.00 Q1.05 Q1.06 Q1.07 Q1.08 Q1.09 Source: FDIC Quarterly annualized data for all insured institutions Source: FDIC, Quarterly annualized data for all insured institutions.

Loan Loss Provisions Have Declined but Remain Elevated

Provision expenses-to-average assets Median percentage 1.50 1.00 Atlanta Metro Georgia National 0.50 0.00 Q1.05 Q1.06 Q1.07 Q1.08 Q1.09 Source: FDIC, all insured institutions.

The Majority of Construction Loans have been Primarily for The Majority of Construction Loans have been Primarily for Construction Other than 1-to-4 Family Residential Building

C&D loan category-to-total risk based capital

140 160

Atlanta Metro Georgia National

Aggregate percentage

80 100 120 20 40 60 20 2008 2009 2008 2009 2008 2009

C&D Single Family C&D Other

Source: FDIC, data as of March 31st for all insured institutions. Note: Prior to 2007, the break out of C&D loan categories did not exist.

C it l E t C&D L di h St t d t T Off Capital Exposure to C&D Lending has Started to Taper Off

C&D-to-Total Risk Based Capital Aggregate percentage

120 140 80 100 Atlanta Metro Georgia National 40 60 20 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Source: FDIC, data as of March 31st for all insured institutions.

G th i B k d D it h l d t F l th C t ti Growth in Brokered Deposits helped to Fuel the Construction Boom Among Atlanta Metro Area Community Institutions

M di (%) M di (%) 30 36 85 90 Brokered-to-Total Deposits (Left Axis) C&D-to-Assets (Left Axis) Core-to-Total Deposits (Right Axis) Median (%) Median (%) 18 24 75 80 6 12 65 70 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 60 S C f 31 f $1 Souce: FDIC. Data as of March 31st for institutions with assets less than $1 billion and headquarters located in the Atlanta Metro area.

Troubled Loan Balances Inside the Atlanta Metro Area Have Risen Faster than Average over the Past Several Quarters

Trouble loan balance-to-total loans Aggregate percentage 5.49

5 6

Atlanta Metro

3 4

Atlanta Metro Georgia National

1 2

0.55

1 Q2.06 Q3.06 Q4.06 Q1.07 Q2.07 Q3.07 Q4.07 Q1.08 Q2.08 Q3.08 Q4.08 Q1.09

Source: FDIC, all insured institutions.

T bl d L B l Shift T d C i l R l E t t

Troubled loan category balance-to-total troubled loan balance

Troubled Loan Balances Shift Toward Commercial Real Estate Among Community Institutions in the Atlanta Metro Area

80 100 Single Family Real Estate CRE for Office / Retail Troubled loan category balance to total troubled loan balance Aggregate percentage 40 60 80 20 40 Q1.07 Q2.07 Q3.07 Q4.07 Q1.08 Q2.08 Q3.08 Q4.08 Q1.09

Source: FDIC. Institutions headquartered in the Atlanta metro area with assets less than $1 billion are used. Note: Trouble loans = (noncurrents + chargeoffs): Single family real estate consist of 1-to-4 family loans and C&D for single family homes CRE for office/retail consist of owner and nonowner occupied nonfarm nonresidential and other single family homes. CRE for office/retail consist of owner and nonowner occupied nonfarm nonresidential and other C&D.

A Sizable Increase in Noncurrent Loan Levels has Pushed th R C R ti t R d L the Reserve Coverage Ratio to Record Lows

Loan loss reserve-to-noncurrent loans Median percentage

350 420

Atlanta Metro Median percentage

210 280

Georgia National

70 140 Q1.05 Q1.06 Q1.07 Q1.08 Q1.09

Source: FDIC

Asset Quality Weakness among C&D Loan Products Drives Overall Past Due Levels Higher

750 900

centage ge)

Atlanta Metro Georgia C&D

300 450 600

nt Loan Perc Point Chan

Georgia Total Loans Atlanta Metro Total Loans Atlanta Metro C&D National C&D

• 150

300

Noncurren (Basis

Total Loans National Total Loans C&D

• 100
• 50

50 100 150

30-89 Day Past Due Loan Percentage (Basis Point Change)

Source: FDIC, data is aggregate for March 31st (2008-2009) for all insured institutions.

The Majority of Insured Institutions Remain Well Capitalized

12

Leverage capital ratio Median percentage

12 9 6

Atlanta Metro Georgia National

3 Q1.05 Q1.06 Q1.07 Q1.08 Q1.09

Source: FDIC Source: FDIC

For further information or a copy of today’s presentation, please contact: Marlon G. Cook at 678.916.2171 or macook@fdic.gov Marlon G. Cook at 678.916.2171 or macook@fdic.gov T St t P fil To access our State Profiles: http://www.fdic.gov/bank/analytical/stateprofile/index.html