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 Atlanta, Georgia t G i 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 g g Net operating income Net operating income Millions ($) Millions ($) 1 500 1,500 45 000 45,000 1,000 30,000 500 15,000 - - (500) (15,000) Atlanta Metro (Left) Georgia (Left) (1,000) ( , ) ( (30,000) , ) National (Right) National (Right) (1,500) (45,000) Q1.06 Q1.07 Q1.08 Q1.09 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 2.0 1.0 0.0 -1.0 1 0 -2.0 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 Institutions reporting a loss in net operating income Percent 100 100 81 80 Atlanta Metro Georgia National 60 40 11 20 0 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 Larger Share of the Banks and Thrifts that are Loosing Money Percent of total that lost money 100 Established (>= 3 years old) Established (>= 3 years old) Denovo (< 3 years old) 80 60 40 40 20 0 Q1.03 Q1.04 Q1.05 Q1.06 Q1.07 Q1.08 Q1.09 S Source: FDIC, all insured institutions. FDIC ll i d i tit ti

M Margin Compression has been Widespread Across Insured Institutions i C i h b Wid d A I d I tit ti Net interest margins Median percentage 5.5 Atlanta Metro Georgia National 4.4 3.3 2.2 1.1 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 (%) Median (%) 1.80 Atlanta Metro 1.20 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 Aggregate percentage 160 Atlanta Metro Georgia National 140 120 100 80 60 40 20 20 0 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.

Capital Exposure to C&D Lending has Started to Taper Off C it l E t C&D L di h St t d t T Off C&D-to-Total Risk Based Capital Aggregate percentage 140 120 100 Atlanta Metro Georgia National 80 60 40 20 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Source: FDIC, data as of March 31st for all insured institutions.

Growth in Brokered Deposits helped to Fuel the Construction G th i B k d D it h l d t F l th C t ti Boom Among Atlanta Metro Area Community Institutions Median (%) M di (%) M di Median (%) (%) 36 90 Brokered-to-Total Deposits (Left Axis) C&D-to-Assets (Left Axis) 30 85 Core-to-Total Deposits (Right Axis) 24 80 18 75 12 70 6 65 0 60 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 S Souce: FDIC. Data as of March 31st for institutions with assets less than $1 billion and headquarters C f 31 f $1 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 5.49 Aggregate percentage 6 5 Atlanta Metro Atlanta Metro Georgia 4 National 3 2 0.55 1 1 0 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.

Troubled Loan Balances Shift Toward Commercial Real Estate T bl d L B l Shift T d C i l R l E t t Among Community Institutions in the Atlanta Metro Area Troubled loan category balance-to-total troubled loan balance Troubled loan category balance to total troubled loan balance Aggregate percentage 100 Single Family Real Estate CRE for Office / Retail 80 80 60 40 40 20 0 0 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 the Reserve Coverage Ratio to Record Lows R C R ti t R d L Loan loss reserve-to-noncurrent loans Median percentage Median percentage 420 350 Atlanta Metro Georgia National 280 210 140 70 0 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 900 centage Georgia 750 ge) C&D Atlanta Metro Atlanta Metro nt Loan Perc Point Chan 600 Georgia C&D Total Loans 450 Atlanta Metro National Total Loans Total Loans 300 300 (Basis C&D C&D Noncurren National 150 Total Loans - -100 -50 0 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 Leverage capital ratio Median percentage 12 12 9 Atlanta Metro Georgia National 6 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 To access our State Profiles: St t P fil http://www.fdic.gov/bank/analytical/stateprofile/index.html