Against the backdrop of an otherwise tough quarterly banking report from the FDIC this week, there were some highlights for Georgia’s commercial banks compared to the national average. Georgia had better marks for average return on assets, return on equity, capital-to-assets levels and core deposits compared to total liabilities. On the flip side, our banks did lag the national average for noncurrent loans and net charge offs for the quarter. Overall, Georgia’s commercial banks (not including savings banks, savings institutions, and credit unions,) reported assets of $281 billion and deposits of $205 billion, with aggregate net income of $921 million for the first six months of 2008. Some other key takeaways from analysis of the quarterly data about all Georgia banks and savings institutions we now have available include:

• 96 percent are considered “well-capitalized” based the generally accepted threshold of having a Total Risk Based Capital Ratio of 10 percent or more.

• 67 percent were profitable through the six months ended June 30.

• 63 percent made a profit in the second quarter of 2008, one of the toughest quarters on record.

Georgia's commercial banks, savings banks, and savings institutions had over $27 billion in aggregate Tangible Equity and

Loan Loss Reserves on June 30, 2008, to protect and buffer the system. Nationally, 98 percent of all FDIC insured institutions are well capitalized, representing 99 percent of the total assets of FDIC insured institutions. For the quarter, U.S. commercial banks and savings institutions insured by the Federal Deposit Insurance Corporation reported net income of $5 billion, a decline 86.5 percent from the $36.8 billion the industry earned in the second quarter of 2007. Also of particular note, the number of institutions the FDIC classifies as problem banks increased to 117 from 90. And, we all need to be aware that the deposit reserve fund balance fell to $45.2 billion at the end of the second quarter, down from $52.8 billion at the end of the first quarter. The decline in the fund balance caused the reserve ratio to fall to 1.01 percent as of June 30 from 1.19 percent one quarter earlier. Because the reserve ratio is now below 1.15 percent, the Federal Deposit Insurance Reform Act of 2005 requires the FDIC to develop a restoration plan that will raise the reserve ratio to no less than 1.15 percent within five years. This means higher premiums for banks, and FDIC Chairman Sheila Bair said the agency’s approach could include charging higher premiums for banks that rely heavily on secured funding such as FHLB advances. See the FDIC’s Quarterly Banking Report web site for full details.

Make sure you are up to date with the most current economic information to help survive the challenges in today’s banking industry by attending one of GBA’s Fall Economic Forums scheduled in September. These forums will be held Sept. 4 at the Chattahoochee Country Club in Gainesville, Sept. 11 at Idle Hour Country Club in Macon and Sept. 23 at the Valdosta Country Club. Dr. Roger Tutterow, professor of Economics at Mercer University, Atlanta will provide an overview of the current national and regional economic environment.

Our thanks go to several bankers who have taken time to meet with their congressmen during the annual August recess. Meetings have been held with U.S. congressmen John Linder, Jack Kingston, Nathan Deal and Phil Gingrey so far. The meetings have been of mutual benefit to the bankers and congressmen alike by sharing our concerns about several issues before the Congress and to update these representatives about the state of the banking industry throughout Georgia. Bankers who have participated are: Ed Briscoe and Tim Krajec with HavenTrust Bank in Duluth; Pat McGoldrick with Legacy State Bank in Loganville; Tom Wiley with The Coastal Bank and Brian Foster with First Chatham Bank in Savannah; Wes Smith and Scott Smith with Northwest Georgia Bank in Ringgold; Gary Fox with Bartow County Bank, Mike McPherson with Unity National Bank and Rick Drews with Century Bank of Georgia in Cartersville; Ford Thigpen with WestSide Bank in Hiram; Eddie Wilson with River City Bank in Rome; and Randy Eaves with First National Bank of Georgia in Carrollton. “These meetings have been especially beneficial as our congressional delegation needs to hear directly from bankers on issues of importance to the industry,” said GBA’s Elizabeth Chandler who coordinated the meetings.

Details are being finalized for GBA’s Bank Counsel Conference scheduled for Oct. 5-7 at The Westin Savannah Harbor Resort & Spa. One highlight of the conference will be a full update on the recent developments in the laws affecting the banking industry.

The FDIC this week issued a financial institution letter highlighting the importance of strong liquidity risk management at financial institutions. The letter cites recent disruptions in credit and capital markets that could expose weakness in a bank’s funding structure.

Since the last Bulletin, the following companies have contributed to the GBA StatePAC:

• HeritageBank of the South, Albany, Len Dorminey, CEO

• Athens First Bank & Trust, Bill Douglas, CEO

• Wachovia Bank, N.A., Atlanta, Kendall Alley, Atlanta President

• Bank of Chickamauga, Scott Carswell, CEO

• Highland Commercial Bank, Marietta, Jim Powell, CEO

• Bank of Monticello, Steve Jordan, CEO

• Northwest Georgia Bank, Ringgold, Wes Smith, CEO

• Tifton Banking Company, Pat Hall, President

The officers, directors and staff of the following companies have contributed to the GBA FedPAC:

• HeritageBank of the South, Albany, Len Dorminey, CEO

• First National Bank of Griffin, Chuck Copeland, CEO

• Bank of Hiawassee, Elois Anderson, Chairman

• McIntosh State Bank, Jackson, Pete Malone, CEO

• Bank of Monticello, Steve Jordan, CEO

• Northwest Georgia Bank, Ringgold, Wes Smith, CEO

• United Bank, Griffin, Jim Edwards, CEO

For more information, please contact GBA's Elizabeth Chandler at 404.420.2027.

Mark your calendar to play in Leadership GBA’s eighth-annual Georgia BankPAC Classic, scheduled for Wednesday, Oct. 22, at Kinderlou Forest Golf Club in Valdosta. This two-person scramble tournament is sure to be a fun and challenging event for everyone. It’s also a great opportunity to invite your legislators and directors to meet and play golf with your colleagues in the banking industry. 

• HSA Basics

• HSA Market Update

• Product and Service Considerations

• Marketing Strategies

• Compliance

• Training & Lessons Learned

With questions, please call GBA’s Courtenay Pope at 404.420.2015.

Quickly locating the GBA educational or developmental opportunity best suited for you is easier than ever. GBA University’s Career Paths for Bankers^TM features a comprehensive course catalog that lists every seminar, webinar, conference, event and AIB course offered by GBA University. Check it out. Click on Career Paths for Bankers^TM from the GBA Home Page, then click on the Course Catalog link on the left side of the page. You’ll see categories that include:

• Topical course titles listed alphabetically

• In-person, webinar and online developmental resources offered for each topic.

GBA’s Southern Operations and Technology School will be Nov. 2-7 at the University of Georgia. The school is the premier provider of operations and technology training in the southeast and one of only a few in the country. The two-year program covers compliance, risk management, technology and general management.

There’s still time to register for GBA’s IRA Update and Review seminar Wednesday, Sept. 10, at the Hilton Garden Inn in Macon, and Thursday, Sept. 11, at the Holiday Inn Lanier Centre (formerly Best Western Lanier Centre) in Gainesville.  The registration fee is $225, and Patrice Konarik with Sunwest Training Corp. in Gilchrist, Texas, is the instructor. This intermediate-level workshop is an excellent refresher for the experienced IRA banker as well as a confidence builder for dealing with the more technical and complex areas of IRAs for the less-experienced IRA representative. Participants will receive a thorough update and review of significant final regulations

Looking to learn what topics are on examiners’ hot list for loan compliance? Need to find out if you need help with RESPA and/or flood insurance compliance? Get the answers to those questions and more by attending GBA’s annual Basic Loan Compliance seminar Sept. 17-18 at the Hilton Garden Inn in Macon. Designed for entry-level compliance officers, loan officers and compliance auditors, this one-and-a-half day seminar will provide an in-depth look at loan compliance.

The following AIB online classes begin the week of September 22. Please register two weeks in advance to secure a seat in the class. These courses are instructor-facilitated with weekly assignments, and can be taken from the comfort of your home or the convenience of your office. All you need is a computer, printer and Internet access.  (Classes with an asterisk * require Microsoft Excel Software.)

• ABA Online Review Course for the CTFA Exam (open enrollment), 12 weeks, $795

• Analyzing Bank Performance, 7 weeks, $745

• Consumer Lending, 16 weeks, $405

• General Accounting*, 16 weeks, $485

• Law & Banking: Applications, 16 weeks, $455

• Marketing Financial Services, 16 weeks, $405

• Principles of Banking, Accelerated, 10 weeks, $335

• Today's Teller: Developing Basic Skills* (open enrollment), 8 weeks, $315

There is still availability in the following AIB Online classes beginning Sept. 15.  Please register as soon as possible to secure a seat in the class.

• Analyzing Financial Statements*, 16 weeks, $485

• Commercial Lending, 16 weeks, $405

• Financial Accounting*, 16 weeks, $485

• Introduction to Mortgage Lending, 16 weeks, $405

• Law & Banking:  Principles, 16 weeks, $455

• Principles of Banking, 16 weeks, $405

• Understanding Your Construction Borrower, 10 weeks, $405

There are seats available in the AIB IRA Online Institute,12 weeks, $1,495 scheduled for Sept. 8, 2008. Please see the AIB Online Course Schedule for a complete listing or call GBA’s Alison Moreau at 404.420.2034 with questions.

AIB classes meet three hours each week for two to 15 weeks and are held at a local financial institution.  If you would like to see a specific AIB course offered in your area or if you have questions about AIB classroom courses, please call GBA’s Alison Moreau at 404.420.2034.  Here are the upcoming AIB classroom courses for Fall 2008:

• Principles of Banking taught by Michelle Collings of Georgian Bank, Atlanta
  Beginning Sept. 11, 10 weeks, $195, text $65

• Commercial Lending taught by Steve McFarland of Gwinnett Community Bank, Duluth
  Beginning Sept. 11, 10 weeks, $195, text $90.

Just a reminder that GBA will offer the following webinars the week of Sept. 8:

• New Regulation Z Mortgage Lending Rules: A First Look – Sept. 8

• Dealing with Subpoenas, Summonses, Garnishments & Tax Levies – Sept. 9

• CRA Frequently Asked Questions – Sept. 11

• Major Performance Factors of Selling – Sept. 11

• Managing & Maintaining Client Relationships: Effective Business Development Calling Skills – Sept. 12

All webinars are live and allow time for questions and answers. The $250 registration fee gives you access to one web site “seat,” one telephone site license and all handout materials. If you can’t attend the webinar, you may buy the audio CD, handout materials and a password to see the information online. With questions, please call GBA’s Courtenay Pope at 404.420.2015.

If you’re concerned about retaining customers whose deposits exceed the FDIC coverage limits, there’s another tool for you to consider adding to your bank’s overall insurance program.  Excess Deposit Bond (EDB) coverage is now available from Progressive everywhere in the continental United States. Progressive underwrites the ABA-sponsored and GBA-endorsed Bond and D&O Insurance sharing partnership. The idea behind EDBs is simple: a cost-effective insurance policy protects depositors for amounts above what is insured by the FDIC in the event of bank insolvency, according to Progressive.

Until six months ago, Other Real Estate Owned Insurance was not a line item that had much effect on a bank’s bottom line. However, in the current market conditions, the expense to insure foreclosed properties has grown significantly. Most banks are paying a much higher rate for this coverage than they should. GBA members may be able to get better rates through Berkshire Hathaway, which has developed a specific program for this risk through the GBA.

Improve Your Bottom Line With GBA Services, Inc. Offerings

Please remember to include the Georgia Bankers Association on the list of recipients for announcements about promotions, new employees and special recognition your bank has received. 

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Georgia Bankers Association • 50 Hurt Plaza, Suite 1050, Atlanta, GA 30303 • Phone 404.522.1501 • Fax 404.522.9848 • www.gabankers.com