Procurement News Notice |
|
| PNN | 5202 |
| Work Detail | A brand new school year is cranking up in South Carolina, but at least one report card is ready for review. The latest profits for U.S. banks have been tallied and posted for the first half of the year. No lenders appear to be in danger of flunking out in the Palmetto State. But the latest mid-term update from the Federal Deposit Insurance Corp. points to room for improvement. The 58 banks that still called South Carolina home as of June 30 earned a combined $116 million through that date, the FDIC said last week, down 4 percent from the first six months of 2015. The bottom-line decline for the second quarter was wider, with profits skidding about 37 percent to $56 million compared to the April-June period last year. The numbers don’t exactly mesh with national trends, and the exact reasons for the slide are innocuous. At first blush, part of the falling figures could be explained away by the thinning herd of South Carolina-based banks. The state has bid adieu to five of its homegrown financial institutions over the past year and 40 over the past decade, mostly to acquisitions by out-of-state buyers. A recent local example was the sale of Mount Pleasant-based Southcoast Community Bank to BNC of High Point, N.C. But that reasoning doesn’t seem to hold water in this case. An apples-to-apples comparison of FDIC data shows the industry in South Carolina would have made more money in the first six months of 2015 — about $132 million as opposed to $121 million — without the five lenders that have since gone away. Instead, the more likely broad-based explanation is that income and profits, for various reasons, aren’t growing as fast. Nearly half of South Carolina’s banks reported lower earnings through June 30 compared to the first half of last year, according to the FDIC. The potential culprits could include escalating regulatory costs, a pullback in commercial real estate lending, one-off losses and the skimpy margins that are part-and-parcel in a world of ultra-low-interest rates. Another factor is that the majority of South Carolina-based banks are small to very small — 31 oversee less than $1 billion in loans and other assets — and many operate in low-growth areas. The smallest among them is Kingstree Federal Savings & Loan, with slightly less than $34 million in assets and net income of about $1,000 at the mid-year point. But growth also can be challenging in the bigger urban areas, including the Charleston region, where local lenders face stiff competition from deeper-pocketed rivals from outside the state. The South Carolina bank that took the deepest loss in the second quarter and for the first six months of the year was Loris-based Horry County State Bank, which was $7.3 million in the hole through June 30, according to the FDIC report. At the top end of the spectrum was Columbia’s South State Bank, far and away the largest financial institution based in South Carolina. Its year-to-date earnings of $51.8 million were essentially flat. At No. 2 CresCom Bank, net profits fell 6 percent to $6.9 million, partly because of merger expenses the Charleston-based company has incurred this year. The national picture shows continued if uneven strength in the industry, eight years after the last financial crisis bared its teeth. The 6,058 U.S. banks as a whole outperformed the miniscule South Carolina subset. The entire industry made $82.6 billion for the first half of the year, or flat compared to 2015. Earnings edged up 1.4 percent to a record $43.6 billion for the April-June quarter. Overall, U.S. banks are still operating in a “challenging environment,” said Martin Gruenberg, chairman of the FDIC. Many lenders see some relief on the way, with Janet Yellen of the Federal Reserve recently suggesting that the case for boosting interest rates is looking better based on labor market trends, the U.S. economic outlook and inflation. The central bank’s policymakers meet Sept. 20-21. If rates go higher, Gruenberg said, “that will be a double-edged sword for the industry.” While banks would earn more from their borrowers, they’ll have to borrow from depositors and other sources to finance those loans. And they’ll have to pay more for that money. South State CEO Robert Hill Jr. thinks the market is more than ready. “I think there was a time for low interest rates. There was a time that our economy was in a hole. It needed to regain its legs, it needed to gain some momentum and strength,” Hill said on the latest episode of “Carolina Business Review.” “But we’re clearly there now. And as the economy has normalized, it’s time for interest rates to normalize as well. |
| Country | United States , Northern America |
| Industry | Financial Services |
| Entry Date | 15 Oct 2016 |
| Source | http://www.postandcourier.com/20160904/160909821/south-carolina-banks-on-whole-earning-less-in-2016 |
