|Community banks here are healthy|
|Written by HAROLD BROWN Sentinel City Editor|
|Wednesday, 02 October 2013 10:12|
The financial health of community banks in Ohio continues to improve, although banks in northern Ohio lag behind their counterparts in the rest of the state, officials from the Office of the Comptroller Central District Office in Chicago said Tuesday morning.
About 95 percent of the community banks in the Cincinnati and Columbus areas get good marks, OCC Risk Committee Chairman and District Risk Officer John Meade said in a telephone conference. "In Cleveland and Northern Ohio eight out of 10 banks are healthy, compared to about two-thirds in 2011. Loan growth is up five percent, charge-offs are down and profitability is up 40 percent," Meade said.
With assets of $3 million to $11 billion, the OCC says there are 526 community banks and savings institutions with a national charter in the eight-state district. There are 92 such institutions in Ohio, 18 being in Northwest Ohio.
The Central District also includes Illinois, Indiana, Kentucky, Michigan, Minnesota, part of Missouri, North Dakota and Wisconsin.
"Overall we are clearly on an improving trend the past several quarters," said OCC's Central District Deputy Comptroller Bert Otto. "Even the Chicago market is stabilizing."
Meade said two of five community banks in Chicago are "still considered problem banks by the examiners. That is high by historical standards. Nine of 10 Illinois community banks outside the Chicago market are at low risk."
Otto said banks in the agricultural areas "are in pretty good shape." The reports points out that as of June 30 there were 104 national banks and federal savings associations that had agricultural loan concentrations exceeding 100 percent of capital.
Otto cited crop insurance as a key factor in why the OCC is not overly concerned. "A high percentage of farmers have purchased insurance, probably 80 to 85 percent," he said, a fact that helps the OCC believe the loan portfolios are "underwritten soundly."
As of June 30, 13 percent of Ohio Central District community national banks and federal thrifts had ag credit concentrations exceeding 100 percent, compared to 11 percent one year ago and nine percent in June 2011.
Four of the 18 national banks or thrifts in northwestern Ohio had an ag concentration exceeding 100 percent of capital. OCC officials said the local region is very comparable to the Central District average of 20 percent.
"There is certainly a place for community banks," Otto said. "They offer a great service that others can't provide."
Otto said community banks fill niches, and carry risks and face competition. "There are good controls in place" but he cautioned against banks "reaching too far" and "cutting corners" that can lead to problems.
The number of problem banks in the district fell to 84 as of June 30, down from 106 at the end of 2012 and 142 at the end of 2011.
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