Minnesota banks continue to recover

  • Article by: JENNIFER BJORHUS , Star Tribune
  • Updated: February 28, 2012 - 8:32 PM

A quarterly FDIC scorecard shows profits nearly tripled from 2010.

Minnesota's banking industry tripled profits in 2011 but remains far off precrisis levels as it struggles to grow loans in a weak recovery, the Federal Deposit Insurance Corp. reported Tuesday.

Minnesota community banks -- minus banks chartered elsewhere such as Wells Fargo, U.S. Bank and TCF Financial -- recorded profits of $410 million last year, compared with $139 million in 2010.

But total loans outstanding were largely flat at $40.8 billion, compared with $40.9 billion in 2010, according to the FDIC's fourth-quarter banking profile.

Bank profits are getting a lift from setting aside less money to cover bad loans. Minnesota banks set aside about $235 million less for loan losses last year compared with 2010. A key concern is flat or declining loan levels, which banks have blamed on weak demand from cautious borrowers.

The year-end FDIC report echoes a report the Minneapolis Fed released last week on Minnesota banks, which showed banks largely on the mend.

In other Minnesota highlights from the FDIC's quarterly profile:

In Minnesota, nearly three-quarters of the community banks showed profits in 2011, compared with about 60 percent in 2010.

Asset quality continues to improve as banks renegotiate and charge-off problem loans and more customers pay up. The ratio of nonperforming assets to assets was 3.15 at the end of 2011. That's down from 3.93 percent at the end of 2010 but still above the ratio of 1.21 in 2007.

The average return on assets rose to 0.63 percent at the end of 2011, up from 0.23 percent at the end of 2010 but still down from 1.37 in 2007.

Overall revenue, however, continues to show weakness. Total interest and noninterest income, such as fees, combined fell 3.5 percent to $3.3 billion last year, from $3.4 billion in 2010.

Banks continue to shoulder a heavy load of repossessed real estate, although it's down from 2010. Banks held $1 billion worth of property at the end of 2011 taken back in foreclosures and other situations. That's down from $1.1 billion in 2010 yet far above the $261 million worth of real estate they held in 2007.

For data on individual banks in Minnesota, go to www.startribune.com/bankreport.

Jennifer Bjorhus • 612-673-4683

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