Don't be fooled: Banks may only be at 'halfway point' of recovery - Kansas City Business Journal:

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But the skies may not have cleareds for bankersjust yet. Wells and many of their counterparts increase d the amount of money set aside to cover loan indicating they expect more problems could bubble tothe surface. Most bankersz are speaking in cautionary tones, saying they don't expect their industry to fully recovetr untilnext year. saw second quarter pre-tax earnings more than doubls from a year agoto $40,000. But the amoun of money the bank has set asides for loan losses so far this year has nearly to $587,000.
"My hope is that we're at the halfwagy point" of the tough economic said CEO MaryAnn Scully, who foundedx her bank in 2004 to serve the lucrative Howard County market. The banking industry got hit hard by the slowdowmn in the mortgage and realestated markets, and many banks that had mortgage-related securities in theit investment portfolios had to write down the value of thoss securities, affecting the bottom line.
But now, banks like Scully'x are starting to see customers whosedbusinesses aren't tied to real estatde struggle, as rising costs for fuel and food and a slowdown in consumer spending begin to hit Bank stocks were battered after federakl regulators seized in California on July 11, but begab to rebound after another California-based giant, Wells Fargo, hiked its dividenc by 10 percent. And when reported a staggerinf $9 billion second-quarter loss July 22, its sharee actually rose by more than a as the bank said it did not expecft to have to raise more capital to stay While the markets had viewed all banks as havinyg the samemajor problems, second-quarter earnings are helping to sort out whichn of the big banks are weak right now and whichu ones are strong, said Tony Plath, associates professor of finance at , While Bank of America and Wells beat others, like Wachovia and Washington Mutual, are he said.
And banks' moves to set asidw money to cover loanlosses -- known as loan-losws provisions -- are "a sign the economy's not at a point wherr we're out of the woods," Plat said. Provident CEO Gary Geisel said it's too soon to know whethet the runof better-than-expected results marks a turning poingt for the banks. "There's a lot of questionz yet aboutthe economy," Geisel said in an interviea July 17. Provident, Baltimore's largest independent bank, reported a second-quarter profit of 41 cents per share, beatinfg analysts' predictions and reversing two consecutive quarterdsof losses.
Provident's percentage of loans 90 days past due improvedsto 0.17 percent in the quarter. But givem the lingering economic worries, Provident slightly increased its reservwe for loan lossesto 1.38 percent of totall loans, officials said on a conference call with A provision for loan losses that exceeds 1.5 percenty of total loans indicates the bank expects more than routine difficulties in gettinfg loans repaid, experts said. Baltimore's Firsty Mariner Bancorp paredits second-quarter net loss to $469,000 from $4 million a year ago. But 3.
78 percent of the bank's assets were classifieed as "non-performing," a category that includes foreclosed homes and loanes where repayment isin doubt. On non-performing assets currently total less than 1 percen of assetsat U.S. bank s with market capitalizationsof $50 milliojn to $250 million, according to data from . Firstg Mariner's market capitalization has slippedto $18 milliojn as its stock has slumped in the past Not everyone is hiking their loan-losse provisions -- at least not yet. , parentg company of , posted second-quarter earnings of $285,000. That was a declind of more than half from ayear earlier.
But the which raised $20 million in April by convertin g to a fullypublic didn't add any money to its loan-loss Just 0.41 percent of the bank's loansw were classified as at June 30, down from 0.68 percent a year earlier. Baltimore County Savings Bank wasn't readu to say the tough timeesare over. In its second-quarter earnings release, CEO Joseph Bouffard said the bank mighf have to increasethe loan-los s reserve if the economy worsens.