If their most recent report to federal regulators are any indication, Middle Tennessee's community banks will spend much of 2011 as they have the past three years: hunkered down and handling problem credits.
As a group, the 27 lenders we track posted a combined loss of $44 million in the fourth quarter. Excluding the $50.5 million of red ink from GreenBank, which does almost half of its business in the Nashville region, the others posted a profit of $6.6 million — about half their income from the third quarter. In many banks' cases, the culprit was a higher loan loss provision, money set aside for future losses.
For instance, at Wilson Bank & Trust, the provision — which sits on the income statement just below net interest income — soared to $4.7 million in the fourth quarter from less than $2 million in the third. At Community First Bank & Trust in Columbia, the provision jumped more than threefold to $3.1 million. And at Peoples State in Nolensville, the increase took more than $1.3 million out of the bank's revenues.
The other prevailing trend of the past few years — little loan growth or outright shrinkage — also continued in late 2010. Only 10 of the 27 regionally headquartered lenders grew their loan books during the quarter. As a group, their portfolios shrank by 1.5 percent from Sept. 30. Since peaking at more than $12.4 billion in the fall of 2009, area lenders have trimmed their lending sails by a collective $510 million.
There were, as always, some bright spots. Three of the region's youngest banks — Avenue, CapStar and Franklin Synergy — all posted strong growth during the last few months of 2010, combining to add more than $180 million in assets to their balance sheets. That growth helped CapStar, which opened its doors in the summer of 2008, get within $36,000 of posting its first quarterly profit.