Little momentum for area lenders

Q4 reports show more loan losses likely

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.

For the full set of Q4 numbers, click here. To see past quarterly wrap-ups, click here.