IBJNews

Indiana banks finally regain pre-meltdown asset levels

Back to TopCommentsE-mailPrintBookmark and Share

Indiana’s 92 state-chartered banks and thrifts, working through a pile of troubled loans since the economy nosedived five years ago, appear nearly to have regained their footing.

But observers say state-chartered banks, particularly many of the smaller ones, face ongoing challenges—from low interest rates to federal regulations to access to capital.

Total assets—what these institutions held in the way of loan value and investments—rose 7.7 percent in 2012 to $39.9 billion. That’s within a few whiskers of pre-crash assets of $40.1 billion, in 2008, according to the annual financial report of the Indiana Department of Financial Institutions.

Total assets of state-charted banks fell to $36.1 billion in 2009. That year, a little more than 21 percent of Indiana financial institutions were unprofitable—compared with 3.7 percent in 2012.

Deposits, meanwhile, showed an 8-percent increase from 2011 to hit $2.5 billion last year.

“Due mainly to the recovery from the recession, improvement is noted in the performance and condition of Indiana’s financial institutions as reflected in most financial categories and ratios” from 2011 to 2012, the department said in its report.

The economy is still soft, but lending has picked up in auto and residential mortgages, said John C. Reed, executive vice president of investment banking at David A. Noyes & Co. in Indianapolis.

“Bankers are now lending. They were spending their time as [bad loan] work-out officers” in the last four years, added Reed.

But low interest rates are making it difficult for banks to make money from loans, particularly for rural community banks, said Joe DeHaven, president and CEO of the Indiana Bankers Association. “That margin is just continuing to get squeezed.”

Many of the larger banks have other business lines and diverse sources of fee-income to help offset the effects of lower margins, he noted.

Compounding the challenge is a new wave of banking regulation, including more than 10,000 pages of regulation under the Dodd-Frank Act, which, DeHaven said, “is just chewing these guys up.”

Many of the smaller banks also struggle to gain access to capital that the bigger banks can more easily raise by issuing new shares.

DeHaven said a number of rural banks, in particular, continue to struggle to attract a high-quality professional staff for the increasingly complicated and more highly regulated industry.

While Indiana has had only a few state-chartered banks fail in recent years, and although aggregate financial signs are improving, the industry here continues to consolidate. DeHaven remembers that in 1980 Indiana had about 600 Indiana-headquartered financial institutions—compared with about 100 today.

Some observers expect a new wave of mergers as small community bankers grow weary of the current environment and decide it’s time to retire. Many larger banks have seen their shares rise, meaning the stock has given buyers a stronger currency to make acquisitions.

Reed points to success of banks such as Muncie-based First Merchants, which earlier this year snapped-up Munster based CFS Bancorp and its Citizens Financial Bank, for $115 million in stock.

Last year First Merchants bought the loans and deposits of the failed SCB of Shelbyville.

“I don’t think we’ll have an onslaught, but we’ll some mergers and acquisitions,” said Reed, who brokered numerous deals in Indiana over the last three decades.

The average return on assets for state-chartered financial institutions in 2012 was 1.15 percent, up from 0.93 percent in 2011, said the Department of Financial Institutions. Return on assets is a measure of operational efficiency.

ADVERTISEMENT

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
ADVERTISEMENT

facebook - twitter on Facebook & Twitter

Follow on TwitterFollow IBJ on Facebook:
Follow on TwitterFollow IBJ's Tweets on these topics:
 
Subscribe to IBJ
  1. Of what value is selling alcoholic beverages to State Fair patrons when there are many families with children attending. Is this the message we want to give children attending and participating in the Fair, another venue with alooholic consumption onsite. Is this to promote beer and wine production in the state which are great for the breweries and wineries, but where does this end up 10-15 years from now, lots more drinkers for the alcoholic contents. If these drinks are so important, why not remove the alcohol content and the flavor and drink itself similar to soft drinks would be the novelty, not the alcoholic content and its affects on the drinker. There is no social or material benefit from drinking alcoholic beverages, mostly people want to get slightly or highly drunk.

  2. I did;nt know anyone in Indiana could count- WHY did they NOT SAY just HOW this would be enforced? Because it WON;T! NOW- with that said- BIG BROTHER is ALIVE in this Article-why take any comment if it won't appease YOU PEOPLE- that's NOT American- with EVERYTHING you indicated is NOT said-I can see WHY it say's o Comments- YOU are COMMIES- BIG BROTHER and most likely- voted for Obama!

  3. In Europe there are schools for hairdressing but you don't get a license afterwards but you are required to assist in turkey and Italy its 7 years in japan it's 10 years England 2 so these people who assist know how to do hair their not just anybody and if your an owner and you hire someone with no experience then ur an idiot I've known stylist from different countries with no license but they are professional clean and safe they have no license but they have experience a license doesn't mean anything look at all the bad hairdressers in the world that have fried peoples hair okay but they have a license doesn't make them a professional at their job I think they should get rid of it because stateboard robs stylist and owners and they fine you for the dumbest f***ing things oh ur license isn't displayed 100$ oh ur wearing open toe shoes fine, oh there's ONE HAIR IN UR BRUSH that's a fine it's like really? So I think they need to go or ease up on their regulations because their too strict

  4. Exciting times in Carmel.

  5. Twenty years ago when we moved to Indy I was a stay at home mom and knew not very many people.WIBC was my family and friends for the most part. It was informative, civil, and humerous with Dave the KING. Terri, Jeff, Stever, Big Joe, Matt, Pat and Crumie. I loved them all, and they seemed to love each other. I didn't mind Greg Garrison, but I was not a Rush fan. NOW I can't stand Chicks and all their giggly opinions. Tony Katz is to abrasive that early in the morning(or really any time). I will tune in on Saturday morning for the usual fun and priceless information from Pat and Crumie, mornings it will be 90.1

ADVERTISEMENT