The Federal Deposit Insurance Corp. on Tuesday reported that profitability for Nevada's banks and thrifts was down more than $2 billion during the first six months of the year, as the number of banks headquartered in the state continued to decline.
The FDIC said that combined Nevada banks and thrifts earned $3.1 billion during the first half of the year, which was down 43.6 percent from $5.5 billion from the same period last year. Banks in Nevada reported a loss of $946,000 million for the first six months of 2009.
As of June 30, there were 28 banks in Nevada, down from 31 last year and 39 in 2009 after a wave of bank failures and mergers. Total assets, however, continue to rebound, reaching $1.31 trillion as of June 30, up from $1.2 trillion last year, according to the FDIC.
Among the three bank failures since June 30, 2010, were Nevada Commerce Bank and Sun West Bank in Las Vegas. Both banks were acquired by City National Bank in Los Angeles and cost the FDIC's Deposit Insurance Fund $128 million.
Nevada Security Bank in Reno was taken over by Umpqua Bank at a cost to the Deposit Insurance Fund of $81 million.
"Banks have continued to make gradual but steady progress in recovering from the financial market turmoil and severe recession that unfolded from 2007 to 2009," acting FDIC Chairman Martin Gruenberg said.
Gruenberg said the recovery "has expanded to include a growing proportion of insured institutions."
While the industry has continued to show signs of improvements, results were mixed for banks in Las Vegas.
Western Liberty Bancorp Inc., the holding company for Service1st Bank of Nevada, reported a second-quarter loss of $4.6 million, which was driven by a $4.4 million provision for loan losses.
Nevada State Bank, a subsidiary of Zions Bancorporation, reported second-quarter earnings of $18.2 million, compared with $4.2 million in the first quarter of 2011. The company attributed its earnings growth to lower credit costs and improving loan quality.
Overall, the number of troubled banks tracked by the FDIC fell in the second quarter, the first drop in five years. As of June 30, there were 865 banks on its confidential "problem" list, down from 888 in the first quarter.
The FDIC also said the banking industry earned $28.8 billion in the second quarter, up from $20.9 billion for the same period last year. This is the eighth consecutive quarter that earnings registered a year-over-year increase.
It was "the smallest such improvement in the past seven quarters," the FDIC said. This points to an expected decline in the release of loan loss reserves, which have padded earnings over the past several quarters.
JP Morgan Chase & Co. reported net income of $5.4 billion during the second quarter, helped by a $1.2 billion reserve release. Wells Fargo & Co. second-quarter income of $3.9 billion reflected a $1.1 billion decline in serves, while Bank of America Corp.'s $8.8 billion second-quarter loss was helped somewhat by a $2.5 billion declined in loan loss reserves.
The FDIC said the industry's loan-loss provisions, which are additions to reserves to cover expected loan losses, totaled $19 billion in the second quarter, less than half of the $40.4 billion set aside in the second quarter of 2010.
Loan quality continued to improve, with the FDIC reporting noncurrent assets of 2.75 percent of total assets as of June 30, compared with 3.33 percent a year earlier. In Nevada, noncurrent assets totaled 3.17 percent for the first six months of the year down from 5.61 percent last year.
Contact reporter Chris Sieroty at firstname.lastname@example.org or 702-477-3893.