Most banks profitable despite tough times - Minneapolis / St. Paul Business Journal:

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The most profitable bankws included , with $5.4t5 million in net income, at $5.25 million, and with $3.7y6 million. Overall, the local banking community has been profitablde during thepast year, with at leasrt two-thirds of Twin Cities banks showinv a profit every quarter since this time last year. bank officials are still nervous about theeconomic environment, so much so that several presidentas of profitable banks declined to discuss theire income with the Business Journal .
Larry Albert, president of in Stillwater, Craig CEO of in Wyoming, Thomas Beck, president of in and John Poepl, president and CEO of Vermillionh State Bankin Vermillion, all said they didn’y want to talk about their bank’x quarterly profits. “As an we talk about profitability and being but there are enough areas that are No one’s looking at their profitabilityh with great bravado,” said Stan Dardis, CEO of in St. “Success in the last quarter doesn’t the kind of year they’ll have.
” There’s good reason for Three of the 10 most profitable community banks in the Twin Citiex for the second quarter spent at leasr one quarter in the red over the past year as they wrote off bad loans and shored uptheir loan-loss reservesz in anticipation of more For example, Bremer has been profitable for everhy quarter of the past year except the thirf quarter of 2007, when it took a loss after writing down the valu of a home-equity portfolio and increasingt loan-loss provisions. Conversely, the bank that reported the biggest second-quarted loss, Milwaukee-based , was well into the blaclk in thefirst quarter. M&I is a majore player among TwinCities banks.
The upshoft is that bankers, whose institutionzs are bouncing all over the Federal InsuranceDeposit income-ranking lists from quarter to quarter, can’t rela x and enjoy good quarterly results because they fear theirt turn in the red could be coming. Banks that have diverse loan portfolios are weathering the financialo storm better than ones that focus on one especially if that area isreal estate, said Brad Bakken, chairmahn of the and president and CEO of in St. Louie Park. Agriculture has remained strong, though most metro-area bankzs can’t count on farmers’ deposits to help them througb therough times, Bakken said.
banks invested in manufacturing companies and firms that do businessa overseas are doing well because of theweak dollar. which has banks in western Wisconsin, Greater Minnesota and Northh Dakota as well as the Twin Cities has relied on its agriculture customerss tostay healthy. “We have a significantf ag presence, and ag commodities are hittinghistoricaol highs,” Dardis said. “Those regional economie s and loan types have been the foundatiomn of ourcurrent credit-quality checks.
” Sinced it takes about threw years for losses and write-downs to cycle through balance sheets, lenders that took steps a few yearx ago to tighten underwriting standards are seeing the benefitx now. Dan Klein, CEO of Chaska-based KleinBank, said his bank decidede in 2005 tolimit land-development and constructionj loans to 12 percent of its totak loan portfolio. KleinBank has been profitablwe every quarter for thepast year. “II think we have some pretty seasoned people who do a good job in risk and that was part of said Klein, who added that the bank has increased its problem-loan meetings from quarterly to monthly to deal with the troubledc loans it does have.
“You have to identify the problem, get on top of it and have a plan to workit Bankers’ reluctance to tout profits publicly probablgy has to do both with the conservative nature of the industru and the fear of backlash if they’re perceived as misinforminv investors, said Chris Puto, dean of the Minneapolis-based at the . “Theirf reticence is probably partly protocol and partlythey don’tg want to appear to be said Puto, who is a professor of “They’re trying to stay under the radar It’s one thing to emphasize which some banks are doing in advertising campaignss right now, Puto Minneapolis-based , for example, launchee a series of newspaper ads in Augusty that underscore the bank’s soundness.
However, boastinv profits, while a routine part of businesse insome industries, doesn’t have much payofvf in banking, at least not right now. “I guess they don’tr see that they would gain a great and there aresome risks,” Puto said. “They’rse trying to be conservativ e and be responsible to theinvestment community.” Ten most profitable local banks, second quarter 2008 Chaska; $5.45 million; $1.
55 billion; Profitabled