Locally headquartered Bank of Tennessee posted second-quarter profits of $2 million, and has net income of $4,054,000 for the first half of 2009 despite a major increase in Federal Deposit Insurance Corp. premiums.
Despite the shake-up experienced by the national financial system over the past year, those numbers compare well with the bank’s 2008 figures at this stage, which were $4,139,000 year-to-date and $1.6 million for the second quarter.
In a Tuesday announcement, BT’s CEO, Roy Harmon, attributed the strong numbers to area customers’ desire for stability in the wake of disruptions to the financial system on the national level.
“We have very strong loan demand as customers are seeking stability and consistency in their banking relationship,” Harmon said.
In an interview last week, Harmon detailed the rising insurance rates being shouldered by all banks, including those that avoided the subprime loans and risky investments leading to last fall’s government “bailout” of the financial industry.
Early in 2009, BT learned its annual FDIC premium was increasing from $139,000 to $348,000 — a 150 percent hike.
“It was to cover the losses on IndyMac (a huge bank failure that occurred last summer) and other big hits that the FDIC insurance fund took,” Harmon said.
Apparently the increase — which also helped cover the new insured amount per account of $250,000, up from $100,000 —wasn’t sufficient. Early in the year, Harmon said, banks learned they also would be levied a “special assessment” that had to be accrued by June 30 and must be paid by Sept. 30.
BT’s contribution? An additional $307,000, turning the increase from last year’s premiums into one totaling $518,000, or 270 percent.
“They’re making all of the survivors pay for the sins of the troubled banks, and it comes out of your net income one way or another,” Harmon said.
That reality — and the bank’s recent hiring of “some great new employees” — leaves Harmon fairly bullish about the bank’s 2009 performance. Other highlights include total assets of $664 million and loans totaling $490 million.
BT is in its 35th year and has 11 Tri-Cities locations and about 200 employees.