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Tuesday, December 11, 2012 - 12:28pm

Georgia Bank Failures Slow

Bank failures in Georgia have slowed for the first time since the beginning of the recession. That’s welcome news for investors and others because Georgia leads the nation in bank failures.

More than eighty Georgia banks have failed since mid-2008. That’s partly because chartering rules here allowed many banks to form even though they lacked sufficient backing.

But experts say a number of signs are pointing to a slow recovery.

So far this year, fewer than ten Georgia banks have failed. And about 75 percent of banks are profitable, according to the Federal Deposit Insurance Corporation.

Chris Marinac is a banking analyst with FIG Partners in Atlanta. He says banks are dealing with fewer bad loans as well.

“I think the lower provision expense, which is the amount banks set aside for bad loans, is coming down," he said. "Banks have spent the last five years building up the reserves to massive proportions and now those reserves are starting to be reduced.”

Marinac says that means banks will have more capital to lend to small businesses and others seeking loans. He says there will be more bank failures but relatively few compared to the past four years.

That's because he says the climate has changed.

“Georgia was a very pro-business state, very easy to get a bank charter, very low barrier-to-entry," he said. "Today the barrier-to-entry is enormously high, which is a good thing. It’s good for the banks that remain the business.”