To the Editor:

The story about Georgia's banks in the Sept. 10 issue ["Search for 'Problems' Often Leads to Ga."] was, of course, of great interest to us at the Georgia Bankers Association. As was pointed out, some banks in Georgia and other areas of the country are facing serious asset quality issues stemming from the weak residential real estate market.

However, we always advise caution when reporting about analyst's lists of what they define as problem banks. Each firm has its own definition of what it believes to be indicative of serious problems, which isn't always consistent with what the FDIC or other regulators measure. And their analysis of some of the raw data can often lead to incomplete conclusions.

For example, our view is that the Integrity Bank closure will have a negligible effect at most on the value of Atlanta residential real estate, because we understand that almost one-third of its problem loans were not even for properties in the Atlanta market.

The issue is that in formulating their problem bank lists, these private firms rarely have in-depth discussions with bank management to understand actions being taken to shore up their institution's finances, nor do they take into account other key information such as collateral backing stressed loans, a bank's success in raising capital since the most current data was released, and revaluation of problem assets based on current market conditions, so the data they are analyzing may well be incomplete.

The only "lists" of problem banks that matter are those kept by the regulators. Regulators rightly protect the identity of those institutions in the interest of working with them to try and regain financial health and preventing unnecessary turbulence in the banking market.

The FDIC, OCC, OTS, Federal Reserve, and Georgia Department of Banking and Finance have access to the most complete and thorough information about their banks' actual safety and soundness. Anyone else's analysis, regardless of the data used, is an educated guess at best and mere sensational speculation at worst.

One other point about historic absorption rates that was covered in the article: The Atlanta and Georgia marketplace is as well positioned as any in the country to begin working through the inventory of existing homes and partially developed lots. The most recent Census Bureau data estimates that Georgia's population will grow by 11.7% from 2007 to 2012, compared to only 6.3% growth nationally.

Balance and perspective are important for the public in any analysis. The most current data available to the public and analysts producing these lists also indicates that a vast majority of Georgia's banks, 96%, meet regulatory requirements for being considered "well capitalized." So while there are some Georgia banks that are unquestionably facing significant asset quality issues right now, the overall safety and soundness of our state's banking industry remains strong.

We think that is an important fact that needs to be reported to balance stories that express concern about our state's banks that are having difficulty.Joe Brannen
President
Georgia Bankers Association

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