Since the economic collapse of 2008, Oklahoma’s banks have posted much stronger profitability numbers than the national figure.
However, Simpson said, “I thought that actually Oklahoma profitability was a little bit stronger. The recession did catch up with the industry to some extent and they’re trying to work through it.”
While capital levels, the top indicator of safety, are strong throughout the state’s banking system, nonperforming assets remain a problem, Simpson said.
The Texas ratio, which compares the amount of nonperforming assets to the amount of capital available to offset losses, is significantly higher than pre-recession levels, he said.
The average Texas ratio in 2011 was 15.8 percent, compared to 9.2 percent in 2007, he said.
“Fifteen Oklahoma banks reported a Texas ratio above 50 percent, which indicates a handful of banks are struggling with nonperforming assets,” he said.
However, almost all of those banks are expected to work through those problem loans, Simpson said.
Simpson said state banks likely will need two years to work through the troubled loans in their portfolios, and probably another year to regain pre-recession levels of profitability.
“The challenge for Oklahoma banks is to decrease nonperforming assets, control noninterest expenses and continue to steadily improve profitability,” he said.
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Oklahoma’s Banking industry
For more information about the Oklahoma Bankers Association and the banking industry in Oklahoma, call 424-5252 or go to www.oba.com. The association has also launched a mobile application, shown above in a screenshot, which includes news items, banks on the web, a calendar and social media links.