Mountain 1st, which had maintained a thin $375,000 profit through the first quarter of this year, went into negative numbers, losing $1.5 million in the second quarter.

But HomeTrust, First Citizens, Macon Bank, Bank of America and Wells Fargo all reported profits, ranging from $219,000 to $3.2 billion.

Dana Stonestreet, president of the HomeTrust Banking Partnership, parent of Tryon Federal Bank, said he expects the economy to be challenging for another two or three years.

&dquo;There is no quick fix,&dquo; Stonestreet said. &dquo;It is not going down as much, but it is not bouncing back either. The economy lost 200,000 jobs in August. That was the third worst month in the last recession.&dquo;

Stonestreet said at some point, consumers had to quit spending and move to get out of debt. In that regard, what is best for the individual is not what is best for the economy.

&dquo;We need an economy that is sustainable, long term,&dquo; Stonestreet said. &dquo;To get there, we have to make some hard decisions, experience some short term pain. We have been pushing that away for twenty years, inflating the balloon. Now we have withdrawal symptoms.&dquo;

&dquo;The sixty four thousand dollar question is whether the real estate slump will end next year (2010) or in 2013,&dquo; said Greg Gibson, chief executive officer of 1st Financial Services Corp., parent company of Mountain 1st. &dquo;I think it will be a good while before real estate truly heals and you see activity. Prices are stable, but activity is low.&dquo;

Gibson said the problems for bankers in the southeast are all tied to real estate markets. New housing land acquisition and development is the problem for the community banks. Commercial real estate is more of a problem for regional and national banks, Gibson said.

&dquo;From my perspective, there are so many things still lying around. The roller coaster has slowed,&dquo; Gibson said, &dquo;but the consumer is two-thirds of economic activity. We must create jobs. We must have rising wages. Where&squo;s the driver for that?

&dquo;All I see is that perhaps the American public has ADD and will get bored and go start spending. It may be a long, slow slog.&dquo;

While the number of high-priced houses, and the size of houses, will likely go down, Gibson said he believes the beach and mountain areas will sell again.

&dquo;As soon as the boomers can move here, they will,&dquo; he said. &dquo;It is just a matter of time.&dquo;

The question of time looms large for the nation&squo;s banks. Gibson said the Federal Deposit Insurance Corp. (FDIC) has slightly over 400 banks on its &dquo;troubled&dquo; list today.

&dquo;If the recovery is in mid-year 2010, I think you will see another 200 bank failures,&dquo; Gibson said. &dquo;If it is three years from now, we are talking a lot more than that. There are 8,500 total banks. If it takes another three or four years, there will probably be a total number of banks below 5,000.&dquo;

As for Mountain 1st, Gibson said despite a bad second quarter the bank is in &dquo;pretty good position,&dquo; with capital 25% above the well-capitalized limits and 50,000 account holders.

What follows is a quick look at the operating results for our local banks, arranged in order of bank size, from smallest to largest.

Mountain 1st Bank & Trust

Mountain 1st reported a net loss of $1.5 million for the period April 1 through June 30, 2009, compared to a profit of $508,000 during the same period last year. Partially accounting for that loss were one-time expenses, including Mountain 1st&squo;s $328,000 share of a special assessment of all banks by the FDIC. Mountain 1st also spent $140,000 in its merger with AB&T Financial Corporation of Gastonia.

Mountain 1st lost money on its stock holdings in the Silverton Bank, which failed earlier this year. In addition, the bank took a nearly $1 million write down on its participation with 30 other banks in a loan to a town home, condominium project in Charlotte.

&dquo;Bad loans are made in good times,&dquo; Gibson said. &dquo;Never again. Times like these teach life long lessons.&dquo;

Mountain 1st has increased its provision for loan losses to $2.7 million, up from $940,000 in the second quarter of 2008.

On the positive side, the bank&squo;s net interest income, at $5.9 million, and net interest margin, at 3.5%, continued to improve.

Macon Bank

Macon Bank reported a second quarter net income of $380,000.

Tryon Federal Bank

Tryon Federal Bank&squo;s parent company, the HomeTrust Banking Partnership, reported a net income of $219,000 for the second quarter of 2009.

The bank showed a loss before income taxes of $1.2 million, but reaped significant tax benefits from its portfolio of loans to volunteer fire departments.

HomeTrust has been working with volunteer fire departments for 18 years and has a $100 million portfolio of loans for equipment, buildings and construction with 450 fire departments, president Dana Stonestreet said.

The tax benefit of those loans is &dquo;pretty significant,&dquo; Stonestreet said, in reducing HomeTrust&squo;s pre-tax income.

In addition, HomeTrust in the second quarter also paid the FDIC $1.4 million for regular and special assessments, and the bank pre-paid the Federal Home Loan Bank $1.6 million to reduce borrowings at higher rates than those rates now available elsewhere.

HomeTrust has $4.4 million in its loan loss reserves account.

HomeTrust also just began offering 10-year refinance mortgages at 4.75% with no points, to help people take advantage of the current low rates and pay off their houses by retirement. &dquo;That could be life changing for people,&dquo; Stonestreet said. &dquo;We have a passion about helping people become financially secure and stable.&dquo;

Carolina First

The South Financial Group Inc., parent company of Carolina First, reported a second quarter 2009 net loss of $111.5 million.

&dquo;As we expected, higher credit costs led to a net loss for the second quarter,&dquo; said H. Lynn Harton, president and chief executive officer. &dquo;However, we continue to be proactive and realistic in addressing problem assets. While credit will remain challenging, we have prepared for it by building our capital position and loan loss reserves.&dquo;

First Citizens Bank

First Citizens BancShares Inc., parent company of First Citizens Bank, reported earnings for the quarter ending June 30, 2009 of $6.2 million, compared to $26.2 million for the same quarter last year. According to Frank B. Holding Jr., chairman of the board, the decrease in net income was the result of higher provision for loan and lease losses, increased deposit insurance expense and lower revenue.

Wells Fargo

Wells Fargo, parent company of Wachovia, reported net income of $3.17 billion, up 81 percent from last year.

Bank of America

Bank of America Corp. reported second quarter profit declined on higher credit card and home loan losses. CEO Kenneth Lewis predicted the weak economy will persist into 2010. Net income for the bank fell 5.5% to $3.22 billion, down from $3.41 billion during the same quarter in 2008.