CHARLESTON, W.Va. -- "West Virginia has been sucked into the same recession that has swallowed the national economy," George Hammond, associate director of West Virginia University's Bureau of Business and Economic Research, said at the state Economic Outlook Conference last week.

Hammond said employment is in free fall and a significant economic turnaround isn't expected until late next year. His summary: "There is light at end of the tunnel but we still have quite a bit of tunnel to get through."

There was some good news. It came from Sally Cline, the state commissioner of banking.

Cline and her staff keep tabs on the 61 banks that are headquartered in West Virginia. She said these banks continue to fare better than the banks in the nation as a whole.

As of June 30, only five of the 61 banks were unprofitable.

Cline said banks generally are experiencing a deterioration in loan quality, although West Virginia is again faring better than the nation's banks overall. She predicted that banking conditions are likely to remain weak for another year or two.

"It took longer for parts of our state to experience the stress and therefore it will take longer for our banks to recover," she said. West Virginia's banks "will continue to fare well because of strong risk-management systems, high levels of capital, reasonable executive pay, and low concentrations in commercial and residential real estate development projects."

Only one bank headquartered in West Virginia - Ameribank Inc. of Northfork - has failed during this recession.  "Community banks in West Virginia have less risky profiles and are less likely to fail," Cline said.

The Division of Banking currently has eight banks on its "watch list," Cline told me. That's up from six on June 30 and three on Dec. 31, 2008. She was quick to say that none of the banks on her list are operating under a formal enforcement action and all are well capitalized.

"I am of the opinion that none pose a significant safety and soundness threat at this time," she said. In fact, two of the banks on the list "have addressed most if not all of the examiners' concerns and could be removed from our watch list at the next on-site examination."

The national situation is not as good. The FDIC has 416 banks on its watch list - the most in 15 years. Cline thinks all 416 are probably under some type of formal order or directive and pose significant safety and soundness concerns to the FDIC's insurance fund.

"The average performance of West Virginia's 61 banks continues to exceed the national average," Cline said. "While we recognize that we have some challenges, we are not experiencing the extent of problems being felt across much of the country and we believe that our banks will bode well through this economic downturn."

Reach George Hohmann at busin...@dailymail.com or 304-348-4836.

CHARLESTON, W.Va. -- "West Virginia has been sucked into the same recession that has swallowed the national economy," George Hammond, associate director of West Virginia University's Bureau of Business and Economic Research, said at the state Economic Outlook Conference last week.

Hammond said employment is in free fall and a significant economic turnaround isn't expected until late next year. His summary: "There is light at end of the tunnel but we still have quite a bit of tunnel to get through."

There was some good news. It came from Sally Cline, the state commissioner of banking.

Cline and her staff keep tabs on the 61 banks that are headquartered in West Virginia. She said these banks continue to fare better than the banks in the nation as a whole.

As of June 30, only five of the 61 banks were unprofitable.

Cline said banks generally are experiencing a deterioration in loan quality, although West Virginia is again faring better than the nation's banks overall. She predicted that banking conditions are likely to remain weak for another year or two.

"It took longer for parts of our state to experience the stress and therefore it will take longer for our banks to recover," she said. West Virginia's banks "will continue to fare well because of strong risk-management systems, high levels of capital, reasonable executive pay, and low concentrations in commercial and residential real estate development projects."

Only one bank headquartered in West Virginia - Ameribank Inc. of Northfork - has failed during this recession.  "Community banks in West Virginia have less risky profiles and are less likely to fail," Cline said.

The Division of Banking currently has eight banks on its "watch list," Cline told me. That's up from six on June 30 and three on Dec. 31, 2008. She was quick to say that none of the banks on her list are operating under a formal enforcement action and all are well capitalized.

"I am of the opinion that none pose a significant safety and soundness threat at this time," she said. In fact, two of the banks on the list "have addressed most if not all of the examiners' concerns and could be removed from our watch list at the next on-site examination."

The national situation is not as good. The FDIC has 416 banks on its watch list - the most in 15 years. Cline thinks all 416 are probably under some type of formal order or directive and pose significant safety and soundness concerns to the FDIC's insurance fund.

"The average performance of West Virginia's 61 banks continues to exceed the national average," Cline said. "While we recognize that we have some challenges, we are not experiencing the extent of problems being felt across much of the country and we believe that our banks will bode well through this economic downturn."

Reach George Hohmann at busin...@dailymail.com or 304-348-4836.