Banking’s household names are raking in profits again, but the cash piles could soon start shrinking. Improvement in the real estate market has resulted in fewer failed and delinquent loans, boosting the bottom line for large banks. Loan demand slowed late last year, though, and did not keep pace with deposit growth as customers carried higher deposit balances with the fiscal cliff crisis looming. The result was a decline in interest margins, or the amount of interest banks collect on loans minus the amount they pay out on deposits, that troubles analysts. The four big banks that do business in Savannah – national players Wells Fargo and Bank of America and regional behemoths SunTrust and BB&T – all reported decreasing net interest margin in 2012’s fourth quarter, which ended Dec. 31. Wells Fargo, Savannah’s biggest banking player in terms of local deposits, reported record earnings but also acknowledged a 13.7 percent drop in its mortgage business. Deposits growth more than doubled loan growth. With lending and credit lines accounting for half of Wells Fargo’s business and the Federal Reserve’s pledge to hold down interest rates until the unemployment rate drops significantly, analysts pressed the bank’s CEO, John Stumpf, during an earnings conference call last week. "Why would we turn away deposits from our customers?" Stumpf said. "Sure, we look at the margin, surely we think about that, but we don't run our business according to it." Such an approach toward deposits runs contrary to the tack taken by many community banks. Many smaller banks worked to shrink their deposits during the recession and the early stage of the recovery, typically by lowering interest rates on certificates of deposit and other interest-bearing accounts. Doing so allowed those banks to maintain their interest margins even as loans soured and loan demand dried up. The big banks, meanwhile, saw the recession and early stages of the recovery as a chance to expand their footprint as well as their presence within existing markets. Locally, Wells Fargo, SunTrust and BB&T have all seen significant deposit growth over the last three years. Only Bank of America has seen deposits fall. Interest margin worries extend beyond the big banks that do business locally. Chase Bank CEO James Dimon noted interest margin issues with his bank in a conference call this week but predicted the pressures will eventually debate as the fiscal pressures ease. Complicating the interest margin situation for the banks going forward is the difference between the rates on existing loans and new loans, said Ed Sibbald, director of Georgia Southern University’s Center for Excellence in Financial Services. “The loans they had at 6 or 7 or 8 percent are running off, and they are replacing them with new loans that are a couple of percentage points lower,” Sibbald said. “That’s going to cause pressure on margins.” The regional banks are faring better than the megabanks. SunTrust managed its deposits in 2010, added $2.8 billion while increasing its loan portfolio by $2.1 billion. Still, all of SunTrust’s year-over-year earnings growth came from non-interest income. BB&T also minimized the impact of lower interest markets, growing loans by $7.3 billion compared to $9.8 billion in deposits. BREAKOUT Skinny on the big banks National megabanks Wells Fargo and Bank of America and regional behemoths SunTrust and BB&T hold more than 57 percent of deposits in the Savannah area. A look at those banks’ 2012 performance: Bank|Profit|Noteworthy Wells Fargo|$18.9B|Lending increased late in year as borrowers took advantage of expiring tax rates. Bank of America|$4.2B|Incurred $5.9 billion in expenses tied to foreclosure abuse claims, not including the $11 billion settlement reached with regulators last week. BB&T|$1.9B|Credit quality improved, with repossessed properties hitting lowest level in five years and net charge-offs, or delinquent loans deemed uncollectable, hitting four-year lows. SunTrust|$1.96B|Increased profitability by five times versus year previous; got big boost from expense cuts tied to reduced employee compensation and benefits and a shrinking workforce. * Savannah’s other large publicly traded banks, including Synovus, the parent company of Sea Island Bank, and Regions Bank, will report earnings next week. South Carolina Bank & Trust, which owns The Savannah Bank and Bryan Bank & Trust, reports Jan. 31.