The FDIC released its second quarter 2011 profile on the banking industry. Here are some of the noteworthy excerpts from the press release:
- Commercial banks and savings institutions insured by the [FDIC] reported an aggregate profit of $28.8 billion in the second quarter of 2011, a $7.9 billion improvement from the $20.9 billion in net income the industry reported in the second quarter of 2010.
- The number of "problem" institutions declined from 888 to 865. This is the first time since the third quarter of 2006 that the number of "problem" banks fell.
- Total assets of "problem" institutions declined from $397 billion to $372 billion.
- 22 insured institutions failed during the second quarter, four fewer than in the previous quarter, and the fewest since the first quarter of 2009.
- The Deposit Insurance Fund (DIF) balance was positive for the first time in two years.
- Loan portfolios grew for the first time in three years
- Deposits in domestic offices increased by $234.4 billion (2.9 percent) during the quarter. Deposits in accounts with balances greater than $250,000 rose by $279.6 billion (8.8 percent).
- 7,513 banks and savings associations (down from 7,575 in the last quarter)
Loan growth is a good sign for the economy and for future deposit rates. However, the large increase in deposits won't help deposit rates in the short-term. Many businesses and investors have been moving their money into safe and insured bank accounts. According to the FDIC, "[m]ore than half of this increase ($161.8 billion or 57.9 percent) consisted of balances in large noninterest-bearing transaction accounts that have temporary unlimited deposit insurance coverage." It's not a good situation for depositors when banks can bring in all that money with zero interest rates.
In terms of bank failures, the FDIC confirmed what we have seen. The number of bank failures is going down. Fewer banks failed in Q2 as compared to Q1, and fewer banks have failed in this first half of 2011 compared to the first half of 2010. According to the FDIC, "[t]hrough the first six months of 2011, there have been 48 insured institution failures, compared to 86 failures in the same period of 2010."
In addition to a decline in bank failures, the number of problem banks has gone down. That's the first time in 19 quarters. The number of "problem" institutions is now 865, down from 888 at the end of Q1.
The FDIC doesn't name any of these problem banks. Calculated Risk Blog has an unofficial list of 984 problem banks based on public enforcement actions. When I reported on the FDIC's Q1 report 3 months ago, the unofficial problem bank number was 988.
In addition to the quarterly report, the FDIC updated its database with the banks' financial data for June 30, 2011. This is the data that is used to determine the health ratings of banks.
At DepositAccounts, we have already updated our bank health scores and Texas Ratios. You can view a table of banks and credit unions with the worst Texas Ratios in our Bank Health Ratings page. From here you can also search for your bank and credit union to view its Texas Ratio, health score and other financial data. Note, the NCUA has not yet updated its database with Q2 data. Thus, our credit union ratings are still based on March 31, 2011 data.
BauerFinancial typically takes a couple of weeks to update its ratings. Bankrate.com has been taking over a month before it updates its ratings.