FDIC's First Quarter Report & Bank Health Ratings
The FDIC released its first quarter 2012 profile on the banking industry today. 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 $35.3 billion in the first quarter of 2012, a $6.6 billion improvement from the $28.8 billion in net income the industry reported in the first quarter of 2011.
- loan balances declined by $56.3 billion (0.8 percent) after three consecutive quarterly increases
- Net operating revenue (net interest income plus total noninterest income) totaled $169.6 billion, an increase of $5 billion (3.1 percent) from a year earlier, as gains from loan sales rose by $2.3 billion.
- Deposits in domestic offices increased by $67.8 billion (0.8 percent) during the quarter, after rising by more than $200 billion in each of the previous three quarters.
- The number of "problem" institutions declined from 813 to 772. This is the smallest number of "problem" banks since year-end 2009.
- Total assets of "problem" institutions declined from $319 billion to $292 billion.
- Sixteen insured institutions failed during the first quarter. This is the smallest number of failures in a quarter since the fourth quarter of 2008, when there were 12.
- The Deposit Insurance Fund (DIF) balance continued to increase. The DIF balance — the net worth of the fund — rose to $15.3 billion at March 31 from $11.8 billion at the end of 2011.
- 7,309 banks and savings associations deposits are insured by the FDIC (down from 7,359 in the last quarter)
It's better for savers when deposits held at banks are shrinking while loans are increasing. In these conditions, banks need deposits and are more willing to offer good deposit deals. Unfortunately, the FDIC reported that the opposite condition existed in the first quarter. The FDIC did report that the "flow of money into insured deposit accounts slowed." However, the cause of the flow slowing down was due to balances in large noninterest-bearing transaction accounts falling by $77.3 billion. These are deposits that have temporary unlimited deposit insurance coverage. Balances in interest-bearing deposits rose by $100.1 billion.
In terms of bank failures, the trend of fewer bank failures continues. Only 16 banks failed in the first quarter which is down from 18 in the fourth quarter of 2011. For the first two months of this quarter, 8 banks have failed.
In addition to a decline in bank failures, the number of problem banks has gone down. The number of "problem" institutions is now 772, down from 813 at the end of 2011.
The FDIC doesn't name any of these problem banks. Calculated Risk Blog has an unofficial list of 928 problem banks based on public enforcement actions. When I reported on the FDIC's Q4 report 3 months ago, the unofficial problem bank number was 960.
In addition to the quarterly report, the FDIC updated its database with the banks' public financial reports that were filed by March 31, 2012. This is the data that we use to determine the health ratings of banks.
We will be updating our bank health scores and Texas Ratios soon based on this new data. 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.
Update 5/25/2012: We have updated our bank health scores and Texas ratios for all banks. We are still waiting on the Q1 release from the NCUA.