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FDIC and NCUA Second Quarter Reports - Health Ratings Updated

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Both the FDIC and the NCUA released their second-quarter reports that summarize the financial health of the banks and credit unions. The FDIC and the NCUA also released second-quarter call reports of all the banks and credit unions. We have pulled in this data and have updated our financial health ratings. If you want to review the latest health ratings of your bank or credit union, check out our Bank Health Ratings page. This page also has a table of banks and credit unions ranked by Texas ratio, a standard financial health metric.

Both the FDIC and the NCUA reported an increase in earnings that were driven largely by increases in fee income and declines in loan-loss provisions.

Here are some of the noteworthy excerpts from the FDIC press release:

  • Commercial banks and savings institutions insured by the [FDIC] reported aggregate net income of $42.2 billion in the second quarter of 2013, a $7.8 billion (22.6 percent) increase from the $34.4 billion in profits that the industry reported a year earlier. (First quarter’s profit was $40.3 billion).
  • Loan balances increased by $73.8 billion (1.8 percent) in the three months ending June 30, as commercial and industrial loan balances rose by $30.4 billion (2 percent).
  • The average net interest margin — the difference between the average yield banks earn on loans and other investments and the average cost of funding those investments — fell to 3.26 percent, its lowest level since the 3.20 percent reported in the fourth quarter of 2006.
  • The number of banks on the FDIC's "Problem List" declined from 612 to 553 during the quarter.
  • Twelve FDIC-insured institutions failed in the second quarter of 2013, up from four failures in the first quarter. Thus far in 2013, there have been 20 failures, compared to 40 during the same period in 2012.
  • The Deposit Insurance Fund (DIF) balance continued to increase. The DIF balance — the net worth of the fund — rose to $37.9 billion as of June 30 from $35.7 billion as of March 31.
  • 6,940 banks and savings associations deposits are insured by the FDIC (down from 7,019 in the last quarter)

For savers the two important trends are loan and deposit balance changes. The environment that’s most conducive for deposit rates is growing loan balances and shrinking deposit growth. Loan balance did increase in the second quarter. Deposit changes weren’t noted in the press release so I had to do some digging in the other reports. In the FDIC’s Statistics at a Glance table, I found the domestic deposits on June 30th to be $9.396 trillion. At the end of March, domestic deposits were $9.427 trillion. That’s a decline of 0.33%.

With the combination of loan growth and deposit decline in the second quarter, banks should have more reason to raise deposit rates.

Compared to the first quarter, the number of bank failures went way up in the second quarter. However, the total number of bank failures for the year is only 20 which is just half of what it was this time last year.

In addition to a decline in bank failures, the number of problem banks has gone down. The number of "problem" institutions is now 553, down from 612 in the first quarter.

The FDIC doesn't name any of these problem banks. Calculated Risk Blog has an unofficial list of 714 problem banks based on public enforcement actions. When I reported on the FDIC's Q1 report three months ago, the unofficial problem bank number was 767.

NCUA's Second Quarter Report on Credit Unions

The NCUA issued a press release on Thursday on the second-quarter credit union data. Here are some highlights from the NCUA press release:

  • Loans were up 2.3 percent in the second quarter, and 5.5 percent in the last four quarters, the strongest four-quarter growth since the start of 2009.
  • Membership in federally insured credit unions reached 95.2 million, a record high, in the second quarter of 2013. Membership grew by 560,670, or 0.6 percent. Nearly 2.1 million Americans have joined a credit union in the last four quarters.
  • the number of federally insured credit unions dipped to 6,681, a drop of 72. The decrease is consistent with recent trends, as most consolidations were voluntary mergers.
  • Overall, share and deposit accounts at credit unions declined during the quarter by $464 million to $909.5 billion, but regular shares (savings), money market shares and IRA/Keogh accounts showed slight increases.

Just like the banks, credit unions saw loan growth and a reduction in deposits. That should encourage higher deposit rates. Not all deposits declined. According to the NCUA, savings, money market and IRA/Keogh account deposits grew slightly. That suggests that CD deposits have declined and was responsible for the overall decline. That makes sense when rates are so low.

Health Ratings

In addition to the quarterly report, the FDIC and NCUA updated their databases with the institutions' public financial reports that were filed by June 30, 2013. This is the data that we use to determine the health ratings of banks and credit unions.

We have already finished importing the FDIC and NCUA data and updating the bank health scores.

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.

BauerFinancial typically takes at least a week to update its ratings. Bankrate has been taking over a month before it updates its ratings.



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Comments
Comment #1 by Anonymous posted on
Anonymous
In the profit margin of a financial statement for a credit union, if there was $0 indicated for interest income, is that something to be alarmed about?

1