The FDIC released its fourth quarter 2011 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 $26.3 billion in the fourth quarter of 2011, a $4.9 billion improvement from the $21.4 billion in net income the industry reported in the fourth quarter of 2010.
- Net operating revenue (net interest income plus total noninterest income) was $3.8 billion (2.3 percent) lower than a year earlier, due to a $4.4 billion (7.4 percent) decline in noninterest income.
- The number of "problem" institutions declined from 844 to 813. This is the smallest number of "problem" banks since first quarter of 2010.
- Total assets of "problem" institutions declined from $339 billion to $319 billion.
- Eighteen insured institutions failed during the fourth quarter. For all of 2011, there were 92 insured institution failures, compared with 157 failures in 2010.
- The Deposit Insurance Fund (DIF) balance continued to increase. The unaudited DIF balance — the net worth of the fund — rose to $9.2 billion at December 31 from $7.8 billion at September 30.
- Loan balances posted a quarterly increase for the third quarter in a row.
- Deposits in domestic offices increased by $249.7 billion (2.9 percent) during the quarter. More than three-quarters of this increase ($191.2 billion or 76.6 percent) consisted of balances in large noninterest-bearing transaction accounts that have temporary unlimited deposit insurance coverage. The 10 largest insured banks accounted for 73.6 percent ($140.7 billion) of the growth in these balances.
- 7,359 banks and savings associations deposits insured by the FDIC (down from 7,437 in the last quarter)
The sizable deposit inflow is noteworthy for savers. Deposits increased 2.9% in the fourth quarter, and more than "three-quarters of this increase ($191.2 billion or 76.6 percent) consisted of balances in large noninterest-bearing transaction accounts that have temporary unlimited deposit insurance coverage." This is very similar to what we saw in the third quarter, and it's probably yet another thing that has put downward pressure on deposit rates. This temporary unlimited deposit insurance coverage will continue through 2012.
In terms of bank failures, fewer banks are failing. There were 92 bank failures in 2011 compared to 157 in 2010. Fewer banks also failed in Q4 (18) as compared to Q3 (26). For the first two months of this quarter, 11 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 813, down from 844 at the end of Q3.
The FDIC doesn't name any of these problem banks. Calculated Risk Blog has an unofficial list of 960 problem banks based on public enforcement actions. When I reported on the FDIC's Q3 report 3 months ago, the unofficial problem bank number was 977.
In addition to the quarterly report, the FDIC updated its database with the banks' public financial reports that were filed by December 31, 2011. 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.