The FDIC released its third quarter 2012 profile on the banking industry on Tuesday. The FDIC was a little late with this release. It's usually released the week before or after Thanksgiving. Here are some of the noteworthy excerpts from the press release:
- Commercial banks and savings institutions insured by the [FDIC] reported aggregate net income of $37.6 billion in the third quarter of 2012, a $2.3 billion (6.6 percent) improvement from the $35.2 billion in profits the industry reported in the third quarter of 2011 (Second quarter's profit was $34.5 billion)
- Loan balances posted their fifth quarterly increase in the last six quarters, rising by $64.8 billion (0.9 percent). (In the second quarter they increased by $102 billion)
- Net operating revenue (net interest income plus total noninterest income) totaled $169.6 billion, an increase of $4.9 billion (3.0 percent) from a year earlier, as gains from loan sales rose by $3.9 billion.
- The flow of money into deposit accounts increased. Total deposits increased by $181.7 billion (1.8 percent) in the third quarter, after rising by only $61.5 billion in the second quarter and $74.7 billion in the first quarter.
- [There was] a decline in the number of banks on the FDIC's "Problem List" from 732 to 694. This marked the sixth consecutive quarter that the number of "problem" banks has fallen, and the first time in three years that there have been fewer than 700 banks on the list.
- Total assets of "problem" institutions declined from $282 billion to $262 billion.
- Twelve insured institutions failed during the third quarter. This is the smallest number of failures in a quarter since the fourth quarter of 2008, when there were also 12.
- The Deposit Insurance Fund (DIF) balance continued to increase. The unaudited DIF balance — the net worth of the fund — rose to $25.2 billion at September 30 from $22.7 billion at the end of June.
- 7,181 banks and savings associations deposits are insured by the FDIC (down from 7,246 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. We didn't see this in the third quarter. Loan balances increased, but the increase was less than it was in the second quarter. Deposits had a large increase in the third quarter that was almost triple the increase in the second quarter.
In terms of bank failures, the trend of fewer bank failures continues. Only 12 banks failed in the third quarter which is down from 15 in the second quarter. For the first two months of this quarter, 7 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 694, down from 732 in the second quarter.
The FDIC doesn't name any of these problem banks. Calculated Risk Blog has an unofficial list of 856 problem banks based on public enforcement actions. When I reported on the FDIC's Q2 report 3 months ago, the unofficial problem bank number was 898.
NCUA's Third Quarter Report on Credit Unions
Last week the NCUA released its Q3 report of credit unions. Below are a few interesting stats:
- Total savings rose 0.1 percent to $869.7 billion from $868.8 billion.
- Total loans expanded by 1.6 percent to $591.1 billion from $581.7 billion.
- membership increased by 742,847 to 93.9 million, a quarterly growth rate of 0.8 percent
- number of federally insured credit unions declined from 6,961 to 6,888 as industry merger trends continued
One thing to note is the difference in deposits between banks and credit unions. According to FDIC's Q3 stats, the total domestic deposits at banks is $9.06 trillion. This is more than 10x the total deposits at all credit unions ($869.7 billion).
Another difference between the reports is that credit unions showed more loan growth and less deposit growth in the third quarter. This is another reason we may see more deposit deals at credit unions than at banks.
In addition to the quarterly report, the FDIC and NCUA updated their databases with the institutions' public financial reports that were filed by September 30, 2012. This is the data that we use to determine the health ratings of banks and credit unions.
We have already updated our credit union health scores and Texas Ratios based on this new data. We're working now on importing the FDIC data and updating the bank health scores.
Update 12/7/2012: We have completed the import of the FDIC data, and our bank health scores and Texas ratios have been updated.
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 a couple of weeks to update its ratings. Bankrate.com has been taking over a month before it updates its ratings.