The FDIC released its fourth quarter 2012 profile on the banking industry on Tuesday. The FDIC reported that bank industry's net income last year was the second-highest on record. According to the FDIC, it wasn't due to the low interest rates. The low interest rate policy has squeezed interest margins. It was due to noninterest income and lower loss provisions. 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 $34.7 billion in the fourth quarter of 2012, a $9.3 billion (36.9 percent) improvement from the $25.3 billion in profits the industry reported in the fourth quarter of 2011 (Third quarter's profit was $37.6 billion)
- Loan balances posted their sixth quarterly increase in the last seven quarters, rising by $118.2 billion (1.6 percent). (In the third quarter they increased by $64.8 billion).
- Total deposits increased by a record $313.1 billion (3 percent) in the fourth quarter, surpassing the previous quarterly high of $308 billion set in the fourth quarter of 2008.
- Fourth quarter net operating revenue (net interest income plus total noninterest income) totaled $169 billion, an increase of $7.3 billion (4.5 percent) from a year earlier, as gains from loan sales rose by $2.4 billion and trading income increased by $1.9 billion.
- The number of institutions on the FDIC's "Problem List" declined for a seventh consecutive quarter. The number of "problem" banks fell from 694 to 651 during the quarter.
- Eight FDIC-insured institutions failed in the fourth quarter. This was the smallest quarterly total since the second quarter of 2008, when two insured institutions were closed.
- The Deposit Insurance Fund (DIF) balance continued to increase. The audited DIF balance — the net worth of the fund — rose to $33.0 billion at December 31 from $25.2 billion at the end of September.
- 7,083 banks and savings associations deposits are insured by the FDIC (down from 7,181 in the last quarter)
It was another quarter with deposit growth. In fact, the deposit growth was a record for a quarter with a 3 percent increase. This is another reason for banks to offer such low deposit rates. One thing that will help with deposit rates is loan growth. That did increase, but not by as much as deposit growth. Loan balances grew by 1.6 percent.
For bank failures, the trend of fewer failures continues. Only eight banks failed in the fourth quarter which is down from twelve in the third quarter. That trend has continued into 2013. So far this year there have only been three bank failures.
In addition to a decline in bank failures, the number of problem banks has gone down. The number of "problem" institutions is now 651, down from 694 in the third quarter.
The FDIC doesn't name any of these problem banks. Calculated Risk Blog has an unofficial list of 809 problem banks based on public enforcement actions. When I reported on the FDIC's Q3 report three months ago, the unofficial problem bank number was 856.
NCUA's Fourth Quarter Report on Credit Unions
Last week the NCUA released its 2012 Share Insurance Fund Trends. Below are a few interesting stats:
- the net position of the Share Insurance Fund improved by 4.6 percent for the year, to $11.3 billion at the end of 2012 from $10.8 billion at the end of 2011.
- The total number of CAMEL code 3, 4 and 5 credit unions dropped 9.8 percent, to 1,940 at year-end 2012 from 2,150 in 2011.
- Assets of CAMEL code 3 credit unions decreased to $119.3 billion at the end of the fourth quarter of 2012, a 16.3 percent drop from $142.5 billion on Dec. 31, 2011.
- Assets of CAMEL code 4 and 5 credit unions fell 35.4 percent, to $19 billion at the end of 2012, down from $29.4 billion for 2011.
- During 2012, there were 22 credit union liquidations and assisted mergers. The total amount of losses associated with these failures was $206.9 million.
A problem credit union is defined as one with a CAMEL 4 or 5 rating.
In addition to the quarterly report, the FDIC updated its database with the institutions' public financial reports that were filed by December 31, 2012. The NCUA should be updating its database soon. This is the data that we use to determine the health ratings of banks and credit unions.
We'll be importing the FDIC and NCUA data and updating the bank health scores over the next week.
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.