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FDIC Fourth Quarter Report


FDIC Fourth Quarter Report

The FDIC released its 2013 fourth-quarter reports that summarize the financial health of the banks. The FDIC also released fourth-quarter call reports of all the banks. The NCUA has released similar data for credit unions. We will be pulling in this data and updating our financial health ratings soon. 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.

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 $40.3 billion in the fourth quarter of 2013, a $5.8 billion (16.9 percent) increase from the $34.4 billion in earnings that the industry reported a year earlier. (Third quarter’s net income was $36.0 billion)
  • Loan balances increased by $90.9 billion (1.2 percent) in the three months ending December 31, as all major loan categories except one- to four-family residential real estate loans experienced growth during the quarter. (Loan balance increased by $69.7 billion in the third quarter).
  • 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 — was 3.28 percent, the highest average of any quarter in 2013, but down from 3.34 percent in the fourth quarter of 2012.
  • The number of banks on the FDIC's "Problem List" declined from 515 to 467 during the quarter. The number of "problem" banks is down by almost half from the recent high of 888 at the end of the first quarter of 2011.
  • Two FDIC-insured institutions failed in the fourth quarter of 2013, down from eight in the fourth quarter of 2012. For all of 2013, there were 24 failures, compared to 51 in 2012.
  • The Deposit Insurance Fund (DIF) balance continued to increase. The unaudited DIF balance — the net worth of the fund — rose to $47.2 billion as of December 31 from $40.8 billion as of September 30.
  • 6,812 banks and savings associations deposits are insured by the FDIC (down from 6,891 in the last quarter)

One important thing to note about the report is the big profit of $40.3 billion. According to this CNNMoney article, this is an "all-time high" for a quarter. However, this isn’t as good as it appears. The article mentioned that the "FDIC noted a large portion of the bottom line boost, though, came from an accounting maneuver that other regulators have cautioned about." The FDIC chairman did describe some of headwinds that banks are facing such as narrow margins, modest loan growth and a decline in mortgage refinancing.

The CNNMoney article also noted something that wasn’t apparent in the FDIC press release, and it’s not good news for savers. According to the article:

According to the FDIC, bank lending as a percentage of deposits sunk to 69.3% at the end of 2013. That was an all-time low. Before the financial crisis, banks used to regularly lend out more than 80% of their deposits. The figure hit a peak of 94% in mid-2006.

The recent drop in that figure comes in part because of the continued fast growth of bank deposits.

This shows that banks are not in need of deposits which means they have little incentive to raise deposit rates. The best environment for savers is when loan growth exceeds deposit growth.

Compared to the third quarter, the number of bank failures went down in the fourth quarter. Only two banks failed in the fourth quarter. The total number of bank failures for 2013 was only 24 which is less than half of the number in 2012 when 51 banks failed.

In addition to a decline in bank failures, the number of problem banks has gone down. The number of "problem" institutions is now 467, down from 515 in the third quarter.

The FDIC doesn't name any of these problem banks. Calculated Risk Blog has an unofficial list of 578 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 654.

Health Ratings

In addition to the quarterly report, the FDIC updated its database with the institutions' public financial reports that were filed by December 31, 2013. This is the data that we use to determine the health ratings of banks and credit unions.

We will soon be 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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Anonymous   |     |   Comment #1
The banks are famous for hiding bad info on earnings and credit defaults. They can manipulate the data to suit the investors and most of them have real and public (manipulated) ledgers. Guess which ledger they will be reporting to FDIC.
Anonymous   |     |   Comment #2
A lot of what you're claiming is based on the assumption that the FDIC and state banking officials don't have the expertise to audit call reports and spot discrepancies. That hasn't been the case for a while, particularly since Dodd-Frank gave regulatory agencies broader examination authority. So, the issue isn't whether banks can pull shenanigans; it's now about how quickly they get caught. Most of the time, state and federal regulators have a good idea what's happening in various banks. That may not comport with your apparently compulsive need to denigrate the government at every opportunity.  However, all your comment really demonstrates is that you haven't the foggiest idea about how the bank examination process actually operates.
Anonymous   |     |   Comment #4
#2, It is obvious you have never worked at a corporate office, I have and I agree with #1 and can add this: The banks can delay, insert wrong dates, the borrowings can be differed for few days so it will be reported in the next quarter and hundreds of small things like that can make a totally different outcome in their reports. and it is perfectly legal from FDIC view point.
AmTrust has created foreign subsidies where all of the bad debt is entered in such a report to show profits in USA. SEC is aware of it, FDIC is aware of it and they can not do anything about it, because all of the accounting including the numbers are correct.
Imagine you are applying for a loan and your credit report does not shows any liabilities or loans, that is equivalent what the AmTrust and hundreds of other banks are doing it, including BofA, they have a good bank bad bank accounting system in which over $50 billions are not reported in the good bank accounting, just sitting there and waiting to be written off as not collectible and remove it from the bad debt forever. FEDs know about it, SEC and FDIC know about it, except you and the people who agree with you by clicking without thinking.
Anonymous   |     |   Comment #6
Law are not changed or in the process that foreign banks have to abilde by American law. 
Anonymous   |     |   Comment #7
#6, Hah, what are you talking about, every bank in USA follows the same rules and laws, i respectable of their head quarter location.
Cracker   |     |   Comment #3
Here's another unofficial troubled bank list which I have found to be highly accurate.  Almost all of the recent failures were banks listed in the red zone on this list.