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FDIC Fourth Quarter Report and Bank Financial Health Grades


FDIC Fourth Quarter Report and Bank Financial Health Grades

On Tuesday the FDIC released its 2014 Fourth Quarter Report, which summarizes the financial health of the banks. In addition, the FDIC released the 2014 Fourth Quarter Call Reports of all the banks. We have finished importing this data, and all of the health grades for banks have been updated. We are still waiting on the NCUA to update their Fourth Quarter data from credit unions. Update 3/2/15: The NCUA has released its Q4 Call Reports, and we have finished importing that data. So now our financial health grades for both banks and credit unions are based on December 31, 2014 data.

You can view the latest health ratings of your bank or credit union, in 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.

According to the Wall Street Journal:

The U.S. banking industry in 2014 posted its first yearly profit decline in five years, the Federal Deposit Insurance Corp. said Tuesday, as reduced revenues from mortgage-related activity and higher litigation expenses ate into earnings.

The vast majority of the nation’s 6,509 banks reported increased earnings for 2014, the FDIC said in its quarterly report on the health of the banking industry. But seven of the 10 largest banks posted lower earnings than the previous year, driving the industry total below its 2013 level.

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 $36.9 billion in the fourth quarter of 2014, down $2.9 billion (7.3 percent) from earnings of $39.8 billion that the industry reported a year earlier.
  • For the industry as a whole, loan and lease balances rose $149.4 billion (1.8 percent) in the fourth quarter to $8.3 trillion. [...] Over the past 12 months, loan and lease balances increased 5.3 percent. This is the highest 12-month growth rate for loans since mid-year 2008.
  • The number of banks on the FDIC's "Problem List" declined from 329 to 291 during the quarter, the lowest since the end of 2008. The number of "problem banks" now is 67 percent below the post-crisis high of 888 at the end of the first quarter of 2011.
  • The Deposit Insurance Fund (DIF) balance continued to increase. The DIF balance (the net worth of the Fund) rose to a record $62.8 billion as of December 31 from $54.3 billion at the end of September.
  • The FDIC insures deposits at the nation's banks and savings associations, 6,509 as of December 31, 2014. (down from 6,589 from the previous quarter)
  • there were 6,037 community banks (92.7 percent of all FDIC-insured institutions) in the fourth quarter of 2014 with assets of $2.1 trillion (13.3 percent of industry assets).

The two things I look at in these reports are loan and deposit growth changes. The best environment for savers is growing loans and shrinking deposits. That encourages banks to raise deposit rates to attract deposits to fund new loans. In the report, the FDIC reported that loan and lease balances increased by 1.8%. According to the FDIC, "This is the highest 12-month growth rate for loans since mid-year 2008." Unfortuantely for savers, deposits also grew. The FDIC reported that insured deposits increased by 1.0%. In the previous quarter, insured deposits increased by 0.4%.

One thing that’s good for savers is fewer problem banks. The number of "problem banks" continues to fall. According to the FDIC, the number of banks on the FDIC's "Problem List" declined from 329 to 291 during the quarter. In recent times, that number peaked at 888 in Q1 of 2011.

The FDIC doesn't name any of these problem banks. Calculated Risk Blog has an unofficial list of 378 problem banks based on public enforcement actions. When I reported on the FDIC's 2014 Q3 report in November, the unofficial problem bank number was 411.

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, 2014. The NCUA should be releasing similar reports from credit unions soon. This is the data that we use to determine the health grades of banks and credit union.

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 grade 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
Doral bank PR taken over by FDIC will be taken over by Popular bank
Anonymous   |     |   Comment #2

All interest accrued through Friday, February 27, 2015 will be paid at your same rate. Your New Institution will be reviewing rates. You will be notified of any changes. Your direct deposits and automatic withdrawals will be transferred to your new bank.
Anonymous   |     |   Comment #3
Coral has been in trouble for a while. Costing the FDIC over 700 million dollars
Anonymous   |     |   Comment #4
What about derivatives exposure?  The individual FDIC report for any bank shows the total amount of derivatives held by such bank.  In assessing the safety of an institution, isn't that figure something that should be focused on?