The FDIC and NCUA recently released their reports of the second quarter health of the institutions they insure. They also released the 2015 Second Quarter Call Reports of all the insured institutions. We use these reports to derive our financial health grades for each institution. We have finished importing this data, and all of the health grades for banks and credit unions have been updated to reflect the June 30, 2015 reports.
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.
Here are a few of the noteworthy excerpts from the FDIC press release on its Q2 report:
- Total loan and lease balances increased $185 billion (2.2 percent) during the second quarter. For the 12 months ended June 30, loans and leases increased $437.8 billion (5.4 percent). At community banks, loan balances rose 2.7 percent during the second quarter of 2015 and increased 8.8 percent during the past 12 months.
- Net Interest Margins Remain Under Pressure: The average net interest margin (the difference between the average yield on banks' interest-earning investments and the average interest expense of funding those investments) rose to 3.06 percent in the second quarter from 3.02 percent in the first quarter, but remained below the 3.15 percent average in second quarter 2014. Average margins at community banks of 3.57 percent in the second quarter were up from 3.54 percent in the first quarter, but down from 3.61 percent in second quarter 2014.
- "Problem List" Continues to Shrink: The number of banks on the FDIC's Problem List fell from 253 to 228 during the second quarter. This is the smallest number of problem banks in nearly seven years and is down dramatically from the peak of 888 in the first quarter of 2011. Total assets of problem banks fell from $60.3 billion to $56.5 billion during the second quarter.
- Deposit Insurance Fund (DIF) Rises $2.3 Billion to $67.6 Billion: The DIF increased from $65.3 billion in the first quarter to $67.6 billion in the second quarter, largely driven by $2.3 billion in assessment income. The DIF reserve ratio rose from 1.03 percent to 1.06 percent during the quarter.
- The FDIC insures deposits at the nation's banks and savings associations, 6,348 as of June 30, 2015 (down from 6,419 from the previous quarter)
The number of "problem banks" continues to fall. According to the FDIC, the number of banks on the FDIC's "Problem List" declined from 253 to 228 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 282 problem banks based on public enforcement actions. When I reported on the FDIC's 2015 Q1 report in June, the unofficial problem bank number was 324.
Here are a few of the noteworthy excerpts from the NCUA press release on its Q2 report:
- Total loans at federally insured credit unions reached $745.2 billion in the second quarter of 2015, an increase of 3.2 percent from the previous quarter and 10.6 percent from a year earlier.
- The loans-to-shares ratio at the end of the second quarter was 75.5 percent, up 2.2 percentage points from the previous quarter and up 3.9 percentage points from the end of the second quarter of 2014. The ratio is nearing the system’s rolling 10-year average of 76.3 percent.
- Membership in federally insured credit unions grew to 101,084,138 at the end of the second quarter of 2015, an increase of more than three million from the end of the second quarter of 2014.
- The number of federally insured credit unions fell to 6,159 at the end of the second quarter, 270 fewer than at the end of the second quarter of 2014, a decline of 4.2 percent.
- A year earlier, 97 percent of credit unions were well-capitalized. As of June 30, 2015, less than one percent of federally insured credit unions were undercapitalized.
One nice thing to see in both the FDIC and NCUA reports is higher loan balances. For the quarter they increased 2.2% at the banks and 3.2% at the credit unions. Credit unions also reported an increase in their loans-to-shares ratio. This indicates that both banks and credit unions are making more loans which means they will be needing more deposits, and that will lead to higher deposit rates.