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Bank and Credit Union Health Grades Updated from Q3 FDIC and NCUA Reports

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Bank and Credit Union Health Grades Updated from Q3 FDIC and NCUA Reports

The FDIC and NCUA recently released their reports of the third quarter health of the institutions they insure. They also released the 2015 Third 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 September 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 Q3 report:

  • Total loan and lease balances increased $95.3 billion (1.1 percent) during the third quarter. For the 12 months ended September 30, loans and leases increased $482.2 billion (5.9 percent). This is the largest 12-month growth rate since mid-2007 to mid-2008. At community banks, loan balances rose 1.9 percent during the third quarter of 2015 and increased 8.5 percent during the past 12 months.
  • Banks Continue to Reach for Yield as Net Interest Margins Remain Low: 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 slightly to 3.08 percent in the third quarter from 3.07 percent in the second quarter, but remained below the 3.15 percent average reported in the third quarter of 2014.
  • "Problem List" Continues to Shrink: The number of banks on the FDIC's Problem List fell from 228 to 203 during the third 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 $56.5 billion to $51.1 billion during the third quarter.
  • Deposit Insurance Fund (DIF) Rises $2.5 Billion to $70.1 Billion: The DIF increased from $67.6 billion in the second quarter to $70.1 billion in the third quarter, largely driven by $2.2 billion in assessment income. The DIF reserve ratio rose from 1.06 percent to 1.09 percent during the quarter.
  • The FDIC insures deposits at the nation’s banks and savings associations, 6,270 as of September 30, 2015 (down from 6,348 from the previous quarter)
You can view the latest health ratings of your bank or credit union in our Bank Health Ratings page.

The number of "problem banks" continues to fall. According to the FDIC, the number of banks on the FDIC's "Problem List" declined from 228 to 203 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 255 problem banks based on public enforcement actions. When I reported on the FDIC's 2015 Q2 report in September, the unofficial problem bank number was 282.

Here are a few of the noteworthy excerpts from the NCUA press release on its Q3 report:

  • Total loans at federally insured credit unions reached $769.5 billion in the third quarter of 2015, an increase of 3.3 percent from the previous quarter and 10.7 percent from a year earlier.
  • The loans-to-shares ratio at the end of the third quarter was 77.5 percent, up 2.0 percentage points from the previous quarter and up 3.5 percentage points from the end of the third quarter of 2014.
  • Membership in federally insured credit unions grew to 102,138,141 at the end of the third quarter of 2015, an increase of 3.4 million from the end of the third quarter of 2014.
  • The number of federally insured credit unions fell to 6,090 at the end of the third quarter, 260 fewer than at the end of the third quarter of 2014, a decline of 4.1 percent. Consolidation in the financial industry has been a long-running trend.
  • The percentage of federally insured credit unions that were well-capitalized rose in the third quarter, with 98.0 percent reporting a net worth ratio at or above the statutorily required 7.0 percent. A year earlier, 97.5 percent of credit unions were well-capitalized. As of Sept. 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 1.1% at the banks and 3.3% at the credit unions. However, the increase for banks was smaller than the previous quarter (2.2%). Increasing loans indicates that they are making more loans which means they will be needing more deposits, and that will lead to higher deposit rates.

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