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Financial Health Grades Updated from Q1 FDIC and NCUA Reports


Financial Health Grades Updated from Q1 FDIC and NCUA Reports

The FDIC and NCUA recently released their reports of the first quarter health of the institutions they insure. They also released the 2016 First 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 March 31, 2016 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 highlights from the FDIC press release on its Q1 report:

  • Total loan and lease balances increased $99.7 billion (1.1 percent) during the first quarter. For the 12 months ended March 31, loans and leases increased $577.1 billion (6.9 percent). This is the largest 12-month growth rate since mid-2007 to mid-2008. At community banks, loan balances rose 1.5 percent during the first quarter and increased 8.9 percent during the past 12 months.
  • Revenue increased from a year earlier and loan balances expanded at the highest 12-month rate since 2008. However, a prolonged period of low interest rates has narrowed margins and caused some institutions to reach for yield. More recently, low energy prices have led to a sharp increase in noncurrent loans to oil and gas producers.
  • Problem List" Continues to Shrink: The number of banks on the FDIC's Problem List fell from 183 to 165 during the first quarter. This is the smallest number of problem banks in more than seven years and is down dramatically from the peak of 888 in the first quarter of 2011. Total assets of problem banks fell from $46.8 billion to $30.9 billion during the first quarter. One bank failed during the first quarter.
  • Deposit Insurance Fund (DIF) Rises $2.5 Billion to $75.1 Billion: The DIF increased from $72.6 billion at the end of 2015 to $75.1 billion at the end of the first quarter, largely driven by $2.3 billion in assessment income. The DIF reserve ratio rose from 1.11 percent to 1.13 percent during the quarter.
  • The FDIC insures deposits at the nation's banks and savings associations, 6,122 as of March 31, 2016 (down from 6,182 at the end of 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 183 to 165 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 205 problem banks based on public enforcement actions. When I reported on the FDIC's 2015 Q4 report in March, the unofficial problem bank number was 228.

It’ll be interesting to see if this trend of fewer and fewer problem banks continue. The FDIC warned that “low energy prices have led to a sharp increase in noncurrent loans to oil and gas producers.” That may lead to an increase in problem banks later this year.

Here are a few of the noteworthy excerpts from the NCUA press release on its Q1 report:

  • Total loans at federally insured credit unions reached $799.5 billion at the end of the first quarter, an increase of 10.7 percent from one year earlier.
  • The loans-to-shares ratio on March 31 was 76.1 percent, up 2.7 percentage points from a year earlier. The ratio, however, fell for the quarter due to an influx of member deposits.
  • Membership in federally insured credit unions grew to 103.7 million in the first quarter of 2016, an increase of 3.8 percent from the first quarter of 2015.
  • Continuing a long-standing trend, the number of federally insured credit unions fell to 5,954 at the end of the first quarter of 2016, 252 less than a year ago. The decline occurred primarily in the number of credit unions under $10 million in assets. Overall, there were 3,721 federal credit unions and 2,233 federally insured, state-chartered credit unions.
  • The percentage of federally insured credit unions that were well capitalized remained steady in the first quarter with 97.8 percent reporting a net worth ratio at or above the statutorily required 7 percent. At end of first quarter of 2016, 0.7 percent of federally insured credit unions were less than adequately capitalized.

Both the FDIC and NCUA reported increased loans. Increasing loans indicates that they are making more loans which means they will be needing more deposits, and that will eventually lead to higher deposit rates. However, deposits also grew at credit unions. In fact, they grew more than loans. The NCUA reported that the loans-to-shares ratio “fell for the quarter due to an influx of member deposits.” That’s not good news for deposit rates.

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jimbeau   |     |   Comment #1
I used to have to go to the government websites and download the aggregate FPR information into a spreadsheet. 

So, thanks for saving me all of that work!
Anonymous   |     |   Comment #2
why would NFCU shows up on both lists, healthiest and riskiest.

Best and Worst Banks and Credit Unions by Texas Ratio
Ken Tumin
Ken Tumin   |     |   Comment #3
Are you referring to Navy Federal Credit Union? For billion-dollar+ credit unions, they're on the second page of the table for riskiest credit unions and on the fifth page of the table for the healthiest credit unions. There are only six pages of billion-dollar+ credit unions.
Anonymous   |     |   Comment #4
But isn't the question "why?" on both lists?

Anonymous   |     |   Comment #6
I think he's saying that since it's a small list of CUs of that size, all of them are going to show up on one of the six page pages for both sorting methods (best to worst or worst to best).  
Anonymous   |     |   Comment #12
exactly,  either the thing is safe or it isn't. having the same bank/CU on both listings is a bit skitzo.

Anyway I was only interested in that one cause I am "over" the limit for now, even with my joint and POD accounts. The reason for that was cause I went with the 3.1%ers they had for a bit while I already had active CD's in force with them, I didn't want to loose out on the 3.1%ers, but couldn't close out any other active CD at the time. I used 2 CD's that were those closable without penalty at  BB&T.

Anyway I have till Nov when one of them comes due, and will move it at that time to be back under limit. Its actually due election day lol, so I assume things will hold till than.
Anonymous   |     |   Comment #5
i wish you had links to the other health monitoring sites like Bauer.  I am especially interested in the health of Valor credit union and there is no info posted about this on the bankdealsblog/deposit account site
paoli2   |     |   Comment #7
As much as I use and appreciate the info on this site, I would not select a bank or credit union unless  I check out the info on Bauers and Bankrate too.  You can easily bring them up yourself and then bookmark them for future use.  These erratic days we need to be extra vigilant about which banks and credit unions we use and they should all have the highest ratings with these sites. 
Anonymous   |     |   Comment #8
As long as a CD is insured by a government agency I really am not that concerned with a banks rating. Such a small percentage are taken over and they are usually small. The risk is like a call. When you get your money back you may have to invest with a lower rate. If the bank or CU is merged you have the option of closing the CD. Those in Valor CU are still getting 3% and change and have been for a year or 2. Even if it gets taken over they have had a nice rate for a few years.
Anonymous   |     |   Comment #9
i worry anyway.  I would be over the limit but I am not because of PODs on the account, but their records have to be accurate
Anonymous   |     |   Comment #10
Mine are Joint. Not part of estate. I could POD my kids. I just keep under $250,000 so no worries.
Anonymous   |     |   Comment #11
I don't worry about the health of a bank or CU as long as they are insured by the FDIC or NCUA and I am not over the insured limits.

I had CDs in the past with two banks that failed.  Both were taken over by other banks.  The only think I lost was the good CD rates.  I was given the option of closing out the CDs or continuing the term at lower rate.  I just chose to accept the lower rate and closed the CDs out when they matured.