The FDIC and NCUA recently released their reports of the third quarter health of the institutions they insure. They also released the 2019 Third Quarter Call Reports of all 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, 2019 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.
2019 Rankings of the Largest Banks and Credit Unions
In addition to the health grades, you can view how the banks and credit unions have changed in size in our table of the Largest Banks and Credit Unions by Assets. By default, the institutions are ranked by assets. Click on the column title and you can sort by total branches, number of states with branches, number of employees and number of customer accounts.
Chase Bank continues to be the largest bank based on assets. As of September 30th, total assets were $2.37 trillion, which is up 7.28% from last year. Navy Federal continues to be the largest credit union. Total assets as of September 30th are $110.12 billion, up 13.45% from a year ago. Navy Federal is way ahead of other credit unions in size. The second largest is State Employees' Credit Union in North Carolina with total assets of $40.87 billion, and the third largest is PenFed with total assets of $24.77 billion.
FDIC 2019 Q3 Report
Here are a few of the noteworthy highlights from the FDIC press release on its Q3 report:
- The 5,256 FDIC-insured institutions reported aggregate net income of $57.4 billion in third quarter 2019, a decline of $4.5 billion (7.3 percent) from a year ago. The quarterly decline in net income was due to nonrecurring events at three large institutions. However, 62 percent of all institutions reported a year-over-year increase in net income; slightly more than 4 percent of institutions were unprofitable.
- Net interest income increased by $1.7 billion (1.2 percent) from 12 months ago, making it the lowest annual growth rate since fourth quarter 2014. Lower yield on earning assets contributed to the slowdown in net interest income. However, slightly more than two-thirds of all banks (70.9 percent) reported annual increases in net interest income. The average net interest margin declined by 10 basis points from a year ago to 3.35 percent.
- Total loan and lease balances increased by $99.5 billion (1 percent) from the previous quarter. Growth among major loan categories was led by consumer loans, which includes credit cards (up $31.3 billion, or 1.8 percent) and residential mortgage loans (up $22 billion, or 1 percent).
- The number of problem banks fell from 56 to 55 during the third quarter, the lowest number of problem banks since first quarter 2007. Total assets of problem banks rose modestly from $48.5 billion in the second quarter to $48.8 billion.
- The Deposit Insurance Fund (DIF) balance totaled $108.9 billion in the third quarter, an increase of $1.5 billion from the previous quarter. The quarterly increase was due to assessment income, interest earned on investment securities held by the DIF, and a reduction in losses from past failures. The reserve ratio rose by 1 basis point from the previous quarter to 1.41 percent.
- During the third quarter, four new banks opened, 46 institutions were absorbed by mergers, and no banks failed.
- The FDIC insures deposits at the nation’s banks and savings associations, 5,256 as of September 30, 2019 (down from 5,303 from the previous quarter.)
Deposits Grew More Than Loans in Q3
The FDIC also published this statistics at a glance document which provides a useful summary of the bank industry’s financials for both Q3 2019 and Q3 2018. The loan-to-deposit ratio decreased from 80.66% in Q3 2018 to 80.12% in Q3 2019. It also decreased from Q2 when it was 80.80%. The decline was due to deposit growth that was larger than loan growth (5.3% vs. 4.6%). A falling loan-to-deposit ratio isn’t good news for savers since it puts downward pressure on deposit rates. When deposits grow more than loans, there is less of a need to raise deposit rates.
The “Problem Bank” Lists
The number of "problem banks" continues to fall. According to the FDIC, the number of banks on the FDIC's "Problem List" fell from 56 in Q2 to 55 in Q3. 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 65 banks based on public enforcement actions as of November 2019. When I reported on the FDIC’s 2019 Q2 report in September, the unofficial problem bank number was 76. You can also see the potential problem banks in our Texas Ratio table which ranks banks and credit unions based on the Texas Ratio, a standard financial health metric.
There were no bank failures in Q3, but there have been three bank failures in Q4 for a total of four bank failures for 2019. The last bank to fail was City National Bank of New Jersey which failed on November 1st. Please refer to my reviews of these bank failures for more details. For a listing of bank failures, this FDIC page is very useful.
NCUA 2019 Q3 Report
Here are a few of the noteworthy excerpts from the 2019 Q3 Credit Union Data Summary:
- Total assets in federally insured credit unions rose by $98 billion, or 6.8 percent, over the year ending in the third quarter of 2019, to $1.54 trillion.
- Total loans outstanding increased $61 billion, or 5.9 percent, over the year to $1.1 trillion. The average outstanding loan balance in the third quarter of 2019 was $15,530, up $262, or 1.7 percent, from one year earlier.
- Credit union shares and deposits rose by $83.7 billion, or 6.9 percent, over the year, to $1.29 trillion in the third quarter of 2019. Regular shares declined $1.6 billion, or 0.4 percent, to $443.1 billion. Other deposits increased $60.2 billion, or 10.2 percent, to $648.9 billion, led by share certificate accounts, which were up $50.5 billion, or 22.3 percent.
- The loan-to-share ratio stood at 84.1 percent in the third quarter of 2019, down from 84.9 percent in the third quarter of 2018.
- The number of federally insured credit unions declined to 5,281 in the third quarter of 2019, from 5,436 in the third quarter of 2018. In the third quarter of 2019, there were 3,321 federal credit unions and 1,960 federally insured, state-chartered credit unions. The year-over-year decline is consistent with long-running industry consolidation trends.
- Consistent with long-running trends, credit unions with assets of at least $1 billion reported the strongest growth in loans, membership, and net worth over the year ending in the third quarter of 2019. Credit unions with less than $500 million in assets reported declines in those categories over the year.
Loan-to-Deposit Ratio Up From Previous Quarter
One thing to note from the NCUA report is that the loan-to-share (deposit) ratio had a decline from the previous year (from 84.9% to 84.1%). However, the loan-to-share ratio went up for the quarter (from 83.3% to 84.1%). The rising loan-to-share ratio should put some upward pressure on deposit rates. When credit unions need to fund loan growth, they often introduce CD specials to attract deposits.
Large Credit Unions Remain Healthy
Just like the FDIC report, the NCUA report doesn’t mention any credit unions that are not well-capitalized. One interesting thing in the report was the financial performance review based on the size of the credit unions. The large credit unions continue to be financially strong while the small credit unions continue to be weak. Just like the last quarter, the weakness extended to the midsize credit unions with assets between $100 million and $500 million. Here’s an excerpt from the report on their Q3 performance:
The number of federally insured credit unions with at least $100 million but less than $500 million in assets declined to 1,012 in the third quarter of 2019 from 1,031 in the third quarter of 2018. These 1,012 credit unions held $225.1 billion in total assets, or 15 percent of total system assets. Credit unions in this category reported a 3.3 percent decline in total loans outstanding. Membership fell 5.4 percent. Net worth edged down 0.3 percent.
In contrast, the largest credit unions are very healthy and have strong growth. I included excerpts below of the performance summary of the largest credit unions (over $1 billion in assets) and the second largest credit unions (between $500 million and $1 billion in assets). Note how much healthier they are as compared to the midsize credit unions above.
The number of federally insured credit unions with assets of at least $1 billion increased to 319 in the third quarter of 2019 from 303 in the third quarter of 2018. These 319 credit unions held $1.0 trillion in assets, or 67 percent of total system assets. Credit unions in this category reported loan growth of 8.8 percent. Membership rose 7.9 percent. Net worth increased 12.0 percent.
The number of federally insured credit unions with assets of at least $500 million but less than $1 billion rose to 255 in the third quarter of 2019 from 240 in the third quarter of 2018. These 255 credit unions held $179.2 billion in total assets, or 12 percent of total system assets. Credit unions in this category reported a 4.9 percent increase in total loans outstanding over the year. Membership rose 3.8 percent, and net worth increased 6.6 percent.
So far this year, one credit union has been liquidated, and two credit unions have been placed into conservatorship. Many more credit unions failed in 2018. In that year seven were liquidated, and two were placed in conservatorship. The most noteworthy credit union to fail in 2018 was Melrose Credit Union. This was a large credit union which had assets of $1.1 billion at the time of the liquidation. Melrose failed due to its large exposure to the taxi industry which has been hurt by ride-sharing app-based services like Uber.
In a conservatorship, the NCUA takes over the management of the credit union with the goal of resolving the issues. If the issues cannot be resolved, the NCUA will either arrange for a merger of the conserved credit union into a healthy credit union or liquidate the credit union.
The last credit union to be placed into conservatorship is the New York City credit union, Municipal Credit Union (MCU). It was placed into NCUA conservatorship on May 17th. It’s a large credit union with over $3 billion in assets. Before the conservatorship, the former CEO of MCU, Kam Wong, was convicted of embezzling $10 million from the credit union. In October, additional arrests were made in connection with Wong. A New York state court judge was charged with obstructing a federal fraud investigation. The judge had served as the chair of MCU’s board of directors. Also, a retired NYPD officer was charged with embezzlement and fraud. The officer was a member of MCU’s supervisory committee.
Please refer to this NCUA page to view past credit union liquidations, conservatorships and mergers.