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Quarterly Quarterly Banking Profile: First Quarter 2016 Highlights: ■ ■ ■ ■ ■ ■ ■ First-Quarter Net Income of $39.1 Billion Is 2 Percent Lower Than the Year Before Troubled Commercial and Industrial Loan Balances Register a Sharp Increase Community Bank Net Income Improves More Than 7 Percent From First Quarter 2015 Community Bank Loan Balances Increase 8.9 Percent From the Year Before DIF Reserve Ratio Rises 2 Basis Points to 1.13 Percent Final Rule Approved in March 2016 to Raise DIF to 1.35 Percent of Insured Deposits Final Rule Approved in April 2016 Revises Calculation of Insurance Assessments for Small Banks 2016 Volume 10, Number 2 Federal Deposit Insurance Corporation FDIC QUARTERLY A The FDIC Quarterly is published by the Division of Insurance and Research of the Federal Deposit Insurance Corporation and contains a comprehensive summary of the most current financial results for the banking industry. Feature articles appearing in the FDIC Quarterly range from timely analysis of economic and banking trends at the national and regional level that may affect the risk exposure of FDIC-insured institutions to research on issues affecting the banking system and the development of regulatory policy. Single copy subscriptions of the FDIC Quarterly can be obtained through the FDIC Public Information Center, 3501 Fairfax Drive, Room E-1002, Arlington, VA 22226. E-mail requests should be sent to publicinfo@fdic.gov. Change of address information also should be submitted to the Public Information Center. The FDIC Quarterly is available online by visiting the FDIC website at www.fdic.gov. To receive e-mail notification of the electronic release of the FDIC Quarterly and the individual feature articles, subscribe at www.fdic.gov/about/subscriptions/index.html. Chairman Martin J. Gruenberg Director, Division of Insurance and Research Diane Ellis Executive Editor Richard A. Brown Managing Editors Matthew Green Jack Reidhill Philip A. Shively Editors Clayton Boyce Peggi Gill Frank Solomon Kathy Zeidler Publication Manager Lynne Montgomery Media Inquiries (202) 898-6993 FDIC QUARTERLY 2016 FDIC QUARTERLY Vo l u m e 1 0 • N u m b e r 2 Quarterly Banking Profile: First Quarter 2016 FDIC-insured institutions reported aggregate net income of $39.1 billion in the first quarter of 2016, down $765 million (1.9 percent) from a year earlier. The decline in earnings was mainly attributable to a $4.2 billion increase in provisions for loan losses and a $2.2 billion decline in noninterest income. The increase in loan-loss provisions is primarily attributable to rising levels of troubled loans to commercial and industrial borrowers, particularly in the energy sector. The decline in noninterest income reflects weakness in trading income at a few large banks, as well as lower income from asset servicing. Of the 6,122 insured institutions reporting first quarter financial results, more than half (61.4 percent) reported year-over-year growth in quarterly earnings. The proportion of banks that were unprofitable in the first quarter fell from 5.7 percent a year earlier to 5 percent, the lowest level since the first quarter of 1998. See page 1. Community Bank Performance Community banks—which represent 93 percent of insured institutions—reported net income of $5.2 billion in the first quarter, up $353.6 million (7.4 percent) from the yearearlier quarter. Improved revenue from net interest income and noninterest income was offset in part by higher loan-loss provisions and noninterest expense. Asset quality indicators continued to improve, and community banks accounted for 44 percent of small loans to businesses. See page 15. Insurance Fund Indicators Insured deposits increased by 2 percent in the first quarter of 2016. The DIF reserve ratio rose to 1.13 percent on March 31, 2016, up from 1.11 percent at December 31, 2015, and 1.03 percent at March 31, 2015. Final rules were approved to raise the DIF to 1.35 percent of insured deposits and revise the calculation of insurance assessments for small banks. See page 23. The views expressed are those of the authors and do not necessarily reflect official positions of the Federal Deposit Insurance Corporation. Some of the information used in the preparation of this publication was obtained from publicly available sources that are considered reliable. However, the use of this information does not constitute an endorsement of its accuracy by the Federal Deposit Insurance Corporation. Articles may be reprinted or abstracted if the publication and author(s) are credited. Please provide the FDIC’s Division of Insurance and Research with a copy of any publications containing reprinted material. FDIC QUARTERLY i QUARTERLY BANKING PROFILE First Quarter 2016 INSURED INSTITUTION PERFORMANCE First-Quarter Net Income of $39.1 Billion Is 2 Percent Lower Than the Year Before Loan-Loss Provisions Are $4.2 Billion Higher Troubled Commercial and Industrial Loan Balances Register a Sharp Increase Loan Growth Rate Continues to Rise Industry Assets Post Largest Quarterly Increase in Eight Years Higher Expenses for Credit Losses Weigh on First-Quarter Earnings Higher expenses for loan losses and lower noninterest income from trading and asset servicing contributed to a $765 million (1.9 percent) decline in quarterly earnings for FDICinsured institutions in first quarter 2016. Most of the year-over-year drop in net income was concentrated among the largest banks. More than half of all banks—61.4 percent—reported higher quarterly earnings compared with first quarter 2015. Only 5 percent of banks reported negative net income in the quarter, down from 5.7 percent the year before. The average return on assets in the first quarter was 0.97 percent, down from 1.02 percent in first quarter 2015. Net Interest Margins Improve From Year-Ago Levels Net operating revenue—the sum of net interest income and total noninterest income— totaled $172.9 billion in the quarter, up $4.6 billion (2.7 percent) from the year earlier. Net interest income was $6.7 billion (6.4 percent) higher, while total noninterest income was $2.2 billion (3.4 percent) lower. The improvement in net interest income was attributable to wider net interest margins, as average asset yields increased more rapidly than average funding costs, and to a 3.7 percent increase in average interest-earning assets compared with first quarter 2015. The average net interest margin rose to 3.10 percent, from 3.02 percent the year before, as 57 percent of banks reported year-over-year improvement in their margins. The drop in noninterest income was concentrated among larger banks, and reflected a $1.9 billion (24.9 percent) decline in trading income, as well as a $736 million (46 percent) decline in servicing income. Chart 1 Chart 2 Unprofitable Institutions and Institutions With Increased Earnings Quarterly Net Income All FDIC-Insured Institutions Securities and Other Gains/Losses, Net Net Operating Income $ Billions 50 40 35.2 30 20 17.4 20.9 23.8 28.7 28.5 34.8 34.5 37.5 40.3 34.4 38.2 36.1 39.8 37.3 40.1 38.5 36.5 39.8 43.0 All FDIC-Insured Institutions Percentage of All FDIC-Insured Institutions 40.4 40.7 39.1 70 50 10 40 0 30 20 -10 -20 Percentage of Institutions With Year-Over-Year Quarterly Income Growth 60 25.3 21.4 80 10 1 2 3 2010 Source: FDIC. 4 1 2 3 2011 4 1 2 3 2012 4 1 2 3 2013 4 1 2 3 2014 4 1 2 3 2015 4 1 2016 0 2006 Percentage of Institutions With Quarterly Losses 2007 Source: FDIC. 2008 2009 2010 2011 2012 2013 2014 2015 2016 FDIC QUARTERLY 1 2016 •Volume 10 • Numb er 2 Aggregate Loan-Loss Provisions Continue to Rise Banks set aside $12.5 billion in provisions for loan losses in the first quarter, a year-overyear increase of $4.2 billion (49.7 percent). This is the largest quarterly increase since fourth quarter 2012, and marks the seventh consecutive quarter that loan-loss provisions have increased. Slightly more than one-third of all banks—35.6 percent—reported higher quarterly loss provisions than the year before. Most of the increase in loss provisions occurred at larger banks. Quarterly provision expenses at banks with assets greater than $10 billion were $4.1 billion (54.8 percent) higher than in first quarter 2015, while total provisions at banks with less than $10 billion in assets were $140 million (15.8 percent) higher. Loan Losses Post Second Consecutive Quarterly Increase Quarterly net charge-offs (NCOs) totaled $10.1 billion, an increase of $1.1 billion (12.3 percent) compared with a year earlier. This is the second consecutive quarter that NCOs have posted a year-over-year increase, following 21 quarters in a row in which NCOs fell. NCOs of commercial and industrial (C&I) loans were $1.1 billion (144.7 percent) higher than in first quarter 2015. Smaller year-over-year NCO increases were reported in credit cards, auto loans, real estate construction and development loans, and agricultural production loans. The average NCO rate in the first quarter was 0.46 percent, compared with 0.43 percent a year earlier. Fewer than half of all banks—41.9 percent—reported year-overyear increases in quarterly NCOs. Noncurrent C&I Loans Increase by $9.3 Billion The amount of loan balances that were noncurrent—90 days or more past due or in nonaccrual status—rose by $3.3 billion (2.4 percent) during the first three months of 2016. This is the first quarterly increase in total noncurrent loan balances in 24 quarters, driven by a $9.3 billion (65.1 percent) increase in noncurrent C&I loans. This is the largest quarterly increase in noncurrent C&I loans since first quarter 1987. Most of the increase occurred at larger banks. At institutions with assets greater than $10 billion, noncurrent C&I loans rose by $8.9 billion (82.1 percent). At institutions with less than $10 billion in assets, noncurrent C&I balances increased by $415 million (12 percent). A large part of the weakness in C&I loans is attributable to loans to the energy sector, especially oil and gas producers. Sharply lower energy prices have reduced the ability of many borrowers to service their Chart 3 Chart 4 Quarterly Net Operating Revenue Year-Over-Year Change in Quarterly Loan-Loss Provisions All FDIC-Insured Institutions All FDIC-Insured Institutions Quarterly Noninterest Income Quarterly Net Interest Income $ Billions $ Billions 10 200 5 180 4.2 0 160 140 -5 120 -10 100 -15 80 -20 60 -25 40 -30 20 -35 -30.7 0 1 2007 Source: FDIC. 2008 2009 2010 2 FDIC QUARTERLY 2011 2012 2013 2014 2015 2016 2 3 2011 Source: FDIC. 4 1 2 3 2012 4 1 2 3 2013 4 1 2 3 2014 4 1 2 3 2015 4 1 2016 QUARTERLY BANKING PROFILE debts, and a large share of the direct lending exposure of the banking industry to these borrowers is held by larger banks. The average noncurrent loan rate rose from 1.56 percent to 1.58 percent during the quarter. This is still the second-lowest noncurrent rate for the industry since year-end 2007. For C&I loans, the average noncurrent rate rose from 0.78 percent to 1.24 percent. This is the highest noncurrent rate for C&I loans since year-end 2011. Noncurrent rates declined for all other major loan categories in the first quarter. Loss Reserves Increase for the First Time in Six Years As a result of the increase in noncurrent loans, the industry’s coverage ratio of loan-loss reserves to noncurrent loans posted its first quarterly decline in 14 quarters, falling from 86 percent at the end of 2015 to 85.5 percent at the end of March. Banks increased their loan-loss reserves by $2.1 billion (1.8 percent), as they added more in loan-loss provisions ($12.5 billion) than they took out in net charge-offs ($10.1 billion). This is the first time in six years that the industry’s aggregate loan-loss reserves have increased. Banks with assets greater than $1 billion, which itemize their reserves for major loan categories, reported a $3.3 billion (10.4 percent) increase in their reserves for estimated losses on non-real-estate commercial loans in the first quarter. Equity Capital Increases by $39.3 Billion An increase in retained earnings and higher market values in securities portfolios helped lift the equity capital of insured institutions by $39.3 billion (2.2 percent) during the first quarter. This is the largest quarterly increase in equity since third quarter 2009. While net income was lower than the year before, banks reduced their cash dividends by $1.6 billion (7.1 percent) compared with first quarter 2015. As a result, retained earnings totaled $18.3 billion, a year-over-year increase of $815 million (4.7 percent). In addition, accumulated other comprehensive income increased by $17.3 billion during first quarter 2016, buoyed by higher unrealized gains on available-for-sale securities. The industry’s ratio of equity capital to total assets increased from 11.24 percent to 11.26 percent during the quarter. At the end of the first quarter, 99 percent of all insured institutions, holding 99.9 percent of total industry assets, met or exceeded the requirements for the highest regulatory capital category as defined for Prompt Corrective Action purposes. Chart 5 Noncurrent Loan Rate and Quarterly Net Charge-Off Rate Chart 6 C & I Loan Performance All FDIC-Insured Institutions All FDIC-Insured Institutions Percentage Percentage 4.0 6 Noncurrent Loan Rate 3.5 5 Noncurrent Loan Rate 3.0 4 2.5 2.0 3 1.5 2 1.0 1 0 2006 0.5 Quarterly Net Charge-Off Rate 2007 Source: FDIC. 2008 2009 2010 2011 2012 2013 2014 2015 2016 0.0 2006 Quarterly Net Charge-Off Rate 2007 Source: FDIC. 2008 2009 2010 2011 2012 2013 2014 2015 2016 FDIC QUARTERLY 3 2016 •Volume 10 • Numb er 2 Loan Growth Remains Strong Total assets increased by $325.6 billion (2 percent) during the quarter, the largest quarterly increase in industry assets since first quarter 2008. Balances with Federal Reserve banks increased by $79.7 billion (6.7 percent), primarily at large banks. Investment securities portfolios grew by $31.1 billion (0.9 percent), primarily as a result of a $23.4 billion increase in unrealized gains on available-for-sale securities. Total loans and leases increased by $99.7 billion (1.1 percent) during the first three months of 2016. C&I loans increased by $71.2 billion (3.9 percent), with the acquisition of a commercial finance business from outside the industry contributing to the strong growth in reported C&I loan balances. Real estate loans secured by nonfarm nonresidential real estate properties increased by $20.3 billion (1.6 percent), and 1-to-4 family residential mortgage loans rose by $14.3 billion (0.7 percent). Credit card balances posted a seasonal decline of $32.8 billion (4.3 percent), as borrowers paid down balances incurred during the holiday season. Over the 12 months ended March 31, total loan and lease balances increased by 6.9 percent. This is the highest 12-month growth rate for loan portfolios since midyear 2007–midyear 2008. Unused credit lines increased by $121.6 billion (1.8 percent) during the quarter, and are up by $451.1 billion (6.9 percent) over the previous 12 months. Deposits Fund Most of the Industry’s Asset Growth Total deposits increased by $239.5 billion (2 percent) during the quarter. Deposits in domestic offices rose by $201.3 billion (1.8 percent), while deposits in foreign offices increased by $38.2 billion (3 percent). Domestic deposits in interest-bearing accounts grew by $218.4 billion (2.8 percent), while balances in noninterest-bearing domestic accounts fell by $17.1 billion (0.6 percent). Banks increased their nondeposit liabilities by $47 billion (2.4 percent), as liabilities in trading accounts rose by $38 billion (15.4 percent). One Insured Bank Failed in the First Quarter The number of insured commercial banks and savings institutions filing quarterly financial reports declined from 6,182 to 6,122 in the first quarter. During the quarter, mergers absorbed 58 insured institutions, while one insured bank failed. No new charters were added in the first quarter. The number of full-time equivalent employees totaled 2,039,887 in the quarter, a net increase of 6,163 (0.3 percent) from the fourth quarter of 2015, but 2,799 (0.1 percent) fewer than the year before. Author: Ross Waldrop Senior Banking Analyst Division of Insurance and Research (202) 898-3951 Chart 7 Chart 8 Number and Assets of Banks on the “Problem List” Quarterly Change in Asset Funding All FDIC-Insured Institutions Assets ($ Billions) Equity Capital Nondeposit Liabilities $ Billions 500 Deposits 450 400 Number 500 1,000 Number of Problem Banks 900 400 800 350 700 300 600 250 500 -100 200 400 -200 150 -300 100 -400 50 300 200 100 0 -500 2007 Source: FDIC. 2008 2009 2010 4 FDIC QUARTERLY 2011 2012 2013 2014 2015 2016 300 Problem Bank Assets 200 165 100 31 0 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Source: FDIC. QUARTERLY BANKING PROFILE TABLE I-A. Selected Indicators, All FDIC-Insured Institutions* Return on assets (%) Return on equity (%) Core capital (leverage) ratio (%) Noncurrent assets plus other real estate owned to assets (%) Net charge-offs to loans (%) Asset growth rate (%) Net interest margin (%) Net operating income growth (%) Number of institutions reporting Commercial banks Savings institutions Percentage of unprofitable institutions (%) Number of problem institutions Assets of problem institutions (in billions) Number of failed institutions Number of assisted institutions 2016** 2015** 2015 2014 2013 2012 2011 0.97 8.62 9.61 0.96 0.46 3.27 3.10 -1.36 6,122 5,289 833 5.00 165 $31 1 0 1.02 9.12 9.48 1.10 0.43 5.82 3.02 6.01 6,419 5,535 884 5.67 253 $60 4 0 1.04 9.30 9.59 0.96 0.44 2.66 3.07 7.15 6,182 5,338 844 4.72 183 $47 8 0 1.01 9.01 9.44 1.20 0.49 5.59 3.14 -0.72 6,509 5,607 902 6.27 291 $87 18 0 1.07 9.54 9.40 1.63 0.69 1.94 3.26 12.82 6,812 5,847 965 8.16 467 $153 24 0 1.00 8.90 9.15 2.20 1.10 4.02 3.42 17.76 7,083 6,072 1,011 11.00 651 $233 51 0 0.88 7.79 9.07 2.61 1.55 4.30 3.60 43.60 7,357 6,275 1,082 16.23 813 $319 92 0 * Excludes insured branches of foreign banks (IBAs). ** Through March 31, ratios annualized where appropriate. Asset growth rates are for 12 months ending March 31. TABLE II-A. Aggregate Condition and Income Data, All FDIC-Insured Institutions (dollar figures in millions) Number of institutions reporting Total employees (full-time equivalent) CONDITION DATA Total assets Loans secured by real estate 1-4 Family residential mortgages Nonfarm nonresidential Construction and development Home equity lines Commercial & industrial loans Loans to individuals Credit cards Farm loans Other loans & leases Less: Unearned income Total loans & leases Less: Reserve for losses Net loans and leases Securities Other real estate owned Goodwill and other intangibles All other assets Total liabilities and capital Deposits Domestic office deposits Foreign office deposits Other borrowed funds Subordinated debt All other liabilities Total equity capital (includes minority interests) Bank equity capital Loans and leases 30-89 days past due Noncurrent loans and leases Restructured loans and leases Mortgage-backed securities Earning assets FHLB Advances Unused loan commitments Trust assets Assets securitized and sold Notional amount of derivatives 1st Quarter 2016 4th Quarter 2015 1st Quarter 2015 %Change 15Q1-16Q1 6,122 2,039,887 6,182 2,033,724 6,419 2,042,686 -4.6 -0.1 $16,293,443 4,419,244 1,918,539 1,251,596 284,246 457,505 1,913,330 1,474,257 723,659 77,620 1,056,820 2,109 8,939,162 120,663 8,818,499 3,384,656 14,049 359,116 3,717,122 $15,967,835 4,375,101 1,904,269 1,231,290 274,884 465,297 1,842,170 1,497,956 756,464 81,501 1,044,846 2,079 8,839,496 118,546 8,720,950 3,353,559 14,700 360,500 3,518,126 $15,777,989 4,203,636 1,855,274 1,163,541 245,984 483,906 1,749,152 1,383,943 679,967 71,545 955,668 1,928 8,362,016 121,056 8,240,960 3,267,342 19,339 355,857 3,894,492 3.3 5.1 3.4 7.6 15.6 -5.5 9.4 6.5 6.4 8.5 10.6 9.4 6.9 -0.3 7.0 3.6 -27.4 0.9 -4.6 16,293,443 12,429,484 11,106,439 1,323,045 1,379,952 91,747 551,989 1,840,272 1,833,872 15,967,835 12,189,990 10,905,117 1,284,872 1,385,671 91,597 499,432 1,801,146 1,794,568 15,777,989 11,958,412 10,578,233 1,380,179 1,362,839 94,842 590,320 1,771,569 1,764,320 3.3 3.9 5.0 -4.1 1.3 -3.3 -6.5 3.9 3.9 INCOME DATA Full Year 2015 58,616 141,179 71,109 1,895,546 14,653,442 481,183 7,036,296 16,872,286 803,719 195,508,395 Full Year 2014 Total interest income Total interest expense Net interest income Provision for loan and lease losses Total noninterest income Total noninterest expense Securities gains (losses) Applicable income taxes Extraordinary gains, net Total net income (includes minority interests) Bank net income Net charge-offs Cash dividends Retained earnings Net operating income $478,517 46,508 432,009 37,034 253,292 417,302 3,635 70,596 -10 163,993 163,507 37,201 104,513 58,994 161,436 $469,781 47,128 422,653 29,798 247,855 422,788 3,202 68,177 -55 152,893 152,263 39,557 90,196 62,067 150,668 64,293 137,876 72,147 1,871,667 14,365,762 495,033 6,914,743 17,302,619 820,686 182,006,727 1st Quarter %Change 2016 1.9 -1.3 2.2 24.3 2.2 -1.3 13.5 3.6 N/M 7.3 7.4 -6.0 15.9 -5.0 7.2 $125,246 12,833 112,413 12,522 60,467 104,782 940 17,372 -10 39,133 39,056 10,115 20,714 18,341 38,477 61,385 152,964 79,503 1,773,843 14,102,979 433,048 6,585,190 18,061,024 940,322 206,694,352 1st Quarter 2015 -4.5 -7.7 -10.6 6.9 3.9 11.1 6.9 -6.6 -14.5 -5.4 %Change 15Q1-16Q1 $117,287 11,593 105,694 8,365 62,620 103,495 1,309 17,832 43 39,974 39,821 9,005 22,295 17,526 39,006 6.8 10.7 6.4 49.7 -3.4 1.2 -28.2 -2.6 N/M -2.1 -1.9 12.3 -7.1 4.7 -1.4 N/M - Not Meaningful FDIC QUARTERLY 5 2016 •Volume 10 • Numb er 2 TABLE III-A. First Quarter 2016, All FDIC-Insured Institutions Asset Concentration Groups* FIRST QUARTER (The way it is...) Number of institutions reporting Commercial banks Savings institutions Total assets (in billions) Commercial banks Savings institutions Total deposits (in billions) Commercial banks Savings institutions Bank net income (in millions) Commercial banks Savings institutions Performance Ratios (annualized, %) Yield on earning assets Cost of funding earning assets Net interest margin Noninterest income to assets Noninterest expense to assets Loan and lease loss provision to assets Net operating income to assets Pretax return on assets Return on assets Return on equity Net charge-offs to loans and leases Loan and lease loss provision to net charge-offs Efficiency ratio % of unprofitable institutions % of institutions with earnings gains Condition Ratios (%) Earning assets to total assets Loss allowance to: Loans and leases Noncurrent loans and leases Noncurrent assets plus other real estate owned to assets Equity capital ratio Core capital (leverage) ratio Common equity tier 1 capital ratio Tier 1 risk-based capital ratio Total risk-based capital ratio Net loans and leases to deposits Net loans to total assets Domestic deposits to total assets Structural Changes New reporters Institutions absorbed by mergers Failed institutions All Insured Institutions 6,122 5,289 833 $16,293.4 15,202.8 1,090.6 12,429.5 11,568.8 860.7 39,056 35,690 3,366 Credit Card Banks 14 12 2 $540.1 426.1 113.9 315.1 228.1 87.0 3,750 2,539 1,211 International Banks 5 5 0 $4,014.9 4,014.9 0.0 2,878.2 2,878.2 0.0 8,195 8,195 0 Agricultural Banks 1,460 1,443 17 $275.6 270.1 5.4 228.6 225.4 3.2 838 815 23 Commercial Lenders 3,046 2,738 308 $5,742.1 5,350.7 391.4 4,486.2 4,198.0 288.2 12,899 12,079 820 Mortgage Lenders 503 125 378 $404.9 151.7 253.2 323.0 126.3 196.7 968 499 469 Consumer Lenders 58 43 15 $192.5 96.4 96.1 162.7 81.1 81.6 509 307 203 Other Specialized <$1 Billion 336 306 30 $60.1 54.1 5.9 48.8 44.7 4.1 351 167 184 All Other <$1 Billion 634 560 74 $112.6 98.1 14.5 95.0 83.1 11.9 248 229 20 All Other >$1 Billion 66 57 9 $4,950.8 4,740.7 210.1 3,892.0 3,703.9 188.1 11,297 10,859 437 3.45 0.35 3.10 1.50 2.60 0.31 0.95 1.40 0.97 8.62 0.46 10.77 1.04 9.73 4.14 6.20 2.59 2.75 4.36 2.75 18.92 3.07 2.69 0.34 2.35 1.77 2.40 0.26 0.83 1.16 0.83 8.33 0.57 4.11 0.46 3.64 0.64 2.50 0.13 1.19 1.44 1.22 10.62 0.10 3.66 0.39 3.28 1.18 2.67 0.21 0.89 1.29 0.91 7.69 0.20 3.28 0.47 2.81 0.96 2.29 -0.10 0.94 1.46 0.97 8.53 0.06 4.12 0.43 3.69 1.30 2.65 0.54 1.07 1.68 1.08 10.71 0.68 3.01 0.33 2.68 5.98 5.26 0.03 2.32 3.19 2.36 15.98 0.07 3.91 0.40 3.51 0.86 2.96 0.09 0.85 1.09 0.89 7.51 0.15 2.92 0.23 2.69 1.42 2.27 0.26 0.90 1.36 0.92 8.20 0.42 123.79 59.85 5.00 61.39 110.03 46.51 0.00 35.71 124.86 62.20 0.00 40.00 200.55 61.61 2.53 62.12 153.53 63.69 4.86 63.99 -249.36 62.99 9.15 56.06 110.14 53.89 1.72 58.62 154.71 62.27 8.04 56.25 110.66 71.90 7.10 54.73 123.33 57.81 3.03 65.15 89.93 92.58 87.20 93.29 90.57 94.82 95.68 91.70 92.64 90.24 1.35 85.47 3.40 294.19 1.58 87.48 1.40 154.06 1.18 97.85 0.89 34.94 1.14 95.76 1.67 120.00 1.39 100.85 1.20 57.61 0.96 11.26 9.61 12.69 12.77 14.24 70.95 54.12 68.17 0.88 14.83 12.35 12.34 12.46 14.72 125.52 73.24 57.58 0.68 9.89 8.87 12.93 12.96 14.31 48.91 35.06 46.17 0.75 11.57 10.75 14.46 14.47 15.58 79.02 65.54 82.95 0.99 11.82 9.99 12.10 12.21 13.67 86.73 67.76 77.37 1.84 11.37 11.15 21.82 21.87 22.71 77.58 61.89 79.76 0.89 10.02 10.14 13.82 14.03 14.82 82.60 69.80 84.49 0.62 14.65 13.72 30.72 30.73 31.65 33.97 27.60 81.23 1.12 11.89 11.52 19.92 19.95 21.09 64.37 54.34 84.40 1.10 11.28 9.16 12.37 12.48 14.00 63.75 50.11 73.55 0 58 1 0 0 0 0 0 0 0 4 0 0 48 1 0 1 0 0 0 0 0 2 0 0 2 0 0 1 0 PRIOR FIRST QUARTERS (The way it was...) Number of institutions 2015 2013 2011 6,419 7,019 7,574 15 16 21 4 5 4 1,464 1,491 1,531 3,150 3,483 3,983 557 619 699 58 49 72 387 450 354 713 827 844 71 79 66 Total assets (in billions) 2015 2013 2011 $15,778.0 14,423.8 13,414.3 $489.9 594.5 676.3 $3,855.3 3,838.6 3,164.6 $254.9 231.1 200.3 $4,926.8 4,223.0 4,084.5 $461.8 566.2 795.8 $181.7 106.3 118.4 $63.6 69.4 51.8 $132.4 148.9 137.1 $5,411.8 4,645.8 4,185.5 Return on assets (%) 2015 2013 2011 1.02 1.12 0.86 3.04 3.11 3.68 0.90 0.95 0.60 1.17 1.14 1.04 0.91 0.89 0.59 0.76 0.94 0.48 1.02 1.48 1.33 2.17 1.52 1.34 0.90 0.93 0.80 1.02 1.22 0.90 Net charge-offs to loans & leases (%) 2015 2013 2011 0.43 0.83 1.83 2.80 3.41 6.67 0.63 1.17 1.96 0.02 0.10 0.31 0.15 0.51 1.34 0.15 0.42 0.98 0.60 1.18 1.77 0.13 0.34 0.76 0.14 0.29 0.39 0.41 0.63 1.40 Noncurrent assets plus OREO to assets (%) 2015 2013 2011 1.10 2.08 2.96 0.83 1.04 1.72 0.78 1.30 2.01 0.80 1.07 1.64 1.06 2.12 3.59 1.94 2.57 2.93 1.11 0.92 1.22 0.70 1.05 0.93 1.31 1.68 1.78 1.33 2.85 3.43 Equity capital ratio (%) 2015 2013 2011 11.18 11.28 11.25 15.30 14.94 16.03 9.52 8.97 8.72 11.44 11.27 10.95 11.98 11.95 11.60 11.34 11.44 10.30 9.93 9.50 10.81 14.69 14.56 15.07 11.69 11.49 11.16 11.23 12.07 12.22 * See Table V-A (page 10) for explanations. 6 FDIC QUARTERLY QUARTERLY BANKING PROFILE TABLE III-A. First Quarter 2016, All FDIC-Insured Institutions Asset Size Distribution FIRST QUARTER (The way it is...) Number of institutions reporting Commercial banks Savings institutions Total assets (in billions) Commercial banks Savings institutions Total deposits (in billions) Commercial banks Savings institutions Bank net income (in millions) Commercial banks Savings institutions Performance Ratios (annualized, %) Yield on earning assets Cost of funding earning assets Net interest margin Noninterest income to assets Noninterest expense to assets Loan and lease loss provision to assets Net operating income to assets Pretax return on assets Return on assets Return on equity Net charge-offs to loans and leases Loan and lease loss provision to net charge-offs Efficiency ratio % of unprofitable institutions % of institutions with earnings gains Condition Ratios (%) Earning assets to total assets Loss allowance to: Loans and leases Noncurrent loans and leases Noncurrent assets plus other real estate owned to assets Equity capital ratio Core capital (leverage) ratio Common equity tier 1 capital ratio Tier 1 risk-based capital ratio Total risk-based capital ratio Net loans and leases to deposits Net loans to total assets Domestic deposits to total assets Structural Changes New reporters Institutions absorbed by mergers Failed institutions All Insured Institutions 6,122 5,289 833 $16,293.4 15,202.8 1,090.6 12,429.5 11,568.8 860.7 39,056 35,690 3,366 Less Than $100 Million 1,663 1,464 199 $97.8 86.5 11.3 82.2 73.5 8.8 228 201 26 3.45 0.35 3.10 1.50 2.60 0.31 0.95 1.40 0.97 8.62 0.46 4.10 0.43 3.67 1.10 3.33 0.09 0.90 1.08 0.93 7.26 0.11 4.12 0.46 3.66 1.13 3.16 0.11 1.00 1.30 1.03 9.14 0.09 3.99 0.42 3.58 1.13 2.80 0.16 1.03 1.50 1.05 8.94 0.19 123.79 59.85 5.00 61.39 144.56 74.28 11.00 56.95 174.37 69.40 3.00 62.40 89.93 92.14 1.35 85.47 Geographic Regions* $100 $1 Billion Greater Million to to Than $1 Billion $10 Billion $10 Billion 3,734 616 109 3,231 501 93 503 115 16 $1,179.8 $1,723.2 $13,292.6 999.9 1,423.1 12,693.3 179.9 300.1 599.3 983.3 1,368.9 9,995.0 840.7 1,141.6 9,513.0 142.7 227.3 482.0 3,023 4,454 31,351 2,603 3,813 29,073 420 641 2,278 New York 752 388 364 $3,084.8 2,661.9 422.9 2,305.2 1,988.3 316.9 6,222 5,469 753 Atlanta 753 680 73 $3,417.7 3,335.7 82.0 2,671.1 2,604.6 66.5 7,486 7,317 169 Chicago 1,325 1,107 218 $3,624.0 3,511.9 112.0 2,652.2 2,570.7 81.5 8,284 7,974 309 Kansas City 1,528 1,470 58 $3,543.5 3,487.6 55.9 2,668.7 2,624.6 44.1 9,071 8,957 114 Dallas 1,299 1,218 81 $962.3 845.0 117.3 794.7 697.8 96.9 2,495 2,156 339 San Francisco 465 426 39 $1,661.2 1,360.7 300.4 1,337.5 1,082.8 254.7 5,497 3,816 1,681 3.32 0.34 2.98 1.58 2.52 0.35 0.94 1.40 0.95 8.54 0.55 3.50 0.43 3.07 1.33 2.60 0.30 0.80 1.19 0.81 6.80 0.48 3.48 0.30 3.18 1.41 2.62 0.38 0.86 1.29 0.88 7.19 0.54 2.82 0.30 2.52 1.82 2.58 0.20 0.92 1.30 0.93 8.94 0.26 3.63 0.39 3.24 1.31 2.42 0.32 1.03 1.49 1.04 10.21 0.55 3.96 0.32 3.64 1.34 3.05 0.29 1.02 1.36 1.05 9.43 0.30 4.01 0.39 3.62 1.81 2.72 0.44 1.32 2.07 1.34 11.07 0.52 125.17 62.58 1.46 68.34 122.69 58.46 1.83 55.05 113.25 62.95 4.92 59.84 120.42 60.82 8.23 63.48 152.37 63.03 6.04 59.02 109.63 56.36 3.53 58.31 151.84 64.64 3.54 64.90 139.77 51.81 5.81 67.53 92.94 92.20 89.36 89.33 89.40 89.02 89.67 91.69 93.69 1.47 110.69 1.35 123.23 1.19 111.18 1.38 79.86 1.27 99.41 1.38 79.13 1.37 79.89 1.41 69.94 1.29 92.75 1.33 157.66 0.96 11.26 9.61 12.69 12.77 14.24 70.95 54.12 68.17 1.22 12.86 12.47 20.13 20.17 21.27 68.51 57.62 84.10 1.09 11.34 10.95 15.43 15.48 16.60 78.39 65.34 83.34 0.92 11.73 10.41 13.47 13.50 14.53 85.84 68.19 79.17 0.95 11.17 9.37 12.31 12.40 13.96 68.20 51.28 65.27 0.77 12.01 9.82 12.72 12.88 14.39 72.12 53.90 66.98 1.13 12.35 9.68 12.53 12.63 14.12 73.86 57.72 75.23 0.93 10.32 9.25 12.59 12.62 13.78 66.17 48.43 63.78 1.14 10.14 8.98 11.79 11.79 13.71 68.62 51.68 57.50 1.10 11.11 9.96 13.08 13.19 14.36 76.37 63.07 82.46 0.56 12.12 11.04 14.97 15.15 16.28 74.01 59.59 79.86 0 58 1 0 18 1 0 38 0 0 2 0 0 0 0 0 9 0 0 9 0 0 11 1 0 13 0 0 10 0 0 6 0 PRIOR FIRST QUARTERS (The way it was…) Number of institutions 2015 2013 2011 6,419 7,019 7,574 1,830 2,161 2,573 3,895 4,196 4,331 582 553 563 112 109 107 796 867 942 797 894 1,010 1,386 1,500 1,581 1,585 1,701 1,811 1,351 1,480 1,580 504 577 650 Total assets (in billions) 2015 2013 2011 $15,778.0 14,423.8 13,414.3 $107.6 126.0 147.1 $1,219.6 1,270.8 1,284.8 $1,573.0 1,423.8 1,428.4 $12,877.8 11,603.2 10,554.0 $3,020.2 2,862.3 2,709.1 $3,273.1 3,017.0 2,913.4 $3,633.2 3,345.3 3,047.9 $3,424.9 3,068.2 1,680.2 $923.7 870.9 788.2 $1,503.0 1,260.0 2,275.5 Return on assets (%) 2015 2013 2011 1.02 1.12 0.86 0.86 0.73 0.57 1.01 0.87 0.52 1.05 1.09 0.69 1.02 1.15 0.93 0.83 0.86 1.04 0.98 1.11 0.60 0.94 1.09 0.68 1.16 1.25 1.19 1.04 1.09 0.92 1.35 1.49 0.96 Net charge-offs to loans & leases (%) 2015 2013 2011 0.43 0.83 1.83 0.15 0.27 0.43 0.11 0.33 0.77 0.20 0.43 1.37 0.51 0.96 2.09 0.46 1.10 2.29 0.52 0.83 1.82 0.27 0.55 1.43 0.54 1.05 2.02 0.16 0.37 0.83 0.46 0.65 1.98 Noncurrent assets plus OREO to assets (%) 2015 2013 2011 1.10 2.08 2.96 1.39 2.04 2.39 1.33 2.30 3.39 1.15 2.17 3.47 1.07 2.04 2.84 0.82 1.41 2.05 1.37 3.03 3.97 1.04 1.87 2.75 1.36 2.34 4.05 1.12 2.00 3.02 0.61 1.28 2.18 Equity capital ratio (%) 2015 2013 2011 11.18 11.28 11.25 12.45 11.97 11.57 11.28 11.00 10.28 11.87 11.84 11.43 11.08 11.23 11.34 11.76 12.26 12.74 12.47 12.22 11.84 9.89 9.12 8.52 10.25 11.03 11.58 11.08 10.82 10.73 12.53 13.41 12.33 * See Table V-A (page 11) for explanations. FDIC QUARTERLY 7 2016 •Volume 10 • Numb er 2 TABLE IV-A. Full Year 2015, All FDIC-Insured Institutions Asset Concentration Groups* FULL YEAR (The way it is...) Number of institutions reporting Commercial banks Savings institutions Total assets (in billions) Commercial banks Savings institutions Total deposits (in billions) Commercial banks Savings institutions Bank net income (in millions) Commercial banks Savings institutions Performance Ratios (%) Yield on earning assets Cost of funding earning assets Net interest margin Noninterest income to assets Noninterest expense to assets Loan and lease loss provision to assets Net operating income to assets Pretax return on assets Return on assets Return on equity Net charge-offs to loans and leases Loan and lease loss provision to net charge-offs Efficiency ratio % of unprofitable institutions % of institutions with earnings gains Condition Ratios (%) Earning assets to total assets Loss allowance to: Loans and leases Noncurrent loans and leases Noncurrent assets plus other real estate owned to assets Equity capital ratio Core capital (leverage) ratio Common equity tier 1 capital ratio Tier 1 risk-based capital ratio Total risk-based capital ratio Net loans and leases to deposits Net loans to total assets Domestic deposits to total assets Structural Changes New reporters Institutions absorbed by mergers Failed institutions All Insured Institutions 6,182 5,338 844 $15,967.8 14,893.4 1,074.4 12,190.0 11,349.5 840.5 163,507 151,964 11,543 Credit Card Banks 14 12 2 $549.1 433.4 115.7 321.8 235.6 86.2 14,490 10,535 3,955 International Banks 4 4 0 $3,774.6 3,774.6 0.0 2,697.2 2,697.2 0.0 33,961 33,961 0 Agricultural Banks 1,479 1,461 18 $277.6 272.4 5.2 230.4 227.2 3.2 2,625 2,520 105 Commercial Lenders 3,090 2,779 311 $5,892.4 5,495.9 396.5 4,582.0 4,292.9 289.1 53,687 50,814 2,873 Mortgage Lenders 501 120 381 $385.7 144.5 241.3 305.9 120.4 185.5 3,118 1,694 1,424 Consumer Lenders 65 49 16 $187.3 94.9 92.4 157.5 79.9 77.6 1,872 1,135 737 Other Specialized <$1 Billion 332 298 34 $57.5 51.3 6.1 46.0 41.8 4.2 1,522 683 840 All Other <$1 Billion 630 557 73 $113.3 98.2 15.2 95.3 82.8 12.4 1,013 924 89 All Other >$1 Billion 67 58 9 $4,730.3 4,528.2 202.1 3,753.9 3,571.6 182.3 51,219 49,699 1,520 3.40 0.33 3.07 1.62 2.66 0.24 1.03 1.49 1.04 9.30 0.44 10.50 0.93 9.57 4.47 6.44 2.46 2.84 4.42 2.84 19.11 2.79 2.58 0.30 2.28 1.81 2.43 0.17 0.86 1.21 0.87 8.93 0.59 4.10 0.45 3.64 0.66 2.77 0.12 0.94 1.18 0.97 8.43 0.10 3.57 0.39 3.19 1.26 2.69 0.14 0.94 1.31 0.95 8.01 0.19 3.24 0.50 2.74 0.86 2.24 0.02 0.80 1.22 0.83 7.23 0.13 4.07 0.44 3.63 1.36 2.72 0.51 1.03 1.64 1.04 10.26 0.62 3.03 0.34 2.69 6.92 5.60 0.03 2.63 3.79 2.68 17.84 0.20 3.87 0.42 3.45 0.99 3.04 0.08 0.87 1.10 0.90 7.58 0.20 3.00 0.19 2.81 1.65 2.38 0.18 1.09 1.65 1.12 9.89 0.41 99.55 59.92 4.72 63.26 113.69 47.61 0.00 57.14 83.18 63.33 0.00 100.00 178.56 62.30 2.03 62.27 110.03 64.33 4.89 68.19 22.83 64.80 9.18 53.29 112.85 54.90 7.69 66.15 61.75 59.46 7.83 46.99 70.46 72.59 5.08 57.30 88.88 55.70 2.99 65.67 89.97 92.50 87.49 92.81 90.51 94.66 97.22 91.71 92.51 90.06 1.34 85.98 3.20 274.03 1.59 87.52 1.38 172.42 1.17 103.89 0.96 36.45 1.14 89.88 1.69 115.06 1.39 95.55 1.20 55.14 0.96 11.24 9.59 12.66 12.75 14.21 71.54 54.62 68.29 0.90 14.29 12.30 11.87 11.98 14.20 127.74 74.87 57.73 0.70 10.13 8.83 13.11 13.15 14.48 50.27 35.92 46.52 0.68 11.32 10.66 14.33 14.34 15.44 78.65 65.27 82.99 0.93 11.77 10.05 12.16 12.34 13.83 86.27 67.08 76.75 1.92 11.36 11.27 21.83 21.88 22.73 78.84 62.52 79.28 0.97 10.12 10.29 13.68 13.89 14.70 85.75 72.11 84.08 0.61 15.02 14.35 32.09 32.10 33.02 33.83 27.09 80.08 1.19 11.80 11.56 19.83 19.87 21.00 64.97 54.61 84.05 1.16 11.08 8.98 12.20 12.20 13.67 63.04 50.03 73.46 1 304 8 0 0 0 0 1 0 0 47 0 0 219 7 0 12 0 0 2 0 1 1 0 0 15 1 0 7 0 PRIOR FULL YEARS (The way it was...) Number of institutions 2014 2012 2010 6,509 7,083 7,658 15 19 22 3 5 4 1,515 1,537 1,559 3,222 3,499 4,085 553 659 718 52 51 72 374 414 314 708 826 815 67 73 69 Total assets (in billions) 2014 2012 2010 $15,553.8 14,450.4 13,318.9 $484.2 600.7 705.4 $3,735.6 3,808.4 3,038.1 $273.5 239.8 199.8 $4,878.5 4,338.9 4,094.5 $439.6 628.3 789.0 $175.9 101.6 114.3 $61.9 64.9 42.9 $129.1 145.8 132.3 $5,375.5 4,522.0 4,202.6 Return on assets (%) 2014 2012 2010 1.01 1.00 0.65 3.22 3.13 1.82 0.72 0.80 0.72 1.17 1.27 0.98 0.94 0.89 0.20 0.96 0.87 0.68 1.05 1.46 1.28 2.20 1.23 1.48 0.86 0.86 0.70 1.06 1.00 0.80 Net charge-offs to loans & leases (%) 2014 2012 2010 0.49 1.10 2.55 2.81 3.69 10.83 0.73 1.41 2.29 0.13 0.24 0.59 0.24 0.74 1.90 0.21 0.82 1.14 0.62 1.31 2.37 0.34 0.45 0.64 0.25 0.45 0.56 0.41 0.94 1.87 Noncurrent assets plus OREO to assets (%) 2014 2012 2010 1.20 2.20 3.11 0.88 1.11 1.90 0.85 1.39 2.38 0.83 1.11 1.62 1.17 2.21 3.71 2.19 2.70 2.88 1.19 0.88 1.22 0.73 1.04 0.81 1.39 1.67 1.67 1.43 3.06 3.49 Equity capital ratio (%) 2014 2012 2010 11.15 11.17 11.15 15.13 14.67 14.96 9.45 8.93 8.93 11.42 11.14 10.86 11.97 11.93 11.40 12.07 11.09 10.05 9.88 9.57 11.00 14.78 14.27 16.31 11.81 11.47 11.01 11.11 11.85 12.04 * See Table V-A (page 10) for explanations. 8 FDIC QUARTERLY QUARTERLY BANKING PROFILE TABLE IV-A. Full Year 2015, All FDIC-Insured Institutions Asset Size Distribution FULL YEAR (The way it is...) Number of institutions reporting Commercial banks Savings institutions Total assets (in billions) Commercial banks Savings institutions Total deposits (in billions) Commercial banks Savings institutions Bank net income (in millions) Commercial banks Savings institutions Performance Ratios (%) Yield on earning assets Cost of funding earning assets Net interest margin Noninterest income to assets Noninterest expense to assets Loan and lease loss provision to assets Net operating income to assets Pretax return on assets Return on assets Return on equity Net charge-offs to loans and leases Loan and lease loss provision to net charge-offs Efficiency ratio % of unprofitable institutions % of institutions with earnings gains Condition Ratios (%) Earning assets to total assets Loss allowance to: Loans and leases Noncurrent loans and leases Noncurrent assets plus other real estate owned to assets Equity capital ratio Core capital (leverage) ratio Common equity tier 1 capital ratio Tier 1 risk-based capital ratio Total risk-based capital ratio Net loans and leases to deposits Net loans to total assets Domestic deposits to total assets Structural Changes New reporters Institutions absorbed by mergers Failed institutions All Insured Institutions 6,182 5,338 844 $15,967.8 14,893.4 1,074.4 12,190.0 11,349.5 840.5 163,507 151,964 11,543 Less Than $100 Million 1,688 1,483 205 $99.2 87.6 11.6 83.4 74.3 9.1 827 745 82 3.40 0.33 3.07 1.62 2.66 0.24 1.03 1.49 1.04 9.30 0.44 4.07 0.44 3.64 1.14 3.44 0.11 0.82 0.96 0.84 6.73 0.19 4.13 0.46 3.67 1.19 3.18 0.11 1.04 1.33 1.07 9.45 0.15 4.00 0.40 3.60 1.21 2.87 0.19 1.09 1.50 1.11 9.36 0.20 99.55 59.92 4.72 63.26 102.52 76.27 9.54 55.92 107.08 68.92 3.22 64.74 89.97 91.75 1.34 85.98 Geographic Regions* $100 $1 Billion Greater Million to to Than $1 Billion $10 Billion $10 Billion 3,792 595 107 3,279 485 91 513 110 16 $1,199.9 $1,682.5 $12,986.3 1,014.8 1,391.0 12,400.1 185.1 291.5 586.2 997.5 1,331.0 9,778.1 851.0 1,111.3 9,312.8 146.5 219.7 465.3 12,424 17,701 132,555 10,510 15,274 125,435 1,914 2,427 7,120 New York 762 394 368 $3,074.1 2,655.0 419.2 2,305.4 1,994.0 311.4 25,908 23,584 2,324 Atlanta 762 689 73 $3,372.6 3,293.4 79.2 2,635.1 2,571.8 63.3 33,881 33,490 392 Chicago 1,337 1,117 220 $3,503.7 3,392.0 111.7 2,559.7 2,479.4 80.3 34,184 32,724 1,461 Kansas City 1,543 1,482 61 $3,444.0 3,389.1 54.9 2,609.1 2,565.1 44.1 39,614 39,212 401 Dallas 1,307 1,226 81 $943.2 831.9 111.2 779.0 687.8 91.2 9,974 8,684 1,290 San Francisco 471 430 41 $1,630.3 1,332.0 298.3 1,301.6 1,051.4 250.2 19,946 14,269 5,676 3.25 0.31 2.94 1.71 2.58 0.26 1.02 1.51 1.03 9.30 0.51 3.41 0.42 2.99 1.44 2.61 0.28 0.86 1.21 0.87 7.37 0.48 3.57 0.28 3.29 1.53 2.71 0.28 1.00 1.49 1.03 8.32 0.50 2.65 0.26 2.40 1.87 2.60 0.10 0.95 1.33 0.96 9.47 0.27 3.61 0.35 3.26 1.46 2.48 0.24 1.14 1.68 1.16 11.30 0.52 3.94 0.31 3.63 1.38 3.10 0.20 1.09 1.42 1.10 9.91 0.23 3.98 0.42 3.56 2.04 2.93 0.39 1.30 2.05 1.31 10.60 0.52 133.06 62.63 1.01 74.96 97.07 58.57 2.80 61.68 110.24 62.72 6.56 61.02 96.45 60.15 8.53 63.91 76.19 64.37 5.09 64.70 88.21 55.36 2.53 64.42 134.48 65.35 3.29 59.37 122.42 53.09 5.73 68.79 92.75 92.17 89.41 89.67 89.09 89.10 89.79 91.91 93.45 1.46 109.58 1.34 121.79 1.20 114.07 1.36 80.14 1.26 101.31 1.37 78.20 1.36 80.29 1.42 69.47 1.27 100.11 1.28 168.44 0.96 11.24 9.59 12.66 12.75 14.21 71.54 54.62 68.29 1.25 12.56 12.30 19.81 19.86 20.94 68.65 57.73 84.08 1.11 11.25 10.92 15.38 15.44 16.55 78.78 65.49 83.13 0.93 11.70 10.48 13.51 13.56 14.58 86.33 68.29 78.84 0.95 11.17 9.33 12.27 12.37 13.91 68.82 51.81 65.44 0.75 11.78 9.77 12.63 12.81 14.32 71.67 53.75 66.69 1.15 12.22 9.61 12.38 12.48 13.99 74.39 58.13 75.45 0.94 10.50 9.19 12.72 12.76 13.86 67.28 49.15 63.80 1.18 10.22 9.02 11.85 11.85 13.78 69.05 52.31 58.29 1.03 11.06 9.96 13.12 13.24 14.38 76.64 63.30 82.46 0.53 12.03 11.10 14.75 14.92 16.03 75.88 60.58 79.11 1 304 8 1 101 5 0 171 2 0 26 1 0 6 0 1 39 1 0 32 3 0 62 2 0 57 0 0 74 1 0 40 1 PRIOR FULL YEARS (The way it was…) Number of institutions 2014 2012 2010 6,509 7,083 7,658 1,871 2,204 2,625 3,957 4,217 4,367 574 555 559 107 107 107 807 873 949 812 904 1,022 1,406 1,515 1,602 1,599 1,716 1,825 1,372 1,490 1,601 513 585 659 Total assets (in billions) 2014 2012 2010 $15,553.8 14,450.4 13,318.9 $109.7 128.1 148.6 $1,232.1 1,275.0 1,291.7 $1,576.4 1,454.7 1,429.6 $12,635.5 11,592.6 10,449.0 $2,956.4 2,896.1 2,694.8 $3,217.9 3,056.1 2,929.7 $3,595.8 3,298.1 2,950.1 $3,404.0 3,068.7 1,686.6 $904.4 870.4 789.0 $1,475.2 1,261.0 2,268.8 Return on assets (%) 2014 2012 2010 1.01 1.00 0.65 0.79 0.68 0.27 1.00 0.80 0.26 1.09 1.13 0.18 1.00 1.01 0.76 0.83 0.96 0.76 1.00 0.77 0.34 0.88 0.90 0.60 1.07 1.10 0.84 1.14 1.01 0.68 1.49 1.72 0.81 Net charge-offs to loans & leases (%) 2014 2012 2010 0.49 1.10 2.55 0.23 0.43 0.80 0.23 0.64 1.12 0.27 0.73 1.80 0.56 1.22 2.93 0.55 1.24 3.57 0.54 1.19 2.43 0.36 0.85 2.03 0.60 1.37 2.88 0.23 0.56 1.27 0.47 0.84 2.29 Noncurrent assets plus OREO to assets (%) 2014 2012 2010 1.20 2.20 3.11 1.45 2.10 2.39 1.38 2.37 3.44 1.41 2.46 3.57 1.15 2.15 3.01 0.89 1.46 2.14 1.55 3.23 3.93 1.11 2.00 2.98 1.46 2.45 4.24 1.18 2.05 3.17 0.65 1.38 2.51 Equity capital ratio (%) 2014 2012 2010 11.15 11.17 11.15 12.28 12.00 11.70 11.20 10.90 10.15 11.90 11.77 11.18 11.04 11.11 11.26 11.81 12.18 12.58 12.45 12.03 11.59 9.80 9.10 8.71 10.20 10.86 11.33 11.06 10.70 10.54 12.47 13.24 12.11 * See Table V-A (page 11) for explanations. FDIC QUARTERLY 9 2016 •Volume 10 • Numb er 2 TABLE V-A. Loan Performance, All FDIC-Insured Institutions Asset Concentration Groups* March 31, 2016 All Insured Institutions Credit Card International Banks Banks Agricultural Banks Commercial Lenders Mortgage Lenders Consumer Lenders Other Specialized <$1 Billion All Other <$1 Billion All Other >$1 Billion Percent of Loans 30-89 Days Past Due All loans secured by real estate Construction and development Nonfarm nonresidential Multifamily residential real estate Home equity loans Other 1-4 family residential Commercial and industrial loans Loans to individuals Credit card loans Other loans to individuals All other loans and leases (including farm) Total loans and leases 0.76 0.37 0.27 0.13 0.61 1.30 0.27 1.16 1.09 1.22 0.25 0.66 0.15 0.00 0.00 0.00 0.00 0.16 0.84 1.17 1.17 1.17 0.22 1.14 1.03 0.59 0.31 0.07 1.01 1.47 0.26 1.18 1.09 1.32 0.24 0.70 0.77 0.61 0.51 0.30 0.38 1.13 0.99 1.28 0.75 1.32 1.24 0.92 0.52 0.36 0.27 0.15 0.45 0.97 0.29 0.98 1.06 0.97 0.24 0.48 0.80 0.78 0.36 0.18 0.63 0.89 0.33 0.75 1.27 0.71 0.16 0.76 0.53 0.38 0.92 3.34 0.35 0.51 0.11 0.71 0.63 0.73 0.09 0.61 1.26 1.11 0.85 0.34 0.46 1.74 1.10 1.71 2.31 1.65 0.69 1.25 1.15 0.87 0.86 0.27 0.59 1.45 0.91 2.23 1.57 2.24 0.59 1.18 1.12 0.26 0.18 0.08 0.69 1.81 0.17 1.35 0.99 1.56 0.17 0.78 Percent of Loans Noncurrent** All real estate loans Construction and development Nonfarm nonresidential Multifamily residential real estate Home equity loans Other 1-4 family residential Commercial and industrial loans Loans to individuals Credit card loans Other loans to individuals All other loans and leases (including farm) Total loans and leases 2.32 1.00 0.86 0.26 2.66 3.89 1.24 0.82 1.15 0.50 0.25 1.58 0.51 0.00 0.00 0.00 0.00 0.56 0.65 1.21 1.23 0.61 0.08 1.16 3.41 0.57 0.69 0.16 4.46 4.83 1.35 0.98 1.09 0.80 0.25 1.80 0.95 0.98 1.06 0.59 0.58 1.00 1.28 0.59 0.29 0.61 0.68 0.91 1.37 1.03 0.82 0.27 1.37 2.44 1.28 0.67 1.07 0.62 0.29 1.21 2.82 0.96 1.39 0.44 2.10 3.17 0.83 0.34 0.91 0.31 0.12 2.56 3.31 7.55 7.96 1.27 2.51 3.02 0.21 0.53 1.22 0.35 2.79 1.20 1.63 2.47 1.84 2.14 0.63 1.43 1.10 0.69 1.10 0.65 0.31 1.39 1.48 1.69 1.66 1.00 0.59 1.51 1.40 1.06 0.60 1.07 0.63 1.38 3.91 0.88 0.87 0.21 3.77 5.83 1.16 0.56 1.01 0.29 0.15 2.08 Percent of Loans Charged-Off (net, YTD) All real estate loans Construction and development Nonfarm nonresidential Multifamily residential real estate Home equity loans Other 1-4 family residential Commercial and industrial loans Loans to individuals Credit card loans Other loans to individuals All other loans and leases (including farm) Total loans and leases 0.07 -0.05 0.00 -0.01 0.33 0.09 0.39 1.94 3.12 0.77 0.11 0.46 -0.10 0.00 0.00 0.00 0.00 -0.11 2.01 3.18 3.25 1.59 0.23 3.07 0.10 0.40 -0.01 -0.02 0.40 0.07 0.41 2.43 3.26 1.05 0.11 0.57 0.03 -0.07 0.04 0.06 0.01 0.08 0.17 0.38 1.53 0.29 0.17 0.10 0.04 -0.08 0.01 -0.01 0.22 0.08 0.34 0.97 3.27 0.64 0.16 0.20 0.04 -0.30 0.01 0.05 0.07 0.06 0.07 0.60 3.35 0.40 0.10 0.06 0.16 0.03 0.03 0.00 0.53 0.08 -0.01 0.94 2.49 0.51 0.02 0.68 0.01 -0.22 -0.02 -0.01 0.11 0.08 -0.01 0.42 1.10 0.33 0.26 0.07 0.09 0.00 0.09 -0.05 0.06 0.12 0.05 0.54 1.17 0.53 0.52 0.15 0.11 -0.03 -0.06 -0.01 0.46 0.11 0.40 1.56 2.76 0.85 0.07 0.42 Loans Outstanding (in billions) All real estate loans Construction and development Nonfarm nonresidential Multifamily residential real estate Home equity loans Other 1-4 family residential Commercial and industrial loans Loans to individuals Credit card loans Other loans to individuals All other loans and leases (including farm) Total loans and leases (plus unearned income) $4,419.2 284.2 1,251.6 352.1 457.5 1,918.5 1,913.3 1,474.3 723.7 750.6 1,134.4 8,941.3 $0.2 0.0 0.0 0.0 0.0 0.2 35.4 373.5 356.5 17.0 0.3 409.5 $539.1 10.3 42.7 64.5 66.4 305.5 308.5 245.8 151.9 93.9 337.5 1,430.9 $111.5 6.4 30.5 3.6 2.4 27.6 21.7 6.3 0.4 5.9 43.7 183.3 $2,366.3 212.5 901.7 230.2 214.7 768.1 949.2 317.8 39.0 278.8 305.3 3,938.6 $225.8 5.3 18.7 7.8 11.3 181.9 7.4 6.9 0.4 6.5 12.8 252.9 $28.0 0.3 1.9 0.2 5.4 20.0 7.2 94.4 19.8 74.6 6.4 136.0 $12.0 0.9 4.1 0.4 0.4 5.6 2.0 1.8 0.2 1.6 1.0 16.9 $47.5 2.9 11.5 1.4 1.8 26.1 5.3 5.1 0.1 5.0 4.1 62.1 $1,088.9 45.6 240.4 44.0 155.1 583.4 576.4 422.7 155.3 267.4 423.3 2,511.3 Memo: Other Real Estate Owned (in millions) All other real estate owned Construction and development Nonfarm nonresidential Multifamily residential real estate 1-4 family residential Farmland GNMA properties 14,049.3 4,321.7 3,426.6 232.9 4,383.1 214.4 1,443.5 0.2 0.0 0.0 0.0 0.2 0.0 0.0 807.6 2.3 56.9 1.0 363.3 0.0 359.0 387.9 142.2 122.6 17.4 79.6 25.8 0.2 9,070.5 3,473.0 2,637.7 193.4 2,461.1 163.8 141.6 932.6 118.1 52.0 3.6 224.5 1.7 532.6 82.4 7.4 17.3 0.3 51.5 0.0 5.9 131.4 59.8 40.1 2.7 25.0 3.6 0.2 398.2 142.4 119.0 6.2 121.6 9.0 0.0 2,238.4 376.4 381.0 8.3 1,056.2 10.5 404.0 * Asset Concentration Group Definitions (Groups are hierarchical and mutually exclusive): Credit-card Lenders - Institutions whose credit-card loans plus securitized receivables exceed 50 percent of total assets plus securitized receivables. International Banks - Banks with assets greater than $10 billion and more than 25 percent of total assets in foreign offices. Agricultural Banks - Banks whose agricultural production loans plus real estate loans secured by farmland exceed 25 percent of the total loans and leases. Commercial Lenders - Institutions whose commercial and industrial loans, plus real estate construction and development loans, plus loans secured by commercial real estate properties exceed 25 percent of total assets. Mortgage Lenders - Institutions whose residential mortgage loans, plus mortgage-backed securities, exceed 50 percent of total assets. Consumer Lenders - Institutions whose residential mortgage loans, plus credit-card loans, plus other loans to individuals, exceed 50 percent of total assets. Other Specialized < $1 Billion - Institutions with assets less than $1 billion, whose loans and leases are less than 40 percent of total assets. All Other < $1 billion - Institutions with assets less than $1 billion that do not meet any of the definitions above, they have significant lending activity with no identified asset concentrations. All Other > $1 billion - Institutions with assets greater than $1 billion that do not meet any of the definitions above, they have significant lending activity with no identified asset concentrations. ** Noncurrent loan rates represent the percentage of loans in each category that are past due 90 days or more or that are in nonaccrual status. 10 FDIC QUARTERLY QUARTERLY BANKING PROFILE TABLE V-A. Loan Performance, All FDIC-Insured Institutions Asset Size Distribution March 31, 2016 Less Than All Insured $100 Institutions Million Geographic Regions* $100 $1 Billion Greater Million to to Than $1 Billion $10 Billion $10 Billion New York Atlanta Chicago Kansas City Dallas San Francisco Percent of Loans 30-89 Days Past Due All loans secured by real estate Construction and development Nonfarm nonresidential Multifamily residential real estate Home equity loans Other 1-4 family residential Commercial and industrial loans Loans to individuals Credit card loans Other loans to individuals All other loans and leases (including farm) Total loans and leases 0.76 0.37 0.27 0.13 0.61 1.30 0.27 1.16 1.09 1.22 0.25 0.66 1.22 0.73 0.88 0.76 0.59 1.68 1.18 1.66 3.82 1.62 1.04 1.22 0.68 0.58 0.46 0.32 0.44 1.00 0.70 1.46 1.67 1.45 0.92 0.73 0.41 0.38 0.24 0.14 0.38 0.69 0.40 1.12 1.46 1.00 0.42 0.46 0.87 0.29 0.22 0.10 0.66 1.46 0.23 1.15 1.08 1.22 0.21 0.68 0.54 0.41 0.34 0.13 0.42 0.90 0.21 0.97 0.90 1.09 0.10 0.51 0.90 0.32 0.23 0.15 0.74 1.55 0.18 1.53 1.20 1.88 0.20 0.76 0.79 0.32 0.33 0.12 0.70 1.23 0.35 0.97 0.89 1.00 0.43 0.66 1.05 0.33 0.22 0.08 0.69 1.74 0.23 1.16 1.14 1.20 0.22 0.75 0.76 0.54 0.34 0.24 0.40 1.51 0.54 0.92 0.63 1.06 0.39 0.70 0.33 0.21 0.17 0.10 0.30 0.55 0.32 1.02 1.38 0.71 0.23 0.47 Percent of Loans Noncurrent** All real estate loans Construction and development Nonfarm nonresidential Multifamily residential real estate Home equity loans Other 1-4 family residential Commercial and industrial loans Loans to individuals Credit card loans Other loans to individuals All other loans and leases (including farm) Total loans and leases 2.32 1.00 0.86 0.26 2.66 3.89 1.24 0.82 1.15 0.50 0.25 1.58 1.39 1.42 1.65 0.50 0.56 1.48 1.90 0.79 1.75 0.78 0.79 1.33 1.12 1.61 1.08 0.67 0.65 1.21 1.27 0.80 1.45 0.76 0.61 1.09 1.06 1.11 0.81 0.28 0.80 1.62 1.32 0.63 1.39 0.39 1.04 1.07 2.96 0.72 0.79 0.19 3.04 4.78 1.22 0.83 1.14 0.49 0.19 1.72 1.67 1.19 1.08 0.23 2.56 2.53 0.96 0.89 1.02 0.68 0.43 1.27 2.88 1.65 0.81 0.20 3.16 4.63 1.12 0.86 1.20 0.51 0.13 1.75 2.64 0.76 0.95 0.29 2.61 4.16 1.13 0.70 0.99 0.60 0.26 1.71 3.38 0.61 0.79 0.33 3.00 5.68 1.41 0.81 1.14 0.41 0.22 2.01 1.44 0.78 0.79 0.55 1.49 2.72 1.90 0.76 1.22 0.54 0.36 1.39 0.72 0.80 0.59 0.17 0.73 0.93 1.35 0.78 1.37 0.25 0.33 0.84 Percent of Loans Charged-Off (net, YTD) All real estate loans Construction and development Nonfarm nonresidential Multifamily residential real estate Home equity loans Other 1-4 family residential Commercial and industrial loans Loans to individuals Credit card loans Other loans to individuals All other loans and leases (including farm) Total loans and leases 0.07 -0.05 0.00 -0.01 0.33 0.09 0.39 1.94 3.12 0.77 0.11 0.46 0.04 -0.23 0.02 0.07 0.00 0.10 0.25 0.66 10.73 0.50 0.10 0.11 0.04 -0.04 0.04 0.03 0.04 0.06 0.21 0.69 4.54 0.44 0.17 0.09 0.03 -0.03 0.02 0.00 0.11 0.06 0.34 1.49 3.72 0.76 0.18 0.19 0.09 -0.07 -0.03 -0.02 0.37 0.10 0.41 2.00 3.10 0.78 0.10 0.55 0.07 0.03 0.01 -0.01 0.26 0.10 0.29 2.07 2.79 0.82 0.10 0.48 0.12 0.02 -0.01 -0.02 0.45 0.14 0.35 2.09 3.30 0.78 0.06 0.54 0.07 -0.12 0.01 -0.01 0.29 0.07 0.32 1.15 2.91 0.55 0.09 0.26 0.08 -0.03 -0.04 -0.01 0.40 0.09 0.49 2.39 3.35 1.18 0.14 0.55 0.02 -0.05 0.01 0.00 0.19 0.03 0.68 1.38 2.40 0.88 0.24 0.30 -0.01 -0.30 0.00 0.00 0.03 0.02 0.42 1.83 3.31 0.48 0.17 0.52 Loans Outstanding (in billions) All real estate loans Construction and development Nonfarm nonresidential Multifamily residential real estate Home equity loans Other 1-4 family residential Commercial and industrial loans Loans to individuals Credit card loans Other loans to individuals All other loans and leases (including farm) Total loans and leases (plus unearned income) $4,419.2 284.2 1,251.6 352.1 457.5 1,918.5 1,913.3 1,474.3 723.7 750.6 1,134.4 8,941.3 $39.0 2.3 10.0 1.1 1.0 17.7 6.8 3.6 0.1 3.6 7.8 57.2 $601.8 54.3 229.4 31.6 25.6 214.9 98.8 31.9 1.9 30.0 49.2 781.8 $859.8 78.9 347.5 84.8 49.6 278.2 189.5 80.2 19.8 60.4 60.3 1,189.8 $2,918.5 148.8 664.8 234.6 381.3 1,407.7 1,618.3 1,358.5 701.9 656.6 1,017.1 6,912.5 $903.6 51.4 286.3 128.7 87.6 345.3 293.1 310.1 193.9 116.2 177.5 1,684.4 $905.2 57.8 261.9 43.7 119.8 408.6 476.3 370.5 188.8 181.7 248.6 2,000.6 $900.9 46.0 192.2 91.2 113.9 435.7 402.6 214.9 54.1 160.8 261.2 1,779.6 $848.0 43.9 179.4 28.6 88.1 418.8 396.4 294.2 162.5 131.8 319.3 1,858.0 $384.7 56.4 154.5 15.5 19.5 123.3 125.3 59.4 19.0 40.5 45.7 615.1 $476.9 28.7 177.4 44.4 28.6 186.9 219.6 225.1 105.4 119.7 82.1 1,003.6 Memo: Other Real Estate Owned (in millions) All other real estate owned Construction and development Nonfarm nonresidential Multifamily residential real estate 1-4 family residential Farmland GNMA properties 14,049.3 4,321.7 3,426.6 232.9 4,383.1 214.4 1,443.5 430.0 151.0 132.5 19.9 118.9 7.5 0.2 4,293.9 1,988.5 1,327.9 99.7 788.7 88.3 0.9 3,121.0 1,275.6 963.4 67.5 726.1 68.8 19.6 6,204.3 906.6 1,002.7 45.7 2,749.4 49.9 1,423.0 2,137.9 385.0 560.4 72.1 1,055.6 20.0 44.8 3,704.5 1,243.3 716.0 34.8 1,093.8 39.7 577.0 2,854.7 630.9 726.9 37.4 985.7 65.3 408.5 2,469.1 862.1 541.3 37.4 594.6 19.5 387.2 1,965.0 869.2 615.0 31.2 380.2 58.3 11.2 918.1 331.3 266.9 20.1 273.3 11.6 14.9 * Regions: New York - Connecticut, Delaware, District of Columbia, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Puerto Rico, Rhode Island, Vermont, U.S. Virgin Islands Atlanta - Alabama, Florida, Georgia, North Carolina, South Carolina, Virginia, West Virginia Chicago - Illinois, Indiana, Kentucky, Michigan, Ohio, Wisconsin Kansas City - Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota Dallas - Arkansas, Colorado, Louisiana, Mississippi, New Mexico, Oklahoma, Tennessee, Texas San Francisco - Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon, Pacific Islands, Utah, Washington, Wyoming ** Noncurrent loan rates represent the percentage of loans in each category that are past due 90 days or more or that are in nonaccrual status. FDIC QUARTERLY 11 2016 •Volume 10 • Numb er 2 Table VI-A. Derivatives, All FDIC-Insured Call Report Filers Asset Size Distribution (dollar figures in millions; notional amounts unless otherwise indicated) ALL DERIVATIVE HOLDERS Number of institutions reporting derivatives Total assets of institutions reporting derivatives Total deposits of institutions reporting derivatives Total derivatives 4th Quarter 2015 3rd Quarter 2015 1,426 1,414 $14,765,546 $14,422,560 11,188,407 10,938,377 195,508,395 182,006,727 1,418 $14,231,256 10,735,417 195,421,111 1,431 1,434 $14,198,373 $14,162,861 10,706,603 10,666,242 201,692,063 206,694,352 -0.6 4.3 4.9 -5.4 64 $4,796 4,000 320 Derivative Contracts by Underlying Risk Exposure Interest rate Foreign exchange* Equity Commodity & other (excluding credit derivatives) Credit Total 147,218,152 138,401,684 148,698,245 37,128,715 33,133,167 34,636,874 2,533,921 2,377,623 2,495,086 1,209,774 1,107,759 1,393,229 7,417,833 6,986,493 8,197,677 195,508,395 182,006,727 195,421,111 154,434,103 158,514,087 34,969,999 35,563,105 2,363,902 2,359,532 1,436,333 1,241,078 8,487,726 9,016,551 201,692,063 206,694,352 -7.1 4.4 7.4 -2.5 -17.7 -5.4 320 0 0 0 0 320 22,383 0 4 8 4 22,400 110,523 5,681 330 79 547 117,159 147,084,927 37,123,033 2,533,587 1,209,687 7,417,282 195,368,516 Derivative Contracts by Transaction Type Swaps Futures & forwards Purchased options Written options Total 114,814,442 107,392,487 37,150,560 35,684,916 16,857,467 15,479,916 16,706,949 15,429,380 185,529,417 173,986,699 117,508,997 117,711,339 40,359,824 44,545,061 16,260,327 16,451,135 15,985,025 16,189,901 190,114,173 194,897,435 -2.5 -16.6 2.5 3.2 -4.8 52 113 11 145 320 7,103 7,245 796 7,251 22,396 69,490 22,682 5,979 18,351 116,502 114,737,797 37,120,519 16,850,681 16,681,202 185,390,200 Fair Value of Derivative Contracts Interest rate contracts Foreign exchange contracts Equity contracts Commodity & other (excluding credit derivatives) Credit derivatives as guarantor Credit derivatives as beneficiary 1st Quarter 2016 112,697,602 38,988,133 16,827,743 16,247,252 184,760,730 2nd Quarter 2015 1st % Change Less Than $100 Quarter 15Q1$100 Million to 2015 16Q1 Million $1 Billion $1 Billion to $10 Billion Greater Than $10 Billion 841 418 $350,617 $1,301,596 290,303 1,039,498 22,400 117,159 103 $13,108,537 9,854,607 195,368,516 75,481 -11,530 5,035 -4,310 2,901 -966 67,223 -12,485 5,318 -3,571 -2,697 7,076 76,692 -15,284 7,880 -6,952 1,890 2,441 71,659 -19,614 2,695 -3,488 35,840 -34,672 68,542 -10,042 335 -5,756 54,675 -53,203 10.1 N/M 1,403.0 N/M -94.7 N/M 0 0 0 0 0 0 21 0 0 0 -1 0 -380 -27 0 1 -2 -26 75,840 -11,503 5,035 -4,310 2,903 -940 65,650,483 50,714,685 34,846,026 26,231,437 4,081,595 1,819,360 1,841,069 674,710 129,076 55,066,477 49,406,784 32,980,646 24,129,441 3,986,436 1,647,804 1,734,984 627,574 130,188 60,770,924 52,458,092 34,618,605 25,206,272 3,672,989 1,500,445 1,604,394 670,068 183,539 63,776,000 54,771,292 35,837,393 25,081,829 3,859,497 1,612,940 1,567,482 579,705 162,800 72,044,050 54,914,300 35,099,036 25,513,647 3,917,108 1,612,457 1,595,472 555,013 169,232 -8.9 -7.6 -0.7 2.8 4.2 12.8 15.4 21.6 -23.7 84 23 38 0 0 0 0 0 0 6,989 2,371 4,841 0 0 0 0 0 0 21,917 27,894 38,257 3,798 244 9 29 108 10 65,621,493 50,684,398 34,802,889 26,227,638 4,081,351 1,819,352 1,841,040 674,602 129,066 2,813,615 4,800,922 619,196 2,651,133 4,694,153 405,131 2,567,836 5,771,045 750,909 2,358,891 5,329,031 428,131 2,192,082 5,718,321 598,669 28.4 -16.0 3.4 0 0 0 6 5 0 44 54 108 2,813,565 4,800,863 619,088 34.5 47.5 30.1 48.3 34.3 50.3 31.6 54.8 39.8 50.3 0.1 0.1 0.5 0.3 1.1 0.6 39.2 54.0 82.0 78.4 84.6 86.4 90.0 0.2 0.8 1.7 93.2 13.3 78.3 71.9 61.4 69.3 -80.8 0.0 0.7 0.2 12.3 HELD FOR TRADING Number of institutions reporting derivatives Total assets of institutions reporting derivatives Total deposits of institutions reporting derivatives 251 11,719,505 8,830,787 250 11,460,983 8,660,644 247 11,384,421 8,553,870 249 11,367,405 8,547,594 249 11,440,608 8,584,534 0.8 2.4 2.9 11 774 645 93 38,927 32,516 85 296,612 234,813 62 11,383,192 8,562,814 Derivative Contracts by Underlying Risk Exposure Interest rate Foreign exchange Equity Commodity & other Total 144,656,610 34,029,005 2,510,439 1,208,052 182,404,106 136,068,193 31,665,956 2,352,971 1,105,989 171,193,110 146,169,740 31,764,784 2,472,541 1,390,888 181,797,953 151,668,106 155,492,761 31,318,657 32,197,481 2,344,517 2,340,858 1,433,959 1,234,659 186,765,239 191,265,759 -7.0 5.7 7.2 -2.2 -4.6 59 0 0 0 59 1,686 0 0 1 1,687 26,506 4,478 0 36 31,020 144,628,358 34,024,527 2,510,439 1,208,015 182,371,339 Trading Revenues: Cash & Derivative Instruments Interest rate Foreign exchange Equity Commodity & other (including credit derivatives) Total trading revenues 3,072 1,407 670 604 5,753 155 3,401 741 -25 4,271 2,581 1,931 50 758 5,319 3,404 854 584 660 5,502 957 4,702 791 1,211 7,662 221.0 -70.1 -15.3 -50.1 -24.9 0 0 0 0 0 0 0 0 1 1 19 8 -1 2 27 3,054 1,399 671 602 5,725 4.7 23.2 3.5 15.7 4.4 19.9 4.5 19.0 6.4 29.4 0.0 0.0 0.2 1.0 0.9 4.7 4.9 23.7 HELD FOR PURPOSES OTHER THAN TRADING Number of institutions reporting derivatives Total assets of institutions reporting derivatives Total deposits of institutions reporting derivatives 1,300 14,522,929 10,993,692 1,299 14,205,123 10,764,769 1,305 13,960,567 10,518,599 1,311 13,896,049 10,465,122 1,308 13,845,427 10,412,082 -0.6 4.9 5.6 53 4,021 3,355 764 320,918 265,262 384 1,212,042 967,451 99 12,985,948 9,757,624 Derivative Contracts by Underlying Risk Exposure Interest rate Foreign exchange Equity Commodity & other Total notional amount 2,561,543 538,565 23,483 1,722 3,125,312 2,333,490 433,677 24,652 1,770 2,793,589 2,528,505 409,385 22,545 2,342 2,962,777 2,765,996 561,179 19,385 2,374 3,348,934 3,021,326 585,259 18,674 6,418 3,631,677 -15.2 -8.0 25.8 -73.2 -13.9 260 0 0 0 260 20,697 0 4 7 20,709 84,016 1,093 330 43 85,482 2,456,569 537,472 23,149 1,672 3,018,861 Derivative Contracts by Maturity** Interest rate contracts < 1 year 1-5 years > 5 years Foreign exchange and gold contracts < 1 year 1-5 years > 5 years Equity contracts < 1 year 1-5 years > 5 years Commodity & other contracts (including credit derivatives, excluding gold contracts) < 1 year 1-5 years > 5 years Risk-Based Capital: Credit Equivalent Amount Total current exposure to tier 1 capital (%) Total potential future exposure to tier 1 capital (%) Total exposure (credit equivalent amount) to tier 1 capital (%) Credit losses on derivatives*** Share of Revenue Trading revenues to gross revenues (%) Trading revenues to net operating revenues (%) All line items are reported on a quarterly basis. N/M - Not Meaningful * Include spot foreign exchange contracts. All other references to foreign exchange contracts in which notional values or fair values are reported exclude spot foreign exchange contracts. ** Derivative contracts subject to the risk-based capital requirements for derivatives. *** The reporting of credit losses on derivatives is applicable to all banks filing the FFIEC 031 report form and to those banks filing the FFIEC 041 report form that have $300 million or more in total assets. 12 FDIC QUARTERLY QUARTERLY BANKING PROFILE TABLE VII-A. Servicing, Securitization, and Asset Sales Activities (All FDIC-Insured Call Report Filers) Asset Size Distribution (dollar figures in millions) Assets Securitized and Sold with Servicing Retained or with Recourse or Other Seller-Provided Credit Enhancements Number of institutions reporting securitization activities Outstanding Principal Balance by Asset Type 1-4 family residential loans Home equity loans Credit card receivables Auto loans Other consumer loans Commercial and industrial loans All other loans, leases, and other assets Total securitized and sold Maximum Credit Exposure by Asset Type 1-4 family residential loans Home equity loans Credit card receivables Auto loans Other consumer loans Commercial and industrial loans All other loans, leases, and other assets Total credit exposure Total unused liquidity commitments provided to institution’s own securitizations Securitized Loans, Leases, and Other Assets 30-89 Days Past Due (%) 1-4 family residential loans Home equity loans Credit card receivables Auto loans Other consumer loans Commercial and industrial loans All other loans, leases, and other assets Total loans, leases, and other assets Securitized Loans, Leases, and Other Assets 90 Days or More Past Due (%) 1-4 family residential loans Home equity loans Credit card receivables Auto loans Other consumer loans Commercial and industrial loans All other loans, leases, and other assets Total loans, leases, and other assets Securitized Loans, Leases, and Other Assets Charged-off (net, YTD, annualized, %) 1-4 family residential loans Home equity loans Credit card receivables Auto loans Other consumer loans Commercial and industrial loans All other loans, leases, and other assets Total loans, leases, and other assets Seller's Interests in Institution's Own Securitizations – Carried as Loans Home equity loans Credit card receivables Commercial and industrial loans Seller's Interests in Institution's Own Securitizations – Carried as Securities Home equity loans Credit card receivables Commercial and industrial loans 1st Quarter 2016 4th Quarter 2015 3rd Quarter 2015 2nd Quarter 2015 74 73 72 71 1st % Change Less Than Quarter 15Q1$100 2015 16Q1 Million $100 $1 Billion Million to to $10 $1 Billion Billion Greater Than $10 Billion 71 4.2 0 19 17 38 $704,676 $715,914 $734,519 $749,911 $818,351 29 30 31 33 35 13,400 13,502 14,187 17,766 17,817 5,604 6,095 6,221 5,660 3,740 5,093 5,286 4,754 6,430 5,966 204 15 14 14 13 74,712 79,844 86,277 89,384 94,400 803,719 820,686 846,005 869,198 940,322 -13.9 -17.1 -24.8 49.8 -14.6 1,469.2 -20.9 -14.5 $0 0 0 0 0 0 0 0 $2,009 0 0 0 1 7 95 2,113 $13,738 0 0 2,379 0 0 8,430 24,547 $688,929 29 13,400 3,225 5,092 197 66,188 777,059 -16.0 0.0 -24.8 0.0 -59.2 0.0 -35.8 -24.1 0.0 0 0 0 0 0 0 0 0 0 4 0 0 0 0 0 0 4 0 0 0 0 0 0 0 0 0 0 2,613 0 1,152 0 86 0 902 4,753 73 2,617 0 1,152 0 86 0 902 4,757 73 2,840 0 1,108 0 89 0 990 5,026 36 2,933 0 1,187 0 89 0 1,319 5,528 37 3,101 0 1,470 0 187 0 1,084 5,842 38 3,117 0 1,531 0 211 0 1,405 6,264 0 3.1 6.2 0.4 1.2 3.8 0.0 0.5 2.8 3.9 5.4 0.4 1.5 3.9 0.0 0.5 3.5 3.8 5.9 0.4 1.1 4.3 0.0 0.3 3.3 3.4 5.3 0.4 0.9 4.1 1.2 0.3 3.0 3.1 5.2 0.4 1.0 4.6 0.0 0.4 2.8 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1.2 0.0 0.0 0.0 0.0 0.0 0.4 1.1 1.6 0.0 0.0 1.4 0.0 0.0 0.0 1.0 3.1 6.2 0.4 1.0 3.8 0.0 0.6 2.9 1.6 47.3 0.3 0.3 3.9 0.1 1.4 1.6 2.1 47.8 0.3 0.2 3.9 1.0 1.2 1.9 2.1 47.4 0.3 0.2 4.4 1.2 1.3 2.0 2.1 46.5 0.3 0.1 4.4 1.8 1.4 2.0 2.1 44.7 0.3 0.1 5.1 1.9 1.4 2.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1.3 0.0 0.0 0.0 0.0 2.4 10.5 1.7 0.5 0.0 0.0 0.4 0.0 0.0 0.5 0.5 1.7 47.3 0.3 0.2 3.9 0.0 1.5 1.6 0.1 1.0 3.0 0.3 0.2 0.0 0.1 0.1 0.4 5.2 1.8 0.4 0.8 0.0 0.6 0.4 0.3 3.2 1.4 0.2 0.6 0.0 0.5 0.3 0.2 1.8 0.8 0.2 0.3 0.0 0.3 0.2 0.1 0.7 0.4 0.1 0.2 0.0 0.1 0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.3 0.0 0.0 0.0 0.0 0.1 1.0 3.0 0.2 0.2 0.0 0.1 0.1 0 12,811 268 0 15,059 0 0 13,248 0 0 10,380 0 0 9,983 0 0.0 28.3 0.0 0 0 0 0 0 0 0 0 0 0 12,811 268 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0.0 0.0 0.0 0 0 0 0 0 0 0 0 0 0 0 0 Assets Sold with Recourse and Not Securitized Number of institutions reporting asset sales Outstanding Principal Balance by Asset Type 1-4 family residential loans Home equity, credit card receivables, auto, and other consumer loans Commercial and industrial loans All other loans, leases, and other assets Total sold and not securitized 1,089 1,087 1,099 1,106 1,097 -0.7 119 731 187 52 36,776 684 267 79,293 117,020 38,515 712 215 73,499 112,941 39,013 714 217 72,201 112,145 38,992 742 80 74,990 114,804 38,856 694 83 71,382 111,015 -5.4 -1.4 221.7 11.1 5.4 1,031 0 2 35 1,068 15,216 3 12 128 15,359 8,865 54 96 1,207 10,223 11,664 627 156 77,923 90,370 Maximum Credit Exposure by Asset Type 1-4 family residential loans Home equity, credit card receivables, auto, and other consumer loans Commercial and industrial loans All other loans, leases, and other assets Total credit exposure 9,475 161 177 21,711 31,524 9,950 163 151 20,138 30,402 10,495 134 154 19,655 30,438 10,436 136 16 19,652 30,240 10,061 137 19 18,624 28,841 -5.8 17.5 831.6 16.6 9.3 63 0 2 35 100 2,558 3 12 12 2,585 2,946 30 6 90 3,072 3,908 128 156 21,575 25,767 Support for Securitization Facilities Sponsored by Other Institutions Number of institutions reporting securitization facilities sponsored by others Total credit exposure Total unused liquidity commitments 110 41,078 1,387 111 41,500 834 110 42,211 884 110 44,649 2,005 117 44,981 887 -6.0 -8.7 56.4 9 8 0 57 157 10 25 334 1 19 40,579 1,377 Other Assets serviced for others* Asset-backed commercial paper conduits Credit exposure to conduits sponsored by institutions and others Unused liquidity commitments to conduits sponsored by institutions and others Net servicing income (for the quarter) Net securitization income (for the quarter) Total credit exposure to Tier 1 capital (%)** 0 0 0 0 0 0.0 0 0 0 0 18,378 13,980 12,020 12,284 11,736 56.6 4 1 0 18,373 26,866 864 203 5.1 29,257 3,328 250 5.2 27,631 1,040 348 5.3 27,902 4,546 325 5.5 28,878 1,600 298 5.5 -7.0 -46.0 -31.9 0 7 0 0.9 0 215 5 2.2 6 54 6 2.0 26,860 588 192 5.9 * The amount of financial assets serviced for others, other than closed-end 1-4 family residential mortgages, is reported when these assets are greater than $10 million. ** Total credit exposure includes the sum of the three line items titled “Total credit exposure” reported above. FDIC QUARTERLY 13 QUARTERLY BANKING PROFILE COMMUNITY BANK PERFORMANCE Community banks are identified based on criteria defined in the FDIC’s Community Banking Study. When comparing community bank performance across quarters, prior-quarter dollar amounts are based on community banks designated in the current quarter, adjusted for mergers. In contrast, prior-quarter performance ratios are based on community banks designated during the previous quarter. Net Income Improves More Than 7 Percent From First Quarter 2015 Revenue Increase Led by $1.3 Billion Growth in Net Interest Income Percent of Unprofitable Community Banks Declines to the Lowest Level Since 1998 Net Interest Margin of 3.56 Percent Increases From the Year Before Asset Quality Improves for All Major Loan Categories From the Previous Year, but Declines for Commercial and Industrial Loans Net Income Grows at Community Banks but Declines at Noncommunity Banks Aggregate net income of 5,664 FDIC-insured community banks totaled $5.2 billion during first quarter 2016, up $353.6 million (7.4 percent) from the year-earlier quarter. Improved revenue from net interest income and noninterest income was offset in part by higher loan-loss provisions and noninterest expense. Net income at noncommunity banks was down $942.4 million (2.7 percent), led by a few large noncommunity banks. Over the past 12 months, almost 62 percent of community banks improved their net income, while 5.1 percent were unprofitable during the quarter. Pretax return on assets was 1.28 percent, up 3 basis points from the same 2015 quarter, but 14 basis points below the rate of noncommunity banks (1.42 percent). There were 71 fewer community banks than in fourth quarter 2015, with one bank failure. Net Interest Margin and Net Interest Income Increase From the Previous Year Community banks reported net interest income of $17.5 billion during first quarter 2016, up $1.3 billion (8.2 percent) from first quarter 2015. With nearly 78 percent of them increasing their net interest income, the annual rate at community banks exceeded that of noncommunity banks (7.2 percent). The yearly increase in net interest income for community banks was led by non 1-to-4 family real estate loan income (up $747.6 million, or 10.5 percent).1 Net interest margin (NIM) of 3.56 percent for the quarter was up 2 basis points from the year earlier, as asset yields increased (up 2 basis points) and funding costs remained unchanged. NIM at community banks was 53 basis points above that of noncommunity banks. 1 Non 1-to-4 family real estate loan income includes construction and development, farmland, multifamily, and nonfarm nonresidential. Chart 1 Chart 2 Contributors to the Year-Over-Year Change in Income Net Interest Margin FDIC-Insured Community Banks Percent Positive Factor $ Billions 1.5 $0.35 $1.33 $0.09 $0.10 $0.82 Community Banks All Insured Institutions Negative Factor -$0.05 $0.11 4.0 1.0 3.54 0.5 3.56 3.5 0.0 -0.5 +7% +8% Net Income Net Interest Income Source: FDIC. +17% +2% +6% Loan Loss Noninterest Noninterest Provisions Income Expense -23% +8% Realized Gains on Securities Income Taxes 3.0 2008 3.02 2009 Source: FDIC. 2010 2011 2012 2013 2014 2015 3.10 2016 FDIC QUARTERLY 15 2016 •Volume 10 • Numb er 2 Noninterest Income Increases 2.1 Percent From the Previous Year Noninterest income totaled $4.7 billion, up $97.6 million (2.1 percent) from a year earlier. While noninterest income improved at community banks, it declined for noncommunity banks (down $1.9 billion, or 3.2 percent) due to lower trading revenue (down $1.9 billion, or 24.9 percent). More than half (55 percent) of community banks increased their noninterest income from first quarter 2015. The year-over-year increase was led by net gains on sale of other assets (up $47 million, or 82.3 percent) and service charges on deposit accounts (up $30.3 million, or 3.3 percent). Noninterest Expense as Percent of Net Operating Revenue Declines Noninterest expense at community banks was $819.9 million (5.8 percent) higher than in first quarter 2015. The annual increase was from higher salary and employee benefits (up $539.9 million, or 6.8 percent). Almost three out of four community banks (71 percent) increased noninterest expense from the year before. Full-time employees at community banks totaled 434,761 for the first quarter, up 12,221 (2.9 percent) from the same 2015 quarter. Noninterest expense represented 67.6 percent of net operating revenue, down from 68.8 percent in first quarter 2015, the lowest level since third quarter 2007. Average assets per employee were $4.9 million, up from $4.7 million in first quarter 2015. Loan and Lease Balances Increase From the Previous Quarter and the Year Before Total assets at community banks were $29.1 billion (1.4 percent) higher than in the previous quarter, as loan and lease balances grew $21.3 billion (1.5 percent). All major loan categories increased from fourth quarter 2015, led by nonfarm nonresidential loans (up $8.5 billion, or 2.1 percent), multifamily residential mortgages (up $4.1 billion, or 4.5 percent), commercial and industrial loans (up $2.9 billion, or 1.5 percent), and 1-to-4 family residential mortgages (up $2.8 billion, or 0.8 percent). Close to 60 percent of community banks posted a quarterover-quarter increase in their loan and lease balance. The 12-month growth rate in loan and lease balances was 8.9 percent, exceeding the rate of noncommunity banks (6.6 percent). With close to 80 percent of community banks increasing their year-over-year loan and lease balances, the annual growth was led by nonfarm nonresidential loans (up $36.3 billion, or 9.4 percent), 1-to-4 family residential mortgages (up $17.8 billion, or 5 percent), commercial and industrial loans (up $15.6 billion, or 8.6 percent), and multifamily residential mortgages (up $15.3 billion, or 19.1 percent). Unused loan commitments totaled $278.4 billion in the quarter, up $11.3 billion from first quarter 2015, with commercial real estate, including construction and development, increasing $14.5 billion (22.7 percent). Chart 3 Chart 4 Change in Loan Balances and Unused Commitments Noncurrent Loan Rates for FDIC-Insured Community Banks FDIC-Insured Community Banks Change 1Q 2016 vs. 1Q 2015 Change 1Q 2016 vs. 4Q 2015 $ Billions 36.3 Percent of Loan Portfolio Noncurrent 16 C&D Loans Nonfarm Nonresidential RE 1-to-4 Family RE C&I Loans Home Equity Credit Cards 14 12 10 17.8 15.6 8 14.5 13.3 6 8.5 2.9 Nonfarm Nonresidential RE Source: FDIC. C&I Loans 2.8 1-to-4 Family Residential RE Loan Balances 16 FDIC QUARTERLY 2.7 C&D Loans 7.3 4.3 3.1 -1.8 Agricultural Production Loans CRE & C&D 4 0.7 C&I Loans Unused Commitments 2 0 2008 2009 Source: FDIC. 2010 2011 2012 2013 2014 2015 2016 QUARTERLY BANKING PROFILE Small Loans to Businesses Increase From First Quarter 2015 Small loans to businesses of $297.7 billion in the first quarter were $725.8 million (0.2 percent) higher than fourth quarter 2015. Almost half (47 percent) of community banks increased their small loans to businesses during the quarter. While the quarterly growth was led by commercial and industrial loans (up $1.3 billion, or 1.4 percent) and nonfarm nonresidential loans (up $944.8 million, or 0.7 percent), agricultural production loans declined $1.6 billion (5.4 percent). The annual increase in small loans to businesses at community banks (up $10.8 billion, or 3.8 percent) surpassed that of noncommunity banks (up $7.2 billion, or 1.9 percent). The 12-month growth in small loans to businesses at community banks was led by commercial and industrial loans (up $4.3 billion, or 4.9 percent) and nonfarm nonresidential loans (up $3.3 billion, or 2.3 percent). Meanwhile, nonfarm nonresidential loans for noncommunity banks declined (down $6.1 billion, or 4.1 percent). Community banks continued to hold 44 percent of small loans to businesses. Community Banks Lower Their Noncurrent Loan and Lease Balances Community banks reported noncurrent loan and lease balances of $16 billion for the quarter, down $1.7 billion (9.8 percent) from the year before. More than half (55 percent) of community banks reduced their noncurrent loan and lease balances from first quarter 2015. The coverage ratio—reserves for loan losses to noncurrent loans—was 116.19 percent, up from 104.71 percent a year earlier. The coverage ratio was above 100 percent for the past six consecutive quarters. Reserves for loan losses totaled $18.5 billion at the end of the quarter. For the first quarter, loan-loss provisions of $620.5 million were offset in part by $349 million in net charge-offs. Asset Quality for Commercial and Industrial Loans Declines From the Previous Year The noncurrent rate of 1.1 percent was 22 basis points lower than a year earlier, as all major loan categories, except for commercial and industrial loans, had lower noncurrent rates. The commercial and industrial noncurrent rate (1.2 percent) increased for a third consecutive quarter. The rate was 10 basis points above the previous quarter, and 13 basis points above first quarter 2015. The commercial and industrial noncurrent rate for noncommunity banks (1.24 percent) was 4 basis points above the rate for community banks. The net charge-off rate for community banks was 0.1 percent for the quarter, the lowest rate since first quarter 2006. All major loan categories, except for commercial and industrial loans (up 6 basis points), had lower net charge-off rates from the year before. Author: Benjamin Tikvina Senior Financial Analyst Division of Insurance and Research (202) 898-6578 FDIC QUARTERLY 17 2016 •Volume 10 • Numb er 2 TABLE I-B. Selected Indicators, FDIC-Insured Community Banks Return on assets (%) Return on equity (%) Core capital (leverage) ratio (%) Noncurrent assets plus other real estate owned to assets (%) Net charge-offs to loans (%) Asset growth rate (%) Net interest margin (%) Net operating income growth (%) Number of institutions reporting Percentage of unprofitable institutions (%) 2016* 2015* 2015 2014 2013 2012 2011 0.98 8.75 10.70 1.05 0.10 2.77 3.56 6.39 5,664 5.12 0.96 8.61 10.65 1.29 0.10 1.83 3.54 10.66 5,946 5.92 0.99 8.89 10.67 1.06 0.14 2.71 3.57 9.98 5,735 4.93 0.93 8.46 10.57 1.34 0.21 2.31 3.61 4.89 6,037 6.44 0.90 8.28 10.43 1.73 0.32 0.33 3.59 14.61 6,306 8.40 0.83 7.68 10.18 2.26 0.58 2.25 3.67 56.25 6,541 11.15 0.55 5.19 9.98 2.84 0.87 1.60 3.74 207.82 6,798 16.34 * Through March 31, ratios annualized where appropriate. Asset growth rates are for 12 months ending March 31. TABLE II-B. Aggregate Condition and Income Data, FDIC-Insured Community Banks 1st Quarter 2016 4th Quarter 2015 1st Quarter 2015 %Change 15Q1-16Q1 5,664 434,761 5,735 437,839 5,946 439,096 -4.7 -1.0 $2,127,886 1,102,255 376,255 421,326 95,163 49,937 196,778 59,524 2,080 49,454 36,930 629 1,444,312 18,546 1,425,766 434,583 6,259 13,927 247,350 $2,120,094 1,094,601 376,499 418,598 93,662 50,629 196,373 59,990 2,173 51,331 36,466 637 1,438,123 18,522 1,419,602 438,361 6,579 13,818 241,734 $2,070,578 1,040,173 361,797 402,170 85,387 49,372 190,142 58,879 1,982 45,270 33,446 553 1,367,358 18,929 1,348,429 445,436 8,382 12,817 255,514 2.8 6.0 4.0 4.8 11.4 1.1 3.5 1.1 5.0 9.2 10.4 13.8 5.6 -2.0 5.7 -2.4 -25.3 8.7 -3.2 Total liabilities and capital Deposits Domestic office deposits Foreign office deposits Brokered deposits Estimated insured deposits Other borrowed funds Subordinated debt All other liabilities Total equity capital (includes minority interests) Bank equity capital 2,127,886 1,748,379 1,747,960 420 72,978 1,319,947 123,675 585 16,295 238,953 238,855 2,120,094 1,736,384 1,735,983 400 71,357 1,313,887 131,741 479 15,661 235,829 235,720 2,070,578 1,708,821 1,708,341 480 65,670 1,313,741 114,621 458 15,652 231,025 230,907 2.8 2.3 2.3 -12.6 11.1 0.5 7.9 27.6 4.1 3.4 3.4 Loans and leases 30-89 days past due Noncurrent loans and leases Restructured loans and leases Mortgage-backed securities Earning assets FHLB Advances Unused loan commitments Trust assets Assets securitized and sold Notional amount of derivatives 9,059 15,962 8,926 185,170 1,979,545 95,105 278,354 260,121 16,363 61,850 8,972 15,781 9,420 185,278 1,968,471 100,881 271,029 292,935 15,812 51,859 9,852 18,077 10,065 190,950 1,920,809 85,204 259,713 247,297 14,130 57,732 -8.0 -11.7 -11.3 -3.0 3.1 11.6 7.2 5.2 15.8 7.1 (dollar figures in millions) Number of institutions reporting Total employees (full-time equivalent) CONDITION DATA Total assets Loans secured by real estate 1-4 Family residential mortgages Nonfarm nonresidential Construction and development Home equity lines Commercial & industrial loans Loans to individuals Credit cards Farm loans Other loans & leases Less: Unearned income Total loans & leases Less: Reserve for losses Net loans and leases Securities Other real estate owned Goodwill and other intangibles All other assets INCOME DATA Total interest income Total interest expense Net interest income Provision for loan and lease losses Total noninterest income Total noninterest expense Securities gains (losses) Applicable income taxes Extraordinary gains, net Total net income (includes minority interests) Bank net income Net charge-offs Cash dividends Retained earnings Net operating income 18 FDIC QUARTERLY Full Year 2015 Full Year 2014 %Change 1st Quarter 2016 1st Quarter 2015 %Change 15Q1-16Q1 $76,403 8,652 67,751 2,456 19,522 59,320 520 5,687 7 20,337 20,310 1,973 10,102 10,208 19,919 $75,692 9,101 66,591 2,566 17,680 58,523 561 5,186 2 18,559 18,535 2,757 9,251 9,284 18,111 0.9 -4.9 1.7 -4.3 10.4 1.4 -7.2 9.7 197.6 9.6 9.6 -28.4 9.2 10.0 10.0 $19,725 2,245 17,480 620 4,694 14,982 180 1,586 1 5,166 5,162 349 2,536 2,626 5,023 $18,998 2,167 16,832 540 4,681 14,796 245 1,512 0 4,911 4,901 349 2,160 2,741 4,721 3.8 3.6 3.9 14.9 0.3 1.3 -26.6 4.9 N/M 5.2 5.3 0.0 17.4 -4.2 6.4 N/M - Not Meaningful QUARTERLY BANKING PROFILE TABLE II-B. Aggregate Condition and Income Data, FDIC-Insured Community Banks Prior Periods Adjusted for Mergers 1st Quarter 2016 4th Quarter 2015 1st Quarter 2015 %Change 15Q1-16Q1 5,664 434,761 5,664 432,358 5,663 422,540 0.0 2.9 $2,127,886 1,102,255 376,255 421,326 95,163 49,937 196,778 59,524 2,080 49,454 36,930 629 1,444,312 18,546 1,425,766 434,583 6,259 13,927 247,350 $2,098,745 1,082,734 373,412 412,849 92,417 49,819 193,862 59,618 2,161 51,286 36,124 629 1,422,995 18,318 1,404,677 434,165 6,490 13,707 239,706 $2,015,557 1,011,278 358,448 385,015 81,833 46,914 181,187 56,694 2,125 45,151 32,813 534 1,326,588 18,359 1,308,230 437,551 8,055 12,442 249,280 5.6 9.0 5.0 9.4 16.3 6.4 8.6 5.0 -2.1 9.5 12.5 17.7 8.9 1.0 9.0 -0.7 -22.3 11.9 -0.8 Total liabilities and capital Deposits Domestic office deposits Foreign office deposits Brokered deposits Estimated insured deposits Other borrowed funds Subordinated debt All other liabilities Total equity capital (includes minority interests) Bank equity capital 2,127,886 1,748,379 1,747,960 420 72,978 1,319,947 123,675 585 16,295 238,953 238,855 2,098,745 1,718,687 1,718,287 400 70,793 1,300,843 130,484 479 15,514 233,580 233,483 2,015,557 1,659,710 1,659,264 446 63,203 1,279,839 114,390 443 15,341 225,672 225,562 5.6 5.3 5.3 -5.9 15.5 3.1 8.1 31.9 6.2 5.9 5.9 Loans and leases 30-89 days past due Noncurrent loans and leases Restructured loans and leases Mortgage-backed securities Earning assets FHLB Advances Unused loan commitments Trust assets Assets securitized and sold Notional amount of derivatives 9,059 15,962 8,926 185,170 1,979,545 95,105 278,354 260,121 16,363 61,850 8,905 15,601 9,305 182,914 1,948,505 100,014 267,580 289,725 15,812 51,600 9,732 17,695 9,770 186,563 1,869,979 85,370 267,044 245,170 14,130 53,926 -6.9 -9.8 -8.6 -0.7 5.9 11.4 4.2 6.1 15.8 14.7 (dollar figures in millions) Number of institutions reporting Total employees (full-time equivalent) CONDITION DATA Total assets Loans secured by real estate 1-4 Family residential mortgages Nonfarm nonresidential Construction and development Home equity lines Commercial & industrial loans Loans to individuals Credit cards Farm loans Other loans & leases Less: Unearned income Total loans & leases Less: Reserve for losses Net loans and leases Securities Other real estate owned Goodwill and other intangibles All other assets INCOME DATA Total interest income Total interest expense Net interest income Provision for loan and lease losses Total noninterest income Total noninterest expense Securities gains (losses) Applicable income taxes Extraordinary gains, net Total net income (includes minority interests) Bank net income Net charge-offs Cash dividends Retained earnings Net operating income Full Year 2015 Full Year 2014 %Change 1st Quarter 2016 1st Quarter 2015 %Change 15Q1-16Q1 $75,420 8,543 66,877 2,433 19,306 58,514 516 5,640 7 20,119 20,092 1,947 10,013 10,079 19,704 $71,583 8,585 62,998 2,360 17,049 55,164 535 4,657 1 18,402 18,377 2,568 8,985 9,392 17,978 5.4 -0.5 6.2 3.1 13.2 6.1 -3.5 21.1 402.3 9.3 9.3 -24.2 11.4 7.3 9.6 $19,725 2,245 17,480 620 4,694 14,982 180 1,586 1 5,166 5,162 349 2,536 2,626 5,023 $18,252 2,101 16,151 530 4,596 14,162 232 1,471 0 4,817 4,808 332 2,194 2,613 4,637 8.1 6.8 8.2 17.1 2.1 5.8 -22.5 7.8 N/M 7.2 7.4 5.1 15.6 0.5 8.3 N/M - Not Meaningful FDIC QUARTERLY 19 2016 •Volume 10 • Numb er 2 TABLE III-B. Aggregate Condition and Income Data by Geographic Region, FDIC-Insured Community Banks First Quarter 2016 (dollar figures in millions) Geographic Regions* All Community Banks New York Atlanta Chicago Kansas City Dallas San Francisco 5,664 434,761 659 86,434 691 54,169 1,249 90,711 1,471 71,162 1,223 95,272 371 37,013 $2,127,886 1,102,255 376,255 421,326 95,163 49,937 196,778 59,524 2,080 49,454 36,930 629 1,444,312 18,546 1,425,766 434,583 6,259 13,927 247,350 $560,570 334,378 127,432 118,207 18,862 16,956 48,837 12,671 453 504 11,627 167 407,851 4,575 403,276 98,414 943 4,608 53,329 $245,108 134,140 43,724 57,014 15,586 7,471 18,553 6,703 128 1,166 2,797 131 163,228 2,131 161,096 47,652 1,579 1,161 33,620 $386,196 194,849 70,258 71,015 12,295 11,346 36,528 11,689 415 7,780 6,291 61 257,075 3,451 253,624 83,647 1,254 2,210 45,461 $332,289 151,647 48,946 50,043 12,472 4,695 32,497 9,779 484 28,141 5,517 45 227,536 3,103 224,433 68,841 925 1,790 36,299 $413,109 191,371 62,553 77,592 27,704 4,430 42,096 13,578 305 9,332 7,448 123 263,701 3,498 260,203 96,559 1,193 2,662 52,492 $190,614 95,870 23,340 47,455 8,244 5,038 18,267 5,103 296 2,531 3,249 101 124,920 1,787 123,133 39,471 365 1,496 26,149 Total liabilities and capital Deposits Domestic office deposits Foreign office deposits Brokered deposits Estimated insured deposits Other borrowed funds Subordinated debt All other liabilities Total equity capital (includes minority interests) Bank equity capital 2,127,886 1,748,379 1,747,960 420 72,978 1,319,947 123,675 585 16,295 238,953 238,855 560,570 444,474 444,106 368 25,559 325,024 47,252 416 5,529 62,900 62,846 245,108 203,701 203,696 6 7,236 156,112 12,312 20 1,684 27,391 27,380 386,196 320,072 320,055 17 12,285 256,799 19,445 75 2,876 43,728 43,713 332,289 273,677 273,677 0 11,135 216,446 19,591 19 1,958 37,043 37,042 413,109 347,661 347,661 0 10,623 255,390 17,102 6 2,533 45,808 45,792 190,614 158,794 158,765 29 6,140 110,175 7,973 50 1,715 22,082 22,081 Loans and leases 30-89 days past due Noncurrent loans and leases Restructured loans and leases Mortgage-backed securities Earning assets FHLB Advances Unused loan commitments Trust assets Assets securitized and sold Notional amount of derivatives 9,059 15,962 8,926 185,170 1,979,545 95,105 278,354 260,121 16,363 61,850 2,230 5,613 2,505 54,903 524,303 39,328 72,135 57,337 3,367 21,377 1,119 2,049 1,303 20,592 225,882 9,798 29,679 9,663 517 7,303 1,504 2,842 2,337 32,500 358,703 13,731 51,091 64,400 5,974 10,962 1,591 1,741 1,015 22,524 310,322 14,299 46,880 77,274 784 9,224 2,112 2,810 1,063 35,781 382,333 13,248 50,342 41,583 615 7,706 502 908 702 18,869 178,001 4,701 28,227 9,864 5,106 5,278 $19,725 2,245 17,480 620 4,694 14,982 180 1,586 1 5,166 5,162 349 2,536 2,626 5,023 $4,993 729 4,264 169 921 3,516 47 499 2 1,051 1,049 95 289 760 1,014 $2,323 263 2,060 58 560 1,874 21 197 0 512 511 36 206 305 496 $3,490 388 3,102 79 1,148 2,902 26 296 0 999 997 63 696 301 976 $3,134 361 2,773 96 690 2,257 26 195 -1 939 939 49 597 342 918 $4,005 373 3,632 178 925 3,035 35 189 -1 1,189 1,188 93 523 665 1,159 $1,781 132 1,649 40 450 1,397 24 209 0 476 476 13 224 252 460 Number of institutions reporting Total employees (full-time equivalent) CONDITION DATA Total assets Loans secured by real estate 1-4 Family residential mortgages Nonfarm nonresidential Construction and development Home equity lines Commercial & industrial loans Loans to individuals Credit cards Farm loans Other loans & leases Less: Unearned income Total loans & leases Less: Reserve for losses Net loans and leases Securities Other real estate owned Goodwill and other intangibles All other assets INCOME DATA Total interest income Total interest expense Net interest income Provision for loan and lease losses Total noninterest income Total noninterest expense Securities gains (losses) Applicable income taxes Extraordinary gains, net Total net income (includes minority interests) Bank net income Net charge-offs Cash dividends Retained earnings Net operating income * See Table V-A (page 11) for explanations. 20 FDIC QUARTERLY QUARTERLY BANKING PROFILE Table IV-B. First Quarter 2016, FDIC-Insured Community Banks All Community Banks Performance ratios (annualized, %) Yield on earning assets Cost of funding earning assets Net interest margin Noninterest income to assets Noninterest expense to assets Loan and lease loss provision to assets Net operating income to assets Pretax return on assets Return on assets Return on equity Net charge-offs to loans and leases Loan and lease loss provision to net charge-offs Efficiency ratio Net interest income to operating revenue % of unprofitable institutions % of institutions with earnings gains 1st Quarter 2016 4.02 0.46 3.56 0.89 2.84 0.12 0.95 1.28 0.98 8.75 0.10 177.76 67.23 78.83 5.12 61.60 4th Quarter 2015 4.06 0.46 3.60 0.96 2.95 0.15 0.96 1.21 0.97 8.68 0.20 113.23 68.05 77.74 10.01 56.32 First Quarter 2016, Geographic Regions* New York 3.85 0.56 3.29 0.66 2.54 0.12 0.73 1.12 0.76 6.78 0.09 177.58 67.44 82.23 5.16 60.24 Atlanta 4.16 0.47 3.69 0.92 3.09 0.10 0.82 1.17 0.84 7.56 0.09 160.85 71.13 78.63 8.83 64.25 Chicago 3.91 0.43 3.48 1.19 3.02 0.08 1.02 1.35 1.04 9.21 0.10 125.81 68.01 72.98 6.16 58.77 Kansas City 4.06 0.47 3.59 0.83 2.72 0.12 1.11 1.37 1.13 10.24 0.09 197.28 64.81 80.09 3.33 58.74 Dallas 4.22 0.39 3.83 0.90 2.96 0.17 1.13 1.34 1.16 10.52 0.14 191.54 66.31 79.71 3.68 65.41 San Francisco 4.06 0.30 3.75 0.96 2.97 0.08 0.98 1.46 1.01 8.73 0.04 307.28 66.25 78.56 6.47 67.39 Dallas 4.22 0.39 3.83 0.92 3.00 0.15 1.13 1.33 1.15 10.51 0.17 145.96 66.79 79.31 3.49 59.42 San Francisco 4.04 0.30 3.74 1.17 3.02 0.05 1.11 1.60 1.12 9.50 0.03 226.33 64.62 74.79 6.35 68.25 Table V-B. Full Year 2015, FDIC-Insured Community Banks All Community Banks Performance ratios (%) Yield on earning assets Cost of funding earning assets Net interest margin Noninterest income to assets Noninterest expense to assets Loan and lease loss provision to assets Net operating income to assets Pretax return on assets Return on assets Return on equity Net charge-offs to loans and leases Loan and lease loss provision to net charge-offs Efficiency ratio Net interest income to operating revenue % of unprofitable institutions % of institutions with earnings gains Full Year 2015 4.03 0.46 3.57 0.95 2.90 0.12 0.97 1.27 0.99 8.89 0.14 124.46 67.58 77.63 4.93 63.03 Full Year 2014 4.10 0.49 3.61 0.89 2.93 0.13 0.91 1.19 0.93 8.46 0.21 93.08 69.11 79.02 6.44 63.62 Full Year 2015, Geographic Regions* New York 3.87 0.56 3.31 0.70 2.62 0.17 0.69 1.04 0.72 6.42 0.16 150.64 68.62 81.58 7.19 61.08 Atlanta 4.14 0.48 3.67 0.92 3.15 0.09 0.80 1.07 0.82 7.28 0.17 83.37 73.16 78.54 9.26 63.11 Chicago 3.94 0.44 3.51 1.30 3.08 0.07 1.11 1.41 1.12 9.99 0.17 65.36 67.40 71.43 5.20 64.57 Kansas City 4.05 0.46 3.59 0.91 2.77 0.11 1.14 1.38 1.16 10.55 0.11 154.39 64.94 78.60 2.49 64.24 * See Table V-A (page 11) for explanations. FDIC QUARTERLY 21 2016 •Volume 10 • Numb er 2 Table VI-B. Loan Performance, FDIC-Insured Community Banks Geographic Regions* March 31, 2016 All Community Banks New York Atlanta Chicago Kansas City Dallas San Francisco Percent of Loans 30-89 Days Past Due All loans secured by real estate Construction and development Nonfarm nonresidential Multifamily residential real estate Home equity loans Other 1-4 family residential Commercial and industrial loans Loans to individuals Credit card loans Other loans to individuals All other loans and leases (including farm) Total loans and leases 0.58 0.47 0.37 0.17 0.38 0.91 0.58 1.55 1.66 1.54 0.77 0.63 0.50 0.32 0.36 0.15 0.43 0.78 0.46 2.46 2.14 2.47 0.27 0.55 0.68 0.44 0.42 0.20 0.45 1.21 0.52 1.44 1.02 1.45 0.52 0.69 0.60 0.45 0.41 0.29 0.39 0.95 0.42 0.82 1.04 0.81 0.57 0.58 0.61 0.62 0.37 0.13 0.27 0.76 0.67 0.97 2.73 0.87 1.08 0.70 0.70 0.55 0.42 0.19 0.36 1.15 0.86 2.11 0.95 2.14 0.73 0.80 0.36 0.36 0.23 0.13 0.23 0.65 0.44 0.72 1.03 0.70 0.78 0.40 Percent of Loans Noncurrent** All loans secured by real estate Construction and development Nonfarm nonresidential Multifamily residential real estate Home equity loans Other 1-4 family residential Commercial and industrial loans Loans to individuals Credit card loans Other loans to individuals All other loans and leases (including farm) Total loans and leases 1.12 1.39 1.01 0.37 0.74 1.44 1.20 0.67 1.02 0.66 0.98 1.11 1.33 1.48 1.18 0.23 0.86 1.90 1.38 0.70 1.40 0.68 3.22 1.38 1.34 2.51 1.12 0.71 0.67 1.37 0.96 0.87 0.56 0.88 0.50 1.26 1.21 1.29 1.14 0.67 0.82 1.48 1.01 0.43 0.98 0.41 0.47 1.11 0.78 1.25 0.87 0.54 0.38 0.75 0.96 0.49 1.29 0.45 0.58 0.76 1.00 0.94 0.89 0.57 0.71 1.24 1.52 1.02 0.70 1.02 0.75 1.07 0.68 0.99 0.57 0.09 0.67 0.93 1.01 0.32 0.62 0.30 0.88 0.73 Percent of Loans Charged-Off (net, YTD) All loans secured by real estate Construction and development Nonfarm nonresidential Multifamily residential real estate Home equity loans Other 1-4 family residential Commercial and industrial loans Loans to individuals Credit card loans Other loans to individuals All other loans and leases (including farm) Total loans and leases 0.03 -0.04 0.03 0.01 0.06 0.06 0.21 0.80 5.09 0.65 0.16 0.10 0.05 -0.02 0.03 0.01 0.09 0.08 0.16 0.96 4.21 0.83 0.22 0.09 0.02 -0.01 0.00 -0.06 0.03 0.07 0.28 0.77 1.05 0.77 0.23 0.09 0.06 0.08 0.02 0.06 0.10 0.09 0.16 0.57 3.47 0.46 0.09 0.10 0.02 -0.07 0.05 0.00 0.01 0.03 0.13 0.89 12.68 0.27 0.09 0.09 0.03 -0.08 0.05 0.00 0.02 0.05 0.38 0.85 1.36 0.84 0.29 0.14 -0.03 -0.17 -0.03 0.00 -0.01 0.00 0.17 0.70 1.98 0.62 0.26 0.04 Loans Outstanding (in billions) All loans secured by real estate Construction and development Nonfarm nonresidential Multifamily residential real estate Home equity loans Other 1-4 family residential Commercial and industrial loans Loans to individuals Credit card loans Other loans to individuals All other loans and leases (including farm) Total loans and leases $1,102.3 95.2 421.3 95.4 49.9 376.3 196.8 59.5 2.1 57.4 86.4 1,444.9 $334.4 18.9 118.2 50.9 17.0 127.4 48.8 12.7 0.5 12.2 12.1 408.0 $134.1 15.6 57.0 6.2 7.5 43.7 18.6 6.7 0.1 6.6 4.0 163.4 $194.8 12.3 71.0 14.7 11.3 70.3 36.5 11.7 0.4 11.3 14.1 257.1 $151.6 12.5 50.0 7.9 4.7 48.9 32.5 9.8 0.5 9.3 33.7 227.6 $191.4 27.7 77.6 7.0 4.4 62.6 42.1 13.6 0.3 13.3 16.8 263.8 $95.9 8.2 47.5 8.7 5.0 23.3 18.3 5.1 0.3 4.8 5.8 125.0 Memo: Unfunded Commitments (in millions) Total Unfunded Commitments Construction and development: 1-4 family residential Construction and development: CRE and other Commercial and industrial 278,354 21,914 55,033 90,409 72,135 4,673 17,225 22,289 29,679 3,902 7,435 8,294 51,091 2,397 7,588 18,834 46,880 2,504 6,341 15,085 50,342 6,084 12,053 16,324 28,227 2,354 4,391 9,582 * See Table V-A (page 11) for explanations. ** Noncurrent loan rates represent the percentage of loans in each category that are past due 90 days or more or that are in nonaccrual status. 22 FDIC QUARTERLY QUARTERLY BANKING PROFILE Insurance Fund Indicators DIF Reserve Ratio Rises 2 Basis Points to 1.13 Percent Insured Deposits Increase by 2 Percent Final Rule Approved in March 2016 to Raise DIF to 1.35 Percent of Insured Deposits Final Rule Approved in April 2016 Revises Calculation of Insurance Assessments for Small Banks Total assets of the 6,122 FDIC-insured institutions increased by 2 percent ($325.6 billion) during the first quarter of 2016. Total deposits increased by 2 percent ($239.5 billion), domestic office deposits increased by 1.8 percent ($201.3 billion), and foreign office deposits increased by 3 percent ($38.2 billion). Domestic interest-bearing deposits increased by 2.8 percent ($218.4 billion), and noninterest-bearing deposits decreased by 0.6 percent ($17.1 billion). For the 12 months ending March 31, total domestic deposits grew by 5 percent ($528.2 billion), with interest-bearing deposits increasing by 6.3 percent ($483.4 billion) and noninterest-bearing deposits increasing by 1.5 percent ($44.8 billion).1 Other borrowed money increased by 5.2 percent, securities sold under agreements to repurchase declined by 17.1 percent, and foreign office deposits declined by 4.1 percent over the same twelve-month period.2 Total estimated insured deposits increased by 2 percent in the first quarter of 2016.3 For institutions existing at the start and the end of the most recent quarter, insured deposits increased during the quarter at 3,900 institutions (64 percent), decreased at 2,201 institutions (36 percent), and remained unchanged at only 30 institutions. Estimated insured deposits increased by 5 percent over the 12 months ending March 31, 2016. The Deposit Insurance Fund (DIF) increased by $2.5 billion during the first quarter of 2016 to $75.1 billion (unaudited). Assessment income of $2.3 billion and unrealized gains on securities of $412 million drove the fund balance increase. Interest on investments of $147 million and a negative provision for insurance losses of $43 million also contributed to fund balance growth. First quarter operating expenses reduced the fund balance by $415 million. One insured institution, with assets of $67 million, failed during the first quarter. The DIF’s reserve ratio was 1.13 percent on March 31, up from 1.11 percent at December 31, 2015, and 1.03 percent four quarters ago. Effective April 1, 2011, the deposit insurance assessment base changed to average consolidated total assets minus average tangible equity.4 Table 1 shows the distribution of the assessment base as of March 31, by institution asset size category. On March 15, 2016, the FDIC Board of Directors (Board) approved a final rule to increase Achieving the Minimum the DIF to the statutorily required minimum of 1.35 percent of estimated insured deposits.6 Reserve Ratio and Calculating Congress, in the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Small Bank Assessments5 Dodd-Frank Act), increased the minimum DIF reserve ratio, the ratio of the fund balance to estimated insured deposits, from 1.15 percent to 1.35 percent and required that the ratio reach that level by September 30, 2020. Further, the Dodd-Frank Act required that, in setting assessments, the FDIC offset the effect of the increase in the minimum reserve ratio from 1.15 to 1.35 percent on banks with less than $10 billion in assets. 1 Throughout the insurance fund discussion, FDIC-insured institutions include insured commercial banks and savings associations and, except where noted, exclude insured branches of foreign banks. 2 Other borrowed money includes FHLB advances, term federal funds, mortgage indebtedness, and other borrowings. 3 Figures for estimated insured deposits in this discussion include insured branches of foreign banks, in addition to insured commercial banks and savings institutions. 4 There is an additional adjustment to the assessment base for banker’s banks and custodial banks, as permitted under Dodd-Frank. 5 Banks with total assets less than $10 billion. 6 https://www.federalregister.gov/articles/2016/03/25/2016-06770/assessments. FDIC QUARTERLY 23 2016 •Volume 10 • Numb er 2 Table 1 Distribution of the Assessment Base for FDIC-Insured Institutions* by Asset Size Data as of March 31, 2016 Asset Size Number of Institutions Percent of Total Institutions Assessment Base** ($ Bil.) Less Than $1 Billion Percent of Base 5,397 88.2 $1,123.7 8.1 $1 - $10 Billion 616 10.1 1,522.4 10.9 $10 - $50 Billion 69 1.1 1,396.0 10.0 $50 - $100 Billion 15 0.2 957.8 6.9 Over $100 Billion 25 0.4 8,951.9 64.2 6,122 100.0 13,951.8 100.0 Total * Excludes insured U.S. branches of foreign banks. ** Average consolidated total assets minus average tangible equity, with adjustments for banker’s banks and custodial banks. To satisfy these requirements, the final rule imposes on large banks a surcharge of 4.5 basis points of their assessment base, after making certain adjustments.7,8 Large banks will pay quarterly surcharges in addition to their regular risk-based assessments. (Overall regular risk-based assessment rates will decline once the reserve ratio reaches 1.15 percent, as approved by the FDIC Board in 2011.9) The final rule will become effective on July 1 of this year. If the reserve ratio reaches 1.15 percent before that date, surcharges will begin July 1. If the reserve ratio has not reached 1.15 percent by that date, surcharges will begin the first quarter after the reserve ratio reaches 1.15 percent. The FDIC expects that surcharges will last eight quarters. In any event, surcharges will continue through the quarter in which the reserve ratio first meets or exceeds 1.35 percent, but not past the fourth quarter of 2018. If the reserve ratio has not reached 1.35 percent by the end of 2018, a shortfall assessment will be imposed on large banks to close the gap. Small banks will receive credits to offset the portion of their assessments that help to raise the reserve ratio from 1.15 percent to 1.35 percent. After the reserve ratio reaches 1.38 percent, the FDIC will automatically apply a small bank’s credits to reduce its regular assessment up to the entire amount of the assessment. On April 26, 2016, the Board adopted a final rule that amends the way insurance assessment rates are calculated for established small banks.10,11 It updates the data and methodology that the FDIC uses to determine risk-based assessment rates for these institutions to better reflect risks and to help ensure that banks that take on greater risks pay more for deposit insurance than their less risky counterparts. The rule revises the financial ratios method used to determine assessment rates for these banks so that it is based on a statistical model that estimates the probability of failure over three years. Financial measures used in the financial ratios method are updated to be consistent with the statistical model. 7 Large banks are, generally, banks with assets of $10 billion or more. assessment base for the surcharge will be a large bank’s regular assessment base reduced by $10 billion (and subject to adjustment for affiliated banks). 9 As discussed below, the FDIC Board reaffirmed these lower rates in April 2016. 10 Generally, banks that have less than $10 billion in assets that have been federally insured for at least five years. 11 https://www.gpo.gov/fdsys/pkg/FR-2016-05-20/pdf/2016-11181.pdf. 8 The 24 FDIC QUARTERLY QUARTERLY BANKING PROFILE Table 2 Initial and Total Base Assessment Rates* (In basis points per annum) After the Reserve Ratio Reaches 1.15 Percent** Established Small Banks CAMELS Composite 1 or 2 3 4 or 5 Large & Highly Complex Institutions Initial Base Assessment Rate 3 to 16 6 to 30 16 to 30 3 to 30 Unsecured Debt Adjustment*** -5 to 0 -5 to 0 -5 to 0 -5 to 0 N/A N/A N/A 0 to 10 1.5 to 16 3 to 30 11 to 30 1.5 to 40 Brokered Deposit Adjustment Total Base Assessment Rate * Total base assessment rates in the table do not include the Depository Institution Debt Adjustment (DIDA). ** The reserve ratio for the immediately prior assessment period must also be less than 2 percent. *** The unsecured debt adjustment cannot exceed the lesser of 5 basis points or 50 percent of an insured depository institution’s initial base assessment rate; thus, for example, an insured depository institution with an initial base assessment rate of 3 basis points will have a maximum unsecured debt adjustment of 1.5 basis points and cannot have a total base assessment rate lower than 1.5 basis points. The rule eliminates risk categories for established small banks and uses the financial ratios method for all such banks (subject to minimum or maximum assessment rates based on a bank’s CAMELS composite rating). The final rule preserves the overall reduction in assessment rates that will apply once the DIF reaches 1.15 percent and adopts the assessment rate schedules shown in Table 2. The aggregate assessment revenue collected from small banks will be approximately the same as it would have been without the changes in the rule. The FDIC estimates that assessment rates under the final rule will be lower than current rates for about 93 percent of small banks and higher for about 7 percent of small banks. This final rule is also effective on July 1. If the reserve ratio reaches 1.15 percent before that date, the revisions in the final rule will begin July 1. If the reserve ratio has not reached 1.15 percent by that date, the revisions will begin the first quarter after the reserve ratio reaches 1.15 percent. Author: Kevin Brown Senior Financial Analyst Division of Insurance and Research (202) 898-6817 FDIC QUARTERLY 25 2016 •Volume 10 • Numb er 2 Table I-C. Insurance Fund Balances and Selected Indicators Deposit Insurance Fund* (dollar figures in millions) 1st Quarter 2016 4th Quarter 2015 3rd Quarter 2015 2nd Quarter 2015 1st Quarter 2015 4th Quarter 2014 3rd Quarter 2014 2nd Quarter 2014 1st Quarter 2014 4th Quarter 2013 3rd Quarter 2013 2nd Quarter 2013 1st Quarter 2013 Beginning Fund Balance $72,600 $70,115 $67,589 $65,296 $62,780 $54,320 $51,059 $48,893 $47,191 $40,758 $37,871 $35,742 $32,958 2,328 2,160 2,170 2,328 2,189 2,030 2,009 2,224 2,393 2,224 2,339 2,526 2,645 147 128 122 113 60 70 80 87 45 23 34 54 -9 0 415 0 447 0 410 0 434 0 396 0 408 0 406 0 428 0 422 302 436 156 298 0 439 0 436 -43 -930 -578 -317 -426 -6,787 -1,663 -204 348 -4,588 -539 -33 -499 5 12 2 3 6 -43 6 6 9 9 46 51 55 412 2,520 -298 2,485 64 2,526 -34 2,293 231 2,516 24 8,460 -91 3,261 73 2,166 25 1,702 -277 6,433 71 2,887 -96 2,129 30 2,784 75,120 72,600 70,115 67,589 65,296 62,780 54,320 51,059 48,893 47,191 40,758 37,871 35,742 15.05 15.64 29.08 32.37 33.55 33.03 33.27 34.82 36.79 43.19 61.58 66.88 133.73 1.13 1.11 1.09 1.06 1.03 1.01 0.88 0.84 0.80 0.79 0.68 0.64 0.60 6,669,378 6,541,665 6,423,858 6,350,106 6,352,414 6,211,197 6,141,732 6,109,668 6,120,755 6,010,810 5,967,515 5,950,765 5,999,235 4.99 5.32 4.59 3.94 3.78 3.33 2.92 Changes in Fund Balance: Assessments earned Interest earned on investment securities Realized gain on sale of investments Operating expenses Provision for insurance losses All other income, net of expenses Unrealized gain/(loss) on available-for-sale securities Total fund balance change Ending Fund Balance Percent change from four quarters earlier Reserve Ratio (%) Estimated Insured Deposits Percent change from four quarters earlier 2.67 2.03 -18.83 -17.68 -15.96 -14.68 Domestic Deposits Percent change from four quarters earlier 11,154,728 10,950,088 10,695,508 10,629,336 10,616,459 10,408,189 10,213,201 10,099,416 9,962,545 9,825,480 9,631,665 9,424,637 9,454,796 5.37 3.70 6.02 5.45 6.85 Assessment Base** Percent change from four quarters earlier 14,025,685 13,859,593 13,687,867 13,620,468 13,545,766 13,360,103 13,127,457 12,921,318 12,809,815 12,757,552 12,538,835 12,502,839 12,440,201 5.07 Number of Institutions Reporting 5.21 4.72 5.25 6.56 5.93 6.04 7.16 3.54 3.74 4.27 5.41 5.75 4.72 4.69 3.35 2.97 2.59 2.14 2.82 1.34 6,131 6,191 6,279 6,357 6,428 6,518 6,598 6,665 6,739 6,821 6,900 6,949 7,028 DIF Reserve Ratios 1.13 Deposit Insurance Fund Balance and Insured Deposits ($ Millions) 3/16 3/13 6/13 9/13 12/13 3/14 6/14 9/14 12/14 3/15 6/15 9/15 12/15 3/16 Percent of Insured Deposits 1.01 0.60 3/13 0.64 6/13 0.79 0.80 9/13 12/13 3/14 0.84 1.03 1.06 1.09 1.11 0.88 0.68 6/14 9/14 12/14 3/15 6/15 9/15 12/15 DIF Balance DIF-Insured Deposits $35,742 37,871 40,758 47,191 48,893 51,059 54,320 62,780 65,296 67,589 70,115 72,600 75,120 $5,999,235 5,950,765 5,967,515 6,010,810 6,120,755 6,109,668 6,141,732 6,211,197 6,352,414 6,350,106 6,423,858 6,541,665 6,669,378 Table II-C. Problem Institutions and Failed Institutions (dollar figures in millions) 2016*** 2015*** Problem Institutions Number of institutions Total assets 2015 165 $30,870 253 $60,276 183 $46,780 291 $86,712 467 $152,687 651 $232,701 813 $319,432 Failed Institutions Number of institutions Total assets**** 1 $67 4 $6,299 8 $6,706 18 $2,914 24 $6,044 51 $11,617 92 $34,923 * Quarterly financial statement results are unaudited. ** Average consolidated total assets minus tangible equity, with adjustments for banker’s banks and custodial banks. *** Through March 31. **** Total assets are based on final Call Reports submitted by failed institutions. 26 FDIC QUARTERLY 2014 2013 2012 2011 QUARTERLY BANKING PROFILE Table III-C. Estimated FDIC-Insured Deposits by Type of Institution (dollar figures in millions) March 31, 2016 Number of Institutions Total Assets Domestic Deposits* Est. Insured Deposits Commercial Banks and Savings Institutions FDIC-Insured Commercial Banks FDIC-Supervised OCC-Supervised Federal Reserve-Supervised 5,289 3,510 980 799 $15,202,849 2,338,073 10,417,123 2,447,653 $10,245,808 1,854,156 6,739,830 1,651,822 $5,938,941 1,318,810 3,732,712 887,419 FDIC-Insured Savings Institutions OCC-Supervised Savings Institutions FDIC-Supervised Savings Institutions Federal Reserve-Supervised 833 395 401 37 1,090,594 696,112 370,165 24,317 860,631 562,604 278,969 19,058 701,662 464,096 222,124 15,441 6,122 16,293,443 11,106,439 6,640,603 Total Commercial Banks and Savings Institutions Other FDIC-Insured Institutions U.S. Branches of Foreign Banks Total FDIC-Insured Institutions 9 95,647 48,289 28,776 6,131 16,389,090 11,154,728 6,669,378 * Excludes $1.3 trillion in foreign office deposits, which are not FDIC insured. Table IV-C. Distribution of Institutions and Assessment Base by Assessment Rate Range Quarter Ending December 31, 2015 (dollar figures in billions) Annual Rate in Basis Points Number of Institutions Percent of Total Institutions Amount of Assessment Base* Percent of Total Assessment Base 2.50-5.00 1,640 26.49 $1,785.9 12.89 5.01-7.50 3,074 49.65 10,331.0 74.54 7.51-10.00 920 14.86 1,249.2 9.01 10.01-15.00 362 5.85 342.4 2.47 15.01-20.00 16 0.26 58.7 0.42 20.01-25.00 143 2.31 85.6 0.62 25.01-30.00 0 0.00 0.0 0.00 30.01-35.00 35 0.57 6.6 0.05 1 0.02 0.0 0.00 greater than 35.00 * Beginning in the second quarter of 2011, the assessment base was changed to average consolidated total assets minus tangible equity, as required by the Dodd-Frank Act. FDIC QUARTERLY 27 QUARTERLY BANKING PROFILE Notes to Users This publication contains financial data and other information for depository institutions insured by the Federal Deposit Insurance Corporation (FDIC). These notes are an integral part of this publication and provide information regarding the comparability of source data and reporting differences over time. Tables I-A through VIII-A. The information presented in Tables I-A through V-A of the FDIC Quarterly Banking Profile is aggregated for all FDIC-insured institutions, both commercial banks and s avings institutions. Tables VI-A (Derivatives) and VII-A (Servicing, Securitization, and Asset Sales Activities) aggregate information only for insured commercial banks and state-chartered savings banks that file quarterly Call Reports. Table VIII-A (Trust Services) aggregates Trust asset and income information collected annually from all FDIC-insured institutions. Some tables are arrayed by groups of FDIC-insured institutions based on predominant types of asset concentration, while other tables aggregate institutions by asset size and g eographic region. Quarterly and full-year data are provided for selected indicators, including aggregate condition and income data, performance ratios, condition ratios, and structural changes, as well as past due, noncurrent, and charge-off information for loans outstanding and other assets. Tables I-B through VI-B. The information presented in Tables I-B through VI-B is aggregated for all FDIC-insured commercial banks and savings institutions meeting the criteria for community banks that were developed for the FDIC’s Community Banking Study, published in December, 2012: http://fdic.gov/regulations/resources/cbi/report/cbi-full.pdf. The determination of which insured institutions are considered community banks is based on five steps. The first step in defining a community bank is to aggregate all charter-level data reported under each holding company into a single banking organization. This aggregation applies both to balance-sheet measures and the number and location of banking offices. Under the FDIC definition, if the banking organization is designated as a community bank, every charter reporting under that organization is also considered a community bank when working with data at the charter level. The second step is to exclude any banking organization where more than 50 percent of total assets are held in certain specialty banking charters, including: credit card specialists, consumer nonbank banks, industrial loan companies, trust companies, bankers’ banks, and banks holding 10 percent or more of total assets in foreign offices. Once the specialty organizations are removed, the third step involves including organizations that engage in basic banking activities as measured by the total loans-to-assets ratio (greater than 33 percent) and the ratio of core deposits to assets (greater than 50 percent). Core deposits are defined as non-brokered deposits in domestic offices. Analysis of the underlying data shows that these thresholds establish meaningful levels of basic lending and deposit gathering and still allow for a degree of diversity in how individual banks construct their balance sheets. The fourth step includes organizations that operate within a limited geographic scope. This limitation of scope is used as a proxy measure for a bank’s relationship approach to banking. Banks that operate within a limited market area have more ease in managing relationships at a personal level. Under this step, four criteria are applied to each banking organization. They include both a minimum and maximum number of total banking offices, a maximum level of deposits for any one office, and location-based criteria. The limits on the number of and deposits per office are gradually adjusted upward over time. For banking offices, banks must have more than one office, and the maximum number of offices starts at 40 in 1985 and reaches 75 in 2010. The maximum level of deposits for any one office is $1.25 billion in deposits in 1985 and $5 billion in deposits in 2010. The remaining geographic limitations are also based on maximums for the number of states (fixed at 3) and large metropolitan areas (fixed at 2) in which the organization maintains offices. Branch office data are based on the most recent data from the annual June 30 Summary of Deposits Survey that are available at the time of publication. Finally, the definition establishes an asset-size limit, also adjusted upward over time from $250 million in 1985 to $1 billion in 2010, below which the limits on banking activities and geographic scope are waived. This final step acknowledges the fact that most of those small banks that are not excluded as specialty banks meet the requirements for banking activities and geographic limits in any event. Summary of FDIC Research Definition of Community Banking Organizations Community banks are designated at the level of the banking organization. (All charters under designated holding companies are considered community banking charters.) Exclude: Any organization with: — No loans or no core deposits — Foreign Assets ≥ 10% of total assets — More than 50% of assets in certain specialty banks, including: • credit card specialists • consumer nonbank banks1 • industrial loan companies • trust companies • bankers’ banks Include: All remaining banking organizations with: — Total assets < indexed size threshold 2 — Total assets ≥ indexed size threshold, where: • Loan to assets > 33% • Core deposits to assets > 50% • More than 1 office but no more than the indexed maximum number of offices.3 • Number of large MSAs with offices ≤ 2 • Number of states with offices ≤ 3 • No single office with deposits > indexed maximum branch deposit size.4 1 Consumer nonbank banks are financial institutions with limited charters that can make commercial loans or take deposits, but not both. 2 Asset size threshold indexed to equal $250 million in 1985 and $1 billion in 2010. 3 Maximum number of offices indexed to equal 40 in 1985 and 75 in 2010. 4 Maximum branch deposit size indexed to equal $1.25 billion in 1985 and $5 billion in 2010. FDIC QUARTERLY 29 2016 •Volume 10 • Numb er 2 Tables I-C through IV-C. ACCOUNTING CHANGES A separate set of tables (Tables I-C through IV-C) provides comparative quarterly data related to the Deposit Insurance Fund (DIF), problem institutions, failed/assisted institutions, estimated FDIC-insured deposits, as well as assessment rate information. Depository institutions that are not insured by the FDIC through the DIF are not included in the FDIC Quarterly Banking Profile. U.S. branches of institutions headquartered in foreign countries and non-deposit trust companies are not included unless otherwise indicated. Efforts are made to obtain financial reports for all active institutions. However, in some cases, final financial reports are not available for institutions that have closed or converted their charters. Accounting for Measurement-Period Adjustments Related to a Business Combination In September 2015, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2015-16, “Simplifying the Accounting for Measurement-Period Adjustments.” Under Accounting Standards Codification Topic 805, Business Combinations (formerly FASB Statement No. 141(R), “Business Combinations”), if the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the acquirer reports provisional amounts in its financial statements for the items for which the accounting is incomplete. During the measurement period, the acquirer is required to adjust the provisional amounts recognized at the acquisition date, with a corresponding adjustment to goodwill, to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the measurement of the amounts recognized as of that date. At present under Topic 805, an acquirer is required to retrospectively adjust the provisional amounts recognized at the acquisition date to reflect the new information. To simplify the accounting for the adjustments made to provisional amounts, ASU 2015-16 eliminates the requirement to retrospectively account for the adjustments. Accordingly, the ASU amends Topic 805 to require an acquirer to recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which adjustment amounts are determined. Under the ASU, the acquirer also must recognize in the financial statements for the same reporting period the effect on earnings, if any, resulting from the adjustments to the provisional amounts as if the accounting for the business combination had been completed as of the acquisition date. In general, the measurement period in a business combination is the period after the acquisition date during which the acquirer may adjust provisional amounts reported for identifiable assets acquired, liabilities assumed, and consideration transferred for the acquiree for which the initial accounting for the business combination is incomplete at the end of the reporting period in which the combination occurs. Topic 805 provides additional guidance on the measurement period, which shall not exceed one year from the acquisition date, and adjustments to provisional amounts during this period. For institutions that are public business entities, as defined under U.S. GAAP, ASU 2015-16 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. For institutions that are not public business entities (i.e., that are p rivate companies), the ASU is effective for fiscal years beginning after December 15, 2016, and interim periods within fiscal years beginning after December 15, 2017. The ASU’s amendments to Topic 805 should be applied prospectively to adjustments to provisional amounts that occur after the effective date of the ASU. Thus, institutions with a calendar year fiscal year that are public business entities must apply the ASU to any adjustments to provisional amounts that occur after January 1, 2016, beginning with their Call Reports for March 31, 2016. Institutions with a calendar year fiscal year that are private companies must apply the ASU to any adjustments to provisional amounts that occur after January 1, 2017, beginning with their Call Reports for December 31, 2017. Early application of ASU 201516 is permitted in Call Reports that have not been submitted. For additional information, institutions should refer to ASU 2015-16, which is available at http://www.fasb.org/jsp/FASB/Page/ SectionPage&cid=1176156316498. DATA SOURCES The financial information appearing in this publication is obtained primarily from the Federal Financial Institutions Examination Council (FFIEC) Consolidated Reports of Condition and Income (Call Reports) and the OTS Thrift Financial Reports submitted by all FDIC-insured depository institutions. (TFR filers began filing Call Reports effective with the quarter ending March 31, 2012.) This information is stored on and retrieved from the FDIC’s Research Information System (RIS) database. COMPUTATION METHODOLOGY Parent institutions are required to file consolidated reports, while their subsidiary financial institutions are still required to file separate reports. Data from subsidiary institution reports are included in the Quarterly Banking Profile tables, which can lead to doublecounting. No adjustments are made for any double-counting of subsidiary data. Additionally, certain adjustments are made to the OTS Thrift Financial Reports to provide closer conformance with the reporting and accounting requirements of the FFIEC Call Reports. (TFR filers began filing Call Reports effective with the quarter ending March 31, 2012.) All condition and performance ratios represent weighted averages, i.e., the sum of the individual numerator values divided by the sum of individual denominator values. All asset and liability figures used in calculating performance ratios represent average amounts for the period (beginning-of-period amount plus end-of-period amount plus any interim periods, divided by the total number of periods). For “pooling-of-interest” mergers, the assets of the acquired institution(s) are included in average assets since the year-to-date income includes the results of all merged institutions. No adjustments are made for “purchase accounting” mergers. Growth rates represent the percentage change over a 12-month period in totals for institutions in the base period to totals for institutions in the current period. For the community bank subgroup, growth rates will reflect changes over time in the number and identities of institutions designated as community banks, as well as changes in the assets and liabilities, and income and expenses of group members. Unless indicated otherwise, growth rates are not adjusted for mergers or other changes in the composition of the community bank subgroup. All data are collected and presented based on the location of each reporting institution’s main office. Reported data may include assets and liabilities located outside of the reporting institution’s home state. In addition, institutions may relocate across state lines or change their charters, resulting in an inter-regional or inter-industry migration, e.g., institutions can move their home offices between regions, and savings institutions can convert to commercial banks or commercial banks may convert to savings institutions. 30 FDIC QUARTERLY QUARTERLY BANKING PROFILE Debt Issuance Costs In April 2015, the FASB issued ASU No. 2015-03, “Simplifying the Presentation of Debt Issuance Costs.” This ASU requires debt issuance costs associated with a recognized debt liability to be presented as a direct deduction from the face amount of the related debt liability, similar to debt discounts. The ASU is limited to the presentation of debt issuance costs; therefore, the recognition and measurement guidance for such costs is unaffected. At present, Accounting Standards Codification (ASC) Subtopic 835-30, Interest—Imputation of Interest, requires debt issuance costs to be reported on the balance sheet as an asset (i.e., a deferred charge). For Call Report purposes, the costs of issuing debt currently are reported, net of accumulated amortization, in “Other assets.” For institutions that are public business entities, as defined under U.S. GAAP, ASU 2015-03 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. For example, institutions with a calendar year fiscal year that are public business entities must apply the ASU in their Call Reports beginning March 31, 2016. For institutions that are not public business entities (i.e., that are private companies), the ASU is effective for fiscal years beginning after December 15, 2015, and interim periods within fiscal years beginning after December 15, 2016. Thus, institutions with a calendar year fiscal year that are private companies must apply the ASU in their December 31, 2016, and subsequent quarterly Call Reports. Early adoption of the guidance in ASU 2015-03 is permitted. Extraordinary Items In January 2015, the FASB issued ASU No. 2015-01, “Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items.” This ASU eliminates from U.S. GAAP the concept of extraordinary items. At present, ASC Subtopic 225-20, Income Statement—Extraordinary and Unusual Items (formerly Accounting Principles Board Opinion No. 30, “Reporting the Results of Operations”), requires an entity to separately classify, present, and disclose extraordinary events and transactions. An event or transaction is presumed to be an ordinary and usual activity of the reporting entity unless evidence clearly supports its classification as an extraordinary item. If an event or transaction currently meets the criteria for extraordinary classification, an institution must segregate the extraordinary item from the results of its ordinary operations and report the extraordinary item in its income statement as “Extraordinary items and other adjustments, net of income taxes.” ASU 2015-01 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. Thus, for example, institutions with a calendar year fiscal year must begin to apply the ASU in their Call Reports for March 31, 2016. Early adoption of ASU 2015-01 is permitted provided that the guidance is applied from the beginning of the fiscal year of adoption. For Call Report purposes, an institution with a calendar year fiscal year must apply the ASU prospectively, that is, in general, to events or transactions occurring after the date of adoption. However, an institution with a fiscal year other than a calendar year may elect to apply ASU 2015-01 prospectively or, alternatively, it may elect to apply the ASU retrospectively to all prior calendar quarters included in the institution’s year-to-date Call Report income statement that includes the beginning of the fiscal year of adoption. After an institution adopts ASU 2015-01, any event or transaction that would have met the criteria for extraordinary classification before the adoption of the ASU should be reported in “Other noninterest income,” or “Other noninterest expense,” as appropriate, unless the event or transaction would otherwise be reportable in the income statement. In addition, consistent with ASU 2015-01, the agencies plan to remove reference to the term “extraordinary items” from the Call Report income statement. For additional information, institutions should refer to ASU 2015-01, which is available at http://www.fasb.org/jsp/FASB/Page/ SectionPage&cid=1176156316498. Accounting by Private Companies for Identifiable Intangible Assets in a Business Combination In December 2014, the FASB issued ASU No. 2014-18, “Accounting for Identifiable Intangible Assets in a Business Combination,” which is a consensus of the Private Company Council (PCC). This ASU provides an accounting alternative that permits a private company, as defined in U.S. GAAP (and discussed in a later section of these Supplemental Instructions), to simplify the accounting for certain intangible assets. The accounting alternative applies when a private company is required to recognize or otherwise consider the fair value of intangible assets as a result of certain transactions, including when applying the acquisition method to a business combination under ASC Topic 805, Business Combinations (formerly FASB Statement No. 141 (revised 2007), “Business Combinations”). Under ASU 2014-18, a private company that elects the accounting alternative should no longer recognize separately from goodwill: • Customer-related intangible assets unless they are capable of being sold or licensed independently from the other assets of a business, and • Noncompetition agreements. However, because mortgage servicing rights and core deposit intangibles are regarded as capable of being sold or licensed independently, a private company that elects this accounting alternative must recognize these intangible assets separately from goodwill, initially measure them at fair value, and subsequently measure them in accordance with ASC Topic 350, Intangibles–Goodwill and Other (formerly FASB Statement No. 142, “Goodwill and Other Intangible Assets”). A private company that elects the accounting alternative in ASU 2014-18 also must adopt the private company goodwill accounting alternative described in ASU 2014-02, “Accounting for Goodwill.” However, a private company that elects the goodwill accounting alternative in ASU 2014-02 is not required to adopt the accounting alternative for identifiable intangible assets in ASU 2014-18. A private company’s decision to adopt ASU 2014-18 must be made upon the occurrence of the first business combination (or other transaction within the scope of the ASU) in fiscal years beginning after December 15, 2015. The effective date of the private company’s decision to adopt the accounting alternative for identifiable intangible assets depends on the timing of that first transaction. If the first transaction occurs in the private company’s first fiscal year beginning after December 15, 2015, the adoption will be effective for that fiscal year’s annual financial reporting period and all interim and annual periods thereafter. If the first transaction occurs in a fiscal year beginning after December 15, 2016, the adoption will be effective in the interim period that includes the date of the transaction and subsequent interim and annual periods thereafter. Early application of the intangibles accounting alternative is permitted for any annual or interim period for which a private company’s financial statements have not yet been made available for issuance. Customer-related intangible assets and noncompetition agreements that exist as of the beginning of the period of adoption should continue to be accounted for separately from goodwill, i.e., such existing intangible assets should not be combined with goodwill. FDIC QUARTERLY 31 2016 •Volume 10 • Numb er 2 A bank or savings association that meets the private company definition in U.S. GAAP is permitted, but not required, to adopt ASU 201418 for Call Report purposes and may choose to early adopt the ASU, provided it also adopts the private company goodwill accounting alternative. If a private institution issues U.S. GAAP financial statements and adopts ASU 2014-18, it should apply the ASU’s intangible asset accounting alternative in its Call Report in a manner consistent with its reporting of intangible assets in its financial statements. For additional information on the private company a ccounting alternative for identifiable intangible assets, institutions should refer to ASU 2014-18, which is available at http://www.fasb.org/jsp/FASB/ Page/SectionPage&cid=1176156316498. Private Company Accounting Alternatives In May 2012, the Financial Accounting Foundation, the independent private sector organization responsible for the oversight of the FASB, approved the establishment of the PCC to improve the process of setting accounting standards for private companies. The PCC is charged with working jointly with the FASB to determine whether and in what circumstances to provide alternative recognition, measurement, disclosure, display, effective date, and transition guidance for private companies reporting under U.S. GAAP. Alternative guidance for private companies may include modifications or exceptions to otherwise applicable existing U.S. GAAP standards. The banking agencies have concluded that a bank or savings association that is a private company, as defined in U.S. GAAP (as discussed in a later section of these Supplemental Instructions), is permitted to use private company accounting alternatives issued by the FASB when preparing its Call Reports, except as provided in 12 U.S.C. 1831n(a) as described in the following sentence. If the agencies determine that a particular accounting principle within U.S. GAAP, including a private company accounting alternative, is inconsistent with the statutorily specified supervisory objectives, the agencies may prescribe an accounting principle for regulatory reporting purposes that is no less stringent than U.S. GAAP. In such a situation, an institution would not be permitted to use that particular private company accounting alternative or other accounting principle within U.S. GAAP for Call Report purposes. The agencies would provide appropriate notice if they were to disallow any accounting alternative under the statutory process. Accounting by Private Companies for Goodwill On January 16, 2014, the FASB issued ASU No. 2014-02, “Accounting for Goodwill,” which is a consensus of the PCC. This ASU generally permits a private company to elect to amortize goodwill on a straight-line basis over a period of ten years (or less than ten years if more appropriate) and apply a simplified impairment model to goodwill. In addition, if a private company chooses to adopt the ASU’s goodwill accounting alternative, the ASU requires the private company to make an accounting policy election to test goodwill for impairment at either the entity level or the reporting unit level. Goodwill must be tested for impairment when a triggering event occurs that indicates that the fair value of an entity (or a reporting unit) may be below its carrying amount. In contrast, U.S. GAAP does not otherwise permit goodwill to be amortized, instead requiring goodwill to be tested for impairment at the reporting unit level annually and between annual tests in certain circumstances. The ASU’s goodwill accounting alternative, if elected by a private company, is effective prospectively for new goodwill recognized in annual periods beginning after December 15, 2014, and in interim periods within annual periods beginning after December 15, 2015. Goodwill existing as of the beginning of the period of adoption is to be amortized 32 FDIC QUARTERLY prospectively over ten years (or less than ten years if more appropriate). The ASU states that early application of the goodwill accounting alternative is permitted for any annual or interim period for which a private company’s financial statements have not yet been made available for issuance. A bank or savings association that meets the private company definition in ASU 2014-02, as discussed in the following section of these Supplemental Instructions (i.e., a private institution), is permitted, but not required, to adopt this ASU for Call Report purposes and may choose to early adopt the ASU. If a private institution issues U.S. GAAP financial statements and adopts the ASU, it should apply the ASU’s goodwill accounting alternative in its Call Report in a manner consistent with its reporting of goodwill in its financial statements. Thus, for example, a private institution with a calendar year fiscal year that chooses to adopt ASU 2014-02 must apply the ASU’s provisions in its December 31, 2015, and subsequent quarterly Call Reports unless early application of the ASU was elected. This would require the private institution to report in its December 31, 2015, Call Report one year’s amortization of goodwill existing as of January 1, 2015, and the amortization of any new goodwill recognized in 2015. For additional information on the private company accounting alternative for goodwill, institutions should refer to ASU 201402, which is available at http://www.fasb.org/jsp/FASB/Page/ SectionPage&cid=1176156316498. Definitions of Private Company and Public Business Entity According to ASU No. 2014-02, “Accounting for Goodwill,” a private company is a business entity that is not a public business entity. ASU No. 2013-12, “Definition of a Public Business Entity,” which was issued in December 2013, added this term to the Master Glossary in the Accounting Standards Codification. This ASU states that a business entity, such as a bank or savings association, that meets any one of five criteria set forth in the ASU is a public business entity for reporting purposes under U.S. GAAP, including for Call Report purposes. An institution that is a public business entity is not permitted to apply the private company goodwill accounting alternative discussed in the preceding section when preparing its Call Report. For additional information on the definition of a public b usiness entity, institutions should refer to ASU 2013-12, which is available at http://www.fasb.org/jsp/FASB/Page/SectionPage&cid= 1176156316498. Reporting Certain Government-Guaranteed Mortgage Loans Upon Foreclosure In August 2014, the FASB issued Accounting Standards Update (ASU) No. 2014-14, “Classification of Certain GovernmentGuaranteed Mortgage Loans Upon Foreclosure,” to address diversity in practice for how government-guaranteed mortgage loans are recorded upon foreclosure. The ASU updates guidance contained in ASC Subtopic 310-40, Receivables—Troubled Debt Restructurings by Creditors (formerly FASB Statement No. 15, “Accounting by Debtors and Creditors for Troubled Debt Restructurings,” as amended), because U.S. GAAP previously did not provide specific guidance on how to categorize or measure foreclosed mortgage loans that are government guaranteed. The ASU clarifies the conditions under which a creditor must derecognize a government-guaranteed mortgage loan and recognize a separate “other receivable” upon foreclosure (that is, when a creditor receives physical possession of real estate property collateralizing a mortgage loan in accordance with the guidance in ASC Subtopic 310-40). QUARTERLY BANKING PROFILE Under the ASU, institutions should derecognize a mortgage loan and record a separate other receivable upon foreclosure of the real estate collateral if the following conditions are met: • The loan has a government guarantee that is not separable from the loan before foreclosure. • At the time of foreclosure, the institution has the intent to convey the property to the guarantor and make a claim on the guarantee and it has the ability to recover under that claim. • At the time of foreclosure, any amount of the claim that is determined on the basis of the fair value of the real estate is fixed (that is, the real estate property has been appraised for purposes of the claim and thus the institution is not exposed to changes in the fair value of the property). This guidance is applicable to fully and partially government- guaranteed mortgage loans provided the three conditions identified above have been met. In such situations, upon foreclosure, the separate other receivable should be measured based on the amount of the loan balance (principal and interest) expected to be recovered from the guarantor. For institutions that are public business entities, as defined under U.S. GAAP (as discussed in an earlier section of these Supplemental Instructions), ASU 2014-14 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2014. For example, institutions with a calendar year fiscal year that are public business entities must apply the ASU in their Call Reports beginning March 31, 2015. However, institutions that are not public business entities (i.e., that are private companies) are not required to apply the guidance in ASU 2014-14 until annual periods ending after December 15, 2015, and interim periods beginning after December 15, 2015. Thus, institutions with a calendar year fiscal year that are private companies must apply the ASU in their December 31, 2015, and subsequent quarterly Call Reports. Earlier adoption of the guidance in ASU 2014-14 is permitted if the institution has already adopted the amendments in ASU No. 2014-04, “Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure.” For additional information, institutions should refer to ASU 2014-14, which is available at http://www.fasb.org/jsp/FASB/Page/ SectionPage&cid=1176156316498. Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans Upon Foreclosure In January 2014, the FASB issued Accounting Standards Update (ASU) No. 2014-04, “Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure,” to address diversity in practice for when certain loan receivables should be derecognized and the real estate collateral recognized. The ASU updated guidance contained in Accounting Standards Codification Subtopic 310-40, Receivables–Troubled Debt Restructurings by Creditors (formerly FASB Statement No.15, “Accounting by Debtors and Creditors for Troubled Debt Restructurings,” as amended). Under prior accounting guidance, all loan receivables were reclassified to other real estate owned (OREO) when the institution, as creditor, obtained physical possession of the property, regardless of whether formal foreclosure proceedings had taken place. The new ASU clarifies when a creditor is considered to have received physical possession (resulting from an in-substance repossession or foreclosure) of residential real estate collateralizing a consumer mortgage loan. Under the new guidance, physical possession for these residen- tial real estate properties is considered to have occurred and a loan receivable would be reclassified to OREO only upon: • The institution obtaining legal title upon completion of a fore closure even if the borrower has redemption rights that provide the borrower with a legal right for a period of time after foreclosure to reclaim the property by paying certain amounts specified by law, or • The completion of a deed in lieu of foreclosure or similar legal agreement under which the borrower conveys all interest in the residential real estate property to the institution to satisfy the loan. Loans secured by real estate other than consumer mortgage loans collateralized by residential real estate should continue to be reclassified to OREO when the institution has received physical possession of a borrower’s real estate, regardless of whether formal foreclosure proceedings take place. For institutions that are public business entities, as defined under U.S. generally accepted accounting principles, ASU 2014-04 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2014. For example, institutions with a calendar year fiscal year that are public business entities must apply the ASU in their Call Reports beginning March 31, 2015. However, institutions that are not public business entities are not required to apply the guidance in ASU 2014-04 until annual periods beginning after December 15, 2014, and interim periods within annual periods beginning after December 15, 2015. Thus, institutions with a calendar year fiscal year that are not public business entities must apply the ASU in their December 31, 2015, and subsequent quarterly Call Reports. Earlier adoption of the guidance in ASU 2014-04 is permitted. Entities can elect to apply the ASU on either a modified retrospective transition basis or a prospective transition basis. Applying the ASU on a prospective transition basis should be less complex for institutions than applying the ASU on a modified retrospective transition basis. Under the prospective transition method, an institution should apply the new guidance to all instances where it receives physical possession of residential real estate property collateralizing consumer mortgage loans that occur after the date of adoption of the ASU. Under the modified retrospective transition method, an institution should apply a cumulative-effect adjustment to residential consumer mortgage loans and OREO existing as of the beginning of the annual period for which the ASU is effective. As a result of adopting the ASU on a modified retrospective basis, assets reclassified from OREO to loans should be measured at the carrying value of the real estate at the date of adoption while assets reclassified from loans to OREO should be measured at the lower of the net amount of the loan receivable or the OREO property’s fair value less costs to sell at the time of adoption. For additional information, institutions should refer to ASU 2014-04, which is available at http://www.fasb.org/jsp/FASB/Page/SectionPage &cid=1176156316498. True-Up Liability Under an FDIC Loss-Sharing Agreement An insured depository institution that acquires a failed insured institution may enter into a loss-sharing agreement with the FDIC under which the FDIC agrees to absorb a p ortion of the losses on a specified pool of the failed institution’s assets during a specified time period. The acquiring institution typically records an indemnification asset representing its right to receive payments from the FDIC for losses during the specified time period on assets covered under the losssharing agreement. Since 2009, most loss-sharing agreements have included a true-up provision that may require the acquiring institution to reimburse the FDIC if cumulative losses in the acquired loss-share portfolio are less FDIC QUARTERLY 33 2016 •Volume 10 • Numb er 2 than the amount of losses claimed by the institution throughout the loss-sharing period. Typically, a true-up liability may result because the recovery period on the loss-share assets (e.g., eight years) is longer than the period during which the FDIC agrees to reimburse the acquiring institution for losses on the loss-share portfolio (e.g., five years). Consistent with U.S. GAAP and bank guidance for “Offsetting,” institutions are permitted to offset assets and liabilities recognized in the Report of Condition when a “right of setoff” exists. Under ASC Subtopic 210-20, Balance Sheet—Offsetting (formerly FASB Interpretation No. 39, “Offsetting of Amounts Related to Certain Contracts”), in general, a right of setoff exists when a reporting institution and another party each owes the other determinable amounts, the reporting institution has the right to set off the amounts each party owes and also intends to set off, and the right of setoff is enforceable at law. Because the conditions for the existence of a right of offset in ASC Subtopic 210-20 normally would not be met with respect to an indemnification asset and a true-up liability under a losssharing agreement with the FDIC, this asset and liability should not be netted for Call Report purposes. Therefore, institutions should report the indemnification asset gross (i.e., without regard to any true-up liability) in Other Assets, and any true-up liability in Other Liabilities. In addition, an institution should not continue to report assets covered by loss-sharing agreements after the expiration of the losssharing period even if the terms of the loss-sharing agreement require reimbursements from the institution to the FDIC for certain amounts during the recovery period. Indemnification Assets and Accounting Standards Update No. 2012-06 – In October 2012, the FASB issued Accounting Standards Update (ASU) No. 2012-06, “Subsequent Accounting for an Indemnification Asset Recognized at the Acquisition Date as a Result of a Government-Assisted Acquisition of a Financial Institution,” to address the subsequent measurement of an indemnification asset recognized in an acquisition of a financial institution that includes an FDIC loss-sharing agreement. This ASU amends ASC Topic 805, Business Combinations (formerly FASB Statement No. 141 (revised 2007), “Business Combinations”), which includes guidance applicable to FDIC-assisted acquisitions of failed institutions. Under the ASU, when an institution experiences a change in the cash flows expected to be collected on an FDIC loss-sharing indemnification asset because of a change in the cash flows expected to be collected on the assets covered by the loss-sharing agreement, the institution should account for the change in the measurement of the indemnification asset on the same basis as the change in the assets subject to indemnification. Any amortization of changes in the value of the indemnification asset should be limited to the lesser of the term of the indemnification agreement and the remaining life of the indemnified assets. The ASU is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2012. For institutions with a calendar year fiscal year, the ASU takes effect January 1, 2013. Early adoption of the ASU is permitted. The ASU’s provisions should be applied prospectively to any new indemnification assets acquired after the date of adoption and to indemnification assets existing as of the date of adoption arising from an FDIC-assisted acquisition of a financial institution. Institutions with indemnification assets arising from FDIC loss-sharing agreements are expected to adopt ASU 2012-06 for Call Report purposes in accordance with the effective date of this standard. For additional information, refer to ASU 2012-06, available at http://www.fasb.org/jsp/FASB/Page/ SectionPage&cid=1176156316498. 34 FDIC QUARTERLY Goodwill Impairment Testing – In September 2011, the FASB issued Accounting Standards Update (ASU) No. 2011-08, “Testing Goodwill for Impairment,” to address concerns about the cost and complexity of the existing goodwill impairment test in ASC Topic 350, Intangibles-Goodwill and Other (formerly FASB Statement No. 142, “Goodwill and Other Intangible Assets”). The ASU’s amendments to ASC Topic 350 are effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011 (i.e., for annual or interim tests performed on or after January 1, 2012, for institutions with a calendar year fiscal year). Early adoption of the ASU was permitted. Under ASU 2011-08, an institution has the option of first assessing qualitative factors to determine whether it is necessary to perform the two-step quantitative goodwill impairment test described in ASC Topic 350. If, after considering all relevant events and circumstances, an institution determines it is unlikely (that is, a likelihood of 50 percent or less) that the fair value of a reporting unit is less than its carrying amount (including goodwill), then the institution does not need to perform the two-step goodwill impairment test. If the institution instead concludes that the opposite is true (that is, it is likely that the fair value of a reporting unit is less than its carrying amount), then it is required to perform the first step and, if necessary, the second step of the two-step goodwill impairment test. Under ASU 2011-08, an institution may choose to bypass the qualitative assessment for any reporting unit in any period and proceed directly to performing the first step of the two-step goodwill impairment test. Accounting for Loan Participations – Amended ASC Topic 860 (formerly FAS 166) modified the criteria that must be met in order for a transfer of a portion of a financial asset, such as a loan participation, to qualify for sale accounting—refer to previously published Quarterly Banking Profile notes: http://www5.fdic.gov/qbp/2011mar/ qbpnot.html. Other-Than-Temporary Impairment – When the fair value of an investment in an individual available-for-sale or held-to-maturity security is less than its cost basis, the impairment is either temporary or other-than-temporary. The amount of the total other-than-temporary impairment related to credit loss must be recognized in earnings, but the amount of total impairment related to other factors must be recognized in other comprehensive income, net of applicable taxes. To determine whether the impairment is other-than-temporary, an institution must apply the applicable accounting guidance—refer to previously published Quarterly Banking Profile notes: http://www5. fdic.gov/qbp/2011mar/qbpnot.html. Accounting Standards Codification – refer to previously published Quarterly Banking Profile notes: http://www5.fdic.gov/qbp/2011sep/ qbpnot.html. DEFINITIONS (in alphabetical order) All other assets – total cash, balances due from depository institutions, premises, fixed assets, direct investments in real estate, investment in unconsolidated subsidiaries, customers’ liability on acceptances outstanding, assets held in trading accounts, federal funds sold, securities purchased with agreements to resell, fair market value of derivatives, prepaid deposit insurance assessments, and other assets. All other liabilities – bank’s liability on acceptances, limited-life preferred stock, allowance for estimated off-balance-sheet credit losses, fair market value of derivatives, and other liabilities. Assessment base – effective April 1, 2011, the deposit insurance assessment base has changed to “average consolidated total assets minus average tangible equity” with an additional adjustment to the QUARTERLY BANKING PROFILE assessment base for banker’s banks and custodial banks, as permitted under Dodd-Frank. Previously the assessment base was “assessable deposits” and consisted of DIF deposits (deposits insured by the FDIC Deposit Insurance Fund) in banks’ domestic offices with certain adjustments. Assets securitized and sold – total outstanding principal balance of assets securitized and sold with servicing retained or other sellerprovided credit enhancements. Capital Purchase Program (CPP) – as announced in October 2008 under the TARP, the Treasury Department purchase of noncumulative perpetual preferred stock and related warrants that is treated as Tier 1 capital for regulatory capital purposes is included in “Total equity capital.” Such warrants to purchase common stock or non cumulative preferred stock issued by publicly-traded banks are reflected as well in “Surplus.” Warrants to purchase common stock or noncumulative preferred stock of not-publicly-traded bank stock are classified in a bank’s balance sheet as “Other liabilities.” Common equity tier 1 capital ratio – ratio of common equity tier 1 capital to risk-weighted assets. Common equity tier 1 capital includes common stock instruments and related surplus, retained earnings, accumulated other comprehensive income (AOCI), and limited amounts of common equity tier 1 minority interest, minus applicable regulatory adjustments and deductions. Items that are fully deducted from common equity tier 1 capital include goodwill, other intangible assets (excluding mortgage servicing assets) and certain deferred tax assets; items that are subject to limits in common equity tier 1 capital include mortgage servicing assets, eligible deferred tax assets, and certain significant investments. Construction and development loans – includes loans for all property types under construction, as well as loans for land acquisition and development. Core capital – common equity capital plus noncumulative perpetual preferred stock plus minority interest in consolidated subsidiaries, less goodwill and other ineligible intangible assets. The amount of eligible intangibles (including servicing rights) included in core capital is limited in accordance with supervisory capital regulations. Cost of funding earning assets – total interest expense paid on deposits and other borrowed money as a percentage of average earning assets. Credit enhancements – techniques whereby a company attempts to reduce the credit risk of its obligations. Credit enhancement may be provided by a third party (external credit enhancement) or by the originator (internal credit enhancement), and more than one type of enhancement may be associated with a given issuance. Deposit Insurance Fund (DIF) – the Bank (BIF) and Savings Association (SAIF) Insurance Funds were merged in 2006 by the Federal Deposit Insurance Reform Act to form the DIF. Derivatives notional amount – the notional, or contractual, amounts of derivatives represent the level of involvement in the types of derivatives transactions and are not a quantification of market risk or credit risk. Notional amounts represent the amounts used to calculate contractual cash flows to be exchanged. Derivatives credit equivalent amount – the fair value of the derivative plus an additional amount for potential future c redit exposure based on the notional amount, the remaining maturity and type of the contract. Derivatives transaction types: Futures and forward contracts – contracts in which the buyer agrees to purchase and the seller agrees to sell, at a specified future date, a specific quantity of an underlying variable or index at a specified price or yield. These contracts exist for a variety of variables or indices, (traditional agricultural or physical commodities, as well as currencies and interest rates). Futures contracts are standardized and are traded on organized exchanges which set limits on counterparty credit exposure. Forward contracts do not have standardized terms and are traded over the counter. Option contracts – contracts in which the buyer acquires the right to buy from or sell to another party some specified amount of an underlying variable or index at a stated price (strike price) during a period or on a specified future date, in return for compensation (such as a fee or premium). The seller is obligated to purchase or sell the variable or index at the discretion of the buyer of the contract. Swaps – obligations between two parties to exchange a series of cash flows at periodic intervals (settlement dates), for a specified period. The cash flows of a swap are either fixed, or determined for each settlement date by multiplying the quantity (notional principal) of the underlying variable or index by specified reference rates or prices. Except for currency swaps, the notional principal is used to calculate each payment but is not exchanged. Derivatives underlying risk exposure – the potential exposure characterized by the level of banks’ concentration in particular underlying instruments, in general. Exposure can result from market risk, credit risk, and operational risk, as well as, interest rate risk. Domestic deposits to total assets – total domestic office deposits as a percent of total assets on a consolidated basis. Earning assets – all loans and other investments that earn interest or dividend income. Efficiency ratio – Noninterest expense less amortization of intangible assets as a percent of net interest income plus noninterest income. This ratio measures the proportion of net operating revenues that are absorbed by overhead expenses, so that a lower value indicates greater efficiency. Estimated insured deposits – in general, insured deposits are total domestic deposits minus estimated uninsured deposits. Beginning March 31, 2008, for institutions that file Call Reports, insured deposits are total assessable deposits minus estimated uninsured deposits. Beginning September 30, 2009, insured deposits include deposits in accounts of $100,000 to $250,000 that are covered by a temporary increase in the FDIC’s standard maximum deposit insurance amount (SMDIA). The Dodd-Frank Wall Street Reform and Consumer Protection Act enacted on July 21, 2010, made permanent the standard maximum deposit insurance amount (SMDIA) of $250,000. Also, the Dodd-Frank Act amended the Federal Deposit Insurance Act to include noninterest-bearing transaction accounts as a new temporary deposit insurance account category. All funds held in noninterest-bearing transaction accounts were fully insured, without limit, from December 31, 2010, through December 31, 2012. Failed/assisted institutions – an institution fails when regulators take control of the institution, placing the assets and liabilities into a bridge bank, conservatorship, receivership, or another healthy institution. This action may require the FDIC to provide funds to cover losses. An institution is defined as “assisted” when the institution remains open and receives assistance in order to continue operating. Fair Value – the valuation of various assets and liabilities on the balance sheet—including trading assets and liabilities, available-for-sale securities, loans held for sale, assets and liabilities accounted for under the fair value option, and foreclosed assets—involves the use FDIC QUARTERLY 35 2016 •Volume 10 • Numb er 2 of fair values. During periods of market stress, the fair values of some financial instruments and nonfinancial assets may decline. FHLB advances – all borrowings by FDIC insured institutions from the Federal Home Loan Bank System (FHLB), as reported by Call Report filers, and by TFR filers prior to March 31, 2012. Goodwill and other intangibles – intangible assets include s ervicing rights, purchased credit card relationships, and other identifiable intangible assets. Goodwill is the excess of the purchase price over the fair market value of the net assets acquired, less subsequent impairment adjustments. Other intangible assets are recorded at fair value, less subsequent quarterly amortization and impairment adjustments. Loans secured by real estate – includes home equity loans, junior liens secured by 1-4 family residential properties, and all other loans secured by real estate. Loans to individuals – includes outstanding credit card balances and other secured and unsecured consumer loans. Long-term assets (5+ years) – loans and debt securities with remaining maturities or repricing intervals of over five years. Maximum credit exposure – the maximum contractual credit exposure remaining under recourse arrangements and other sellerprovided credit enhancements provided by the reporting bank to securitizations. Mortgage-backed securities – certificates of participation in pools of residential mortgages and collateralized mortgage obligations issued or guaranteed by government-sponsored or private enter prises. Also, see “Securities,” below. Net charge-offs – total loans and leases charged off (removed from balance sheet because of uncollectability), less amounts recovered on loans and leases previously charged off. Net interest margin – the difference between interest and dividends earned on interest-bearing assets and interest paid to depositors and other creditors, expressed as a percentage of average earning assets. No adjustments are made for interest income that is tax exempt. Net loans to total assets – loans and lease financing receivables, net of unearned income, allowance and reserves, as a percent of total assets on a consolidated basis. Net operating income – income excluding discretionary transactions such as gains (or losses) on the sale of investment securities and extraordinary items. Income taxes subtracted from operating income have been adjusted to exclude the portion applicable to securities gains (or losses). Noncurrent assets – the sum of loans, leases, debt securities, and other assets that are 90 days or more past due, or in nonaccrual status. Noncurrent loans & leases – the sum of loans and leases 90 days or more past due, and loans and leases in nonaccrual status. Number of institutions reporting – the number of institutions that actually filed a financial report. New reporters – insured institutions filing quarterly financial reports for the first time. Other borrowed funds – federal funds purchased, securities sold with agreements to repurchase, demand notes issued to the U.S. Treasury, FHLB advances, other borrowed money, mortgage indebtedness, obligations under capitalized leases and trading liabilities, less revaluation losses on assets held in trading accounts. 36 FDIC QUARTERLY Other real estate owned – primarily foreclosed property. Direct and indirect investments in real estate ventures are excluded. The amount is reflected net of valuation allowances. For institutions that file a Thrift Financial Report (TFR), the v aluation allowance subtracted also includes allowances for other repossessed assets. Also, for TFR filers the components of other real estate owned are reported gross of valuation allowances. (TFR filers began filing Call Reports effective with the quarter ending March 31, 2012.) Percent of institutions with earnings gains – the percent of institutions that increased their net income (or decreased their losses) compared to the same period a year earlier. “Problem” institutions – federal regulators assign a composite rating to each financial institution, based upon an evaluation of financial and operational criteria. The rating is based on a scale of 1 to 5 in ascending order of supervisory concern. “Problem” institutions are those institutions with financial, operational, or managerial weaknesses that threaten their continued financial viability. Depending upon the degree of risk and supervisory concern, they are rated either a “4” or “5.” The number and assets of “problem” institutions are based on FDIC composite ratings. Prior to March 31, 2008, for institutions whose primary federal regulator was the OTS, the OTS composite rating was used. Recourse – an arrangement in which a bank retains, in form or in substance, any credit risk directly or indirectly associated with an asset it has sold (in accordance with generally accepted accounting principles) that exceeds a pro rata share of the bank’s claim on the asset. If a bank has no claim on an asset it has sold, then the retention of any credit risk is recourse. Reserves for losses – the allowance for loan and lease losses on a consolidated basis. Restructured loans and leases – loan and lease financing receivables with terms restructured from the original contract. Excludes restructured loans and leases that are not in compliance with the modified terms. Retained earnings – net income less cash dividends on common and preferred stock for the reporting period. Return on assets – bank net income (including gains or losses on securities and extraordinary items) as a percentage of average total (consolidated) assets. The basic yardstick of bank profitability. Return on equity – bank net income (including gains or losses on securities and extraordinary items) as a percentage of average total equity capital. Risk-based capital groups – definitions: Capital Ratios Used to Determine Capital Evaluations for Assessment Purposes, Effective January 1, 2015* Total RiskBased Capital Ratio Tier 1 RiskBased Capital Ratio Well Capitalized ≥10% ≥8% ≥6.5% ≥5% Adequately Capitalized** ≥8% ≥6% ≥4.5% ≥4% Capital Evaluations Under capitalized Common Equity Tier 1 Capital Ratio Leverage Ratio Does not qualify as either Well Capitalized or Adequately Capitalized * Effective January 1, 2018, the supplemental leverage ratio will be added to capital evaluations for deposit insurance assessment purposes. **An institution is Adequately Capitalized if it is not Well Capitalized, but satisfies each of the listed capital ratio standards for Adequately Capitalized. QUARTERLY BANKING PROFILE Risk Categories and Assessment Rate Schedule – The current risk categories became effective January 1, 2007. Capital ratios and supervisory ratings distinguish one risk category from another. Effective April 1, 2011, risk categories for large institutions (generally those with at least $10 billion in assets) were eliminated. The following table shows the relationship of risk categories (I, II, III, IV) for small institutions to capital and supervisory groups as well as the initial base assessment rates (in basis points) for each risk category. Supervisory Group A generally includes institutions with CAMELS composite ratings of 1 or 2; Supervisory Group B generally includes institutions with a CAMELS composite rating of 3; and Supervisory Group C generally includes institutions with CAMELS composite ratings of 4 or 5. For purposes of risk-based assessment capital groups, undercapitalized includes institutions that are significantly or critically undercapitalized. Supervisory Group Capital Category 1. Well Capitalized 2. Adequately Capitalized 3. Undercapitalized A B C II 14 bps III 23 bps I 5–9 bps II 14 bps III 23 bps IV 35 bps Effective April 1, 2011, the initial base assessment rates are 5 to 35 basis points. An institution’s total assessment rate may be less than or greater than its initial base assessment rate as a result of additional risk adjustments. The base assessment rates for small institutions in Risk Category I are based on a combination of financial ratios and CAMELS component ratings (the financial ratios method). As required by Dodd-Frank, the calculation of risk-based assessment rates for large institutions no longer relies on long-term debt issuer ratings. Rates for large institutions are based on CAMELS ratings and certain forward-looking financial measures combined into two scorecards—one for most large institutions and another for the remaining very large institutions that are structurally and operationally complex or that pose unique challenges and risks in case of failure (highly complex institutions). In general, a highly complex institution is an institution (other than a credit card bank) with more than $500 billion in total assets that is controlled by a parent or intermediate parent company with more than $500 billion in total assets or a processing bank or trust company with total fiduciary assets of $500 billion or more. The FDIC retains its ability to take additional information into account to make a limited adjustment to an institution’s total score (the large bank adjustment), which will be used to determine an institution’s initial base assessment rate. Effective April 1, 2011, the three possible adjustments to an institution’s initial base assessment rate are as follows: (1) Unsecured Debt Adjustment: An institution’s rate may decrease by up to 5 basis points for unsecured debt. The unsecured debt adjustment cannot exceed the lesser of 5 basis points or 50 percent of an institution’s initial base assessment rate (IBAR). Thus, for example, an institution with an IBAR of 5 basis points would have a maximum unsecured debt adjustment of 2.5 basis points and could not have a total base assessment rate lower than 2.5 basis points. (2) Depository Institution Debt Adjustment: For institutions that hold long-term unsecured debt issued by another insured depository institution, a 50 basis point charge is applied to the amount of such debt held in excess of 3 percent of an institution’s Tier 1 capital. (3) Brokered Deposit Adjustment: Rates for small institutions that are not in Risk Category I and for large institutions that are not well capitalized or do not have a composite CAMELS rating of 1 or 2 may increase (not to exceed 10 basis points) if their brokered deposits exceed 10 percent of domestic deposits. After applying all possible adjustments (excluding the Depository Institution Debt Adjustment), minimum and maximum total base assessment rates for each risk category are as follows: Total Base Assessment Rates* Risk Category I Risk Category II Risk Category III Risk Large and Category Highly Complex IV Institutions Initial base assessment rate 5–9 14 23 35 5–35 Unsecured debt adjustment -4.5–0 -5–0 -5–0 -5–0 -5–0 Brokered deposit adjustment — 0–10 0–10 0–10 0–10 Total Base Assessment rate 2.5–9 9–24 18–33 30–45 2.5–45 * All amounts for all categories are in basis points annually. Total base rates that are not the minimum or maximum rate will vary between these rates. Total base assessment rates do not include the depository institution debt adjustment. Beginning in 2007, each institution is assigned a risk-based rate for a quarterly assessment period near the end of the quarter following the assessment period. Payment is generally due on the 30th day of the last month of the quarter following the assessment period. Supervisory rating changes are effective for assessment purposes as of the examination transmittal date. Special Assessment – On May 22, 2009, the FDIC board approved a final rule that imposed a 5 basis point special assessment as of June 30, 2009. The special assessment was levied on each insured depository institution’s assets minus its Tier 1 capital as reported in its report of condition as of June 30, 2009. The special assessment was collected September 30, 2009, at the same time that the risk-based assessment for the second quarter of 2009 was collected. The special assessment for any institution was capped at 10 basis points of the institution’s assessment base for the second quarter of 2009 risk-based assessment. Prepaid Deposit Insurance Assessments – In November 2009, the FDIC Board of Directors adopted a final rule requiring insured depository institutions (except those that are exempted) to prepay their quarterly risk-based deposit insurance assessments for the fourth quarter of 2009, and for all of 2010, 2011, and 2012, on December 30, 2009. For regulatory capital purposes, an institution may assign a zero-percent risk weight to the amount of its prepaid deposit assessment asset. As required by the FDIC’s regulation establishing the prepaid deposit insurance assessment program, this program ended with the final application of prepaid assessments to the quarterly deposit insurance assessments payable March 29, 2013. The FDIC issued refunds of any unused prepaid deposit insurance assessments on June 28, 2013. Risk-weighted assets – assets adjusted for risk-based capital definitions which include on-balance-sheet as well as off-balance-sheet items multiplied by risk-weights that range from zero to 200 percent. A conversion factor is used to assign a balance sheet equivalent amount for selected off-balance-sheet accounts. Securities – excludes securities held in trading accounts. Banks’ securities portfolios consist of securities designated as “held-to-maturity,” FDIC QUARTERLY 37 2016 •Volume 10 • Numb er 2 which are reported at amortized cost (book value), and securities designated as “available-for-sale,” reported at fair (market) value. Securities gains (losses) – realized gains (losses) on held-to- maturity and available-for-sale securities, before adjustments for income taxes. Thrift Financial Report (TFR) filers also include gains (losses) on the sales of assets held for sale. (TFR filers began filing Call Reports effective with the quarter ending March 31, 2012.) Seller’s interest in institution’s own securitizations – the reporting bank’s ownership interest in loans and other assets that have been securitized, except an interest that is a form of recourse or other seller-provided credit enhancement. Seller’s interests differ from the securities issued to investors by the securitization structure. The principal amount of a seller’s interest is generally equal to the total principal amount of the pool of assets included in the securitization structure less the principal amount of those assets attributable to investors, i.e., in the form of securities issued to investors. Small Business Lending Fund – The Small Business Lending Fund (SBLF) was enacted into law in September 2010 as part of the Small Business Jobs Act of 2010 to encourage lending to small businesses by providing capital to qualified community institutions with assets of less than $10 billion. The SBLF Program is administered by the U.S. Treasury Department (http://www.treasury.gov/resource-center/ sb-programs/Pages/Small-Business-Lending-Fund.aspx). Under the SBLF Program, the Treasury Department purchased noncumulative perpetual preferred stock from qualifying depository institutions and holding companies (other than Subchapter S and mutual institutions). When this stock has been issued by a depository institution, it is reported as “Perpetual preferred stock and related surplus.” For regulatory capital purposes, this noncumulative perpetual preferred stock qualifies as a component of Tier 1 capital. Qualifying Subchapter S corporations and mutual institutions issue unsecured subordinated debentures to the Treasury Department through the SBLF. Depository institutions that issued these 38 FDIC QUARTERLY debentures report them as “Subordinated notes and debentures.” For regulatory capital purposes, the debentures are eligible for inclusion in an institution’s Tier 2 capital in accordance with their primary federal regulator’s capital standards. To participate in the SBLF Program, an institution with outstanding securities issued to the Treasury Department under the Capital Purchase Program (CPP) was required to refinance or repay in full the CPP securities at the time of the SBLF funding. Any outstanding warrants that an institution issued to the Treasury Department under the CPP remain outstanding after the refinancing of the CPP stock through the SBLF Program unless the institution chooses to repurchase them. Subchapter S corporation – a Subchapter S corporation is treated as a pass-through entity, similar to a partnership, for federal income tax purposes. It is generally not subject to any federal income taxes at the corporate level. This can have the effect of reducing institutions’ reported taxes and increasing their after-tax earnings. Trust assets – market value, or other reasonably available value of fiduciary and related assets, to include marketable securities, and other financial and physical assets. Common physical assets held in fiduciary accounts include real estate, equipment, collectibles, and household goods. Such fiduciary assets are not included in the assets of the financial institution. Unearned income & contra accounts – unearned income for Call Report filers only. Unused loan commitments – includes credit card lines, home equity lines, commitments to make loans for construction, loans secured by commercial real estate, and unused commitments to originate or purchase loans. (Excluded are commitments after June 2003 for originated mortgage loans held for sale, which are accounted for as derivatives on the balance sheet.) Yield on earning assets – total interest, dividend, and fee income earned on loans and investments as a percentage of average earning assets.
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