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FDIC Quarterly Quarterly Banking Profile: Fourth Quarter 2014 Brick-and-Mortar Banking Remains Prevalent in an Increasingly Virtual World 2015, Volume 9, Number 1 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 Editors Richard A. Brown Maureen E. Sweeney Managing Editors Matthew Green Jack Reidhill Philip A. Shively Editors Clayton Boyce Peggi Gill Frank Solomon Publication Manager Lynne Montgomery Media Inquiries (202) 898-6993 FDIC Quarterly 2015, Volume 9, Number 1 Quarterly Banking Profile: Fourth Quarter 2014 FDIC-insured institutions reported aggregate net income of $36.9 billion in the fourth quarter of 2014, down $2.9 billion (7.3 percent) from earnings of $39.8 billion that the industry reported a year earlier. The decline in earnings was mainly attributable to a $4.4 billion increase in litigation expenses at a few large banks. More than half of the 6,509 insured institutions reporting (61.2 percent) had year-over-year growth in quarterly earnings. The proportion of banks that were unprofitable during the fourth quarter fell to 9.4 percent from 12.7 percent a year earlier. See page 1. Community Bank Performance Community banks—which represent 93 percent of insured institutions—reported net income of $4.8 billion in the fourth quarter, up $1 billion (27.7 percent) from one year earlier. The increase was driven by higher net operating revenue and lower loan loss provisions. In the fourth quarter of 2014, loan balances at community banks grew at a faster pace than in the industry, asset quality indicators continued to show improvement, and community banks accounted for 45 percent of small loans to businesses. See page 15. Insurance Fund Indicators Estimated insured deposits increased by 1 percent in the fourth quarter of 2014, and increased by 3.2 percent for all of 2014. The DIF reserve ratio was 1.01 percent at December 31, 2014, up from 0.88 percent at September 30, 2014, and 0.79 percent at December 31, 2013. Four FDIC-insured institutions failed during the quarter. See page 22. Featured Article: Brick-and-Mortar Banking Remains Prevalent in an Increasingly Virtual World This paper chronicles long-term trends in the number and density of U.S. banking offices from 1935 to 2014. The study examines the effects that population trends, bank crises, changes in banking laws, and online and mobile banking have had on the number and density of banking offices, and explores the relationship between technology and brick-and-mortar bank offices. See page 37. 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. Quarterly Banking Profile Fourth Quarter 2014 INSURED INSTITUTION PERFORMANCE Fourth Quarter Net Income of $36.9 Billion Is $2.9 Billion Less Than a Year Earlier Full-Year Earnings Fall $1.7 Billion, to $152.7 Billion Increased Litigation Expenses, Reduced Mortgage Revenues Cause Decline in Profits Quarterly Earnings at Community Banks Rise 28 Percent (see page 15) Pace of Loan Growth Picks Up “Problem List” Falls Below 300 for First Time Since 2008 ■ ■ ■ ■ ■ ■ Quarterly ROA Falls Below 1 Percent for First Time in 2 Years Most Banks Report Increased Revenues Strengthening loan growth helped lift revenues at most banks, but higher litigation expenses at a few large banks and lower noninterest income from sales, securitization, and servicing of residential mortgage loans caused the industry’s fourth-quarter net income to fall below the level of a year earlier. A majority of banks—61 percent—reported improved quarterly earnings, while the proportion of unprofitable institutions fell to 9.4 percent from 12.7 percent in fourth quarter 2013. However, fourth-quarter net income of $36.9 billion was $2.9 billion (7.3 percent) less than in fourth quarter 2013, as the four largest banks reported year-over-year declines in quarterly net income totaling $4.1 billion. The average return on assets (ROA) fell to 0.96 percent from 1.09 percent the year before. This is the first time in two years that the average quarterly ROA has fallen below 1 percent. Net operating revenue—the sum of net interest income and total noninterest income—increased by $923 million (0.6 percent) in the fourth quarter compared with fourth quarter 2013. Net interest income was $1.1 billion (1 percent) higher, while total noninterest income was $160 million (0.3 percent) lower. The increase in net interest income was attributable to growth in interestbearing assets, which increased 6.2 percent in the 12 months ended December 31. Almost 71 percent of all banks reported higher net interest income than a year earlier. The average net interest margin in the fourth quarter was 3.12 percent, compared with 3.27 percent in fourth quarter 2013 and 3.15 percent in third quarter 2014. The decline in noninterest income was primarily the result of a $1.6 billion (30.8 percent) drop in revenue from the sale, securitization, and servicing of residential mortgage loans. More than half of all banks (54.4 percent) reported higher noninterest income than the year-earlier quarter. Chart 1 Chart 2 Unprofitable Institutions and Institutions With Increased Earnings Quarterly Net Income All FDIC-Insured Institutions Billions of Dollars $50 $40 35.2 28.7 28.5 $30 23.8 21.4 20.9 17.4 $20 70 Percentage of Institutions With Year-Over-Year Quarterly Income Growth 60 25.3 50 2.1 $0 -$20 40.4 39.8 40.1 38.2 38.5 37.5 37.3 36.9 36.1 34.8 34.4 34.5 40 $10 -$10 Percentage of All FDIC-Insured Institutions 80 30 -1.7 -6.1 -12.6 20 Securities and Other Gains/Losses, Net Net Operating Income 10 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 2010 2009 2011 2012 2013 2014 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 Source: FDIC. Source: FDIC. FDIC Quarterly Percentage of Institutions With Quarterly Losses 1 2015, Volume 9, No. 1 Loss Provisions Rise for a Second Consecutive Quarter Net Charge-Off Rate Falls to an Eight-Year Low For a second consecutive quarter, the amount that banks set aside for loan-loss provisions was higher than a year earlier. Loan-loss provisions totaled $8.2 billion in the fourth quarter, up $878 million (12 percent) versus fourth quarter 2013. Noninterest expenses were $4.9 billion (4.8 percent) higher, as itemized litigation expenses at a few of the largest banks were $4.4 billion more than the year-earlier quarter. Asset-quality indicators continued to improve in the fourth quarter, as net charge-offs (NCOs) posted a year-over-year decline for the 18th consecutive quarter. Fourth-quarter NCOs were $2.2 billion (18.3 percent) lower than in fourth quarter 2013. The largest improvements were in retail loan categories. Residential mortgage loan NCOs fell by $785 million (49.9 percent), while charge-offs of home equity lines of credit were $446 million (39.1 percent) lower, and credit card NCOs were $356 million (6.4 percent) less than in fourth quarter 2013. The average net charge-off rate in the fourth quarter fell to 0.48 percent, from 0.62 percent a year earlier. This is the lowest fourth quarter NCO rate since 2006. Full-Year Earnings Post First Decline in Five Years Full-year 2014 net income totaled $152.7 billion, $1.7 billion (1.1 percent) less than the industry earned in 2013. This is the first decline in annual net income in five years. The full-year ROA was 1.01 percent, marking the third year in a row that annual ROA exceeded 1 percent. Reduced revenues from mortgage sales, securitization, and servicing (down $9.1 billion, or 35.1 percent), and increased litigation expenses (up $6.5 billion) were the main contributors to the drop in full-year earnings. Almost two out of every three banks (64 percent) reported increased earnings in 2014, but 7 of the 10 largest banks reported lower earnings. Although more than two-thirds of all banks reported higher net operating revenue, the industry total was essentially unchanged from 2013, as net interest income rose by $5.5 billion (1.3 percent), and noninterest income fell by $5.5 billion (2.2 percent). This is the first time in four years that annual net interest income has increased. Full-year loan-loss provisions were $2.7 billion (8.4 percent) lower in 2014. Noninterest expenses were $5.2 billion (1.2 percent) higher, as the higher litigation expenses were offset in part by a $3.5 billion (72.9 percent) reduction in goodwill impairment charges. Noncurrent Loan Rate Falls Below 2 Percent The amount of loans that were noncurrent (90 days or more past due or in nonaccrual status) declined for the 19th quarter in a row. During the three months ended December 31, noncurrent loan balances fell by $9.2 billion (5.4 percent). The biggest improvements occurred in real estate loan portfolios. Noncurrent residential mortgage balances fell by $5.3 billion (4.9 percent) during the quarter, while noncurrent nonfarm nonresidential real estate loans declined by $1.6 billion (9.4 percent), and noncurrent real estate construction and development loan balances declined by $887 million (15.1 percent). The percentage of total loans and leases that were noncurrent fell from 2.11 percent to 1.96 percent during the quarter. This is the first time since the end of first quarter 2008 that the noncurrent rate has been below 2 percent. Chart 3 Chart 4 Quarterly Net Operating Revenue Billions of Dollars $180 Percentage of Institutions Reporting Year-Over-Year Growth in Net Operating Revenue All FDIC-Insured Institutions $160 70 $140 Quarterly Noninterest Income $120 60 $100 50 $80 40 $60 30 Quarterly Net Interest Income $40 20 $20 $0 All FDIC-Insured Institutions Percent 80 10 0 12341234123412341234123412341234 2007 2008 2009 2010 2011 2012 2013 2014 Source: FDIC. FDIC Quarterly 2007 2008 2009 2010 2011 2012 2013 2014 Source: FDIC. 2 2015, Volume 9, No. 1 Quarterly Banking Profile (4.4 percent). Loan growth was led by commercial and industrial (C&I) loans, which increased by $42.2 billion (2.5 percent); credit cards, which posted a seasonal $35.4 billion (5.2 percent) increase; nonfarm nonresidential real estate loans, which rose by $16.7 billion (1.5 percent); and real estate construction and development loans, which grew by $7.9 billion (3.4 percent). Loans to small businesses and farms increased by $2.9 billion (0.4 percent), as small C&I loans rose by $4.2 billion (1.4 percent). For the 12 months ended December 31, total loan and lease balances were up by 5.3 percent, the highest 12-month growth rate since mid-year 2008. Eighty percent of the increase in Treasury securities and 85 percent of the growth in Federal Reserve balances in the fourth quarter occurred at banks with assets greater than $250 billion, which are subject to a new Liquidity Coverage Ratio rule. The Industry Continues to Release Reserves Insured institutions reduced their reserves for loan losses by $2.6 billion (2.1 percent) in the fourth quarter, as net charge-offs of $9.9 billion exceeded the $8.2 billion that banks set aside in loan-loss provisions. This is the 19th consecutive quarter that the industry’s loss reserves have declined. At the end of 2014, reserves totaled $122.6 billion, the lowest since the end of first quarter 2008. The ratio of reserves to total loans and leases fell to 1.48 percent at year-end, a seven-year low. Despite the reduction in reserves, the industry’s coverage ratio of reserves to noncurrent loans and leases improved for the ninth quarter in a row, rising from 72.9 percent to 75.4 percent. This is the highest level for the coverage ratio since third quarter 2008. Retained Earnings Are More Than Double the Year-Ago Level Large Denomination Deposits Continue to Lead Growth in Liabilities Equity capital increased by $15.7 billion (0.9 percent) during the quarter. Retained earnings contributed $13.9 billion to capital growth, more than twice the $4.8 billion of a year earlier. Total risk-based capital rose by $20.3 billion (1.3 percent). At the end of 2014, 98.6 percent of all insured institutions, representing 99.8 percent of industry assets, met or exceeded the requirements for the highest regulatory capital category, as defined for Prompt Corrective Action purposes. Total assets increased by $204.4 billion (1.3 percent), as loan and lease balances rose by $149.4 billion (1.8 percent), holdings of U.S. Treasury securities increased by $59.9 billion (17.3 percent), and balances at Federal Reserve banks grew by $58.6 billion Deposits increased by $167.3 billion (1.4 percent) in the fourth quarter, as balances in domestic offices rose by $195.2 billion (1.9 percent), and deposits in foreign offices fell by $27.9 billion (2 percent). Most of the growth in domestic deposits occurred in accounts with balances greater than $250,000. Balances in these large denomination accounts increased by $158.9 billion (3.1 percent), while balances in domestic accounts of less than $250,000 rose by $50.3 billion (1 percent). Time deposits posted their largest quarterly increase since third quarter 2008, rising by $96.8 billion (6 percent). Nondeposit liabilities increased by $22.5 billion (1.1 percent), as banks increased their Federal Home Loan Bank advances by $21.1 billion (4.8 percent). Chart 5 Chart 6 12-Month Loan Growth Rate Rises Above 5 Percent Quarterly Noninterest Income From Sale, Securitization, and Servicing of 1-to-4 Family Residential Mortgage Loans Billions of Dollars $10 $9 $8 Year-Over-Year Change in Quarterly Loan-Loss Provisions 8.8 8.0 7.3 7.5 -$5 $7 -$10 $6 4.7 $5 5.3 $4 5.0 -$15 4.8 3.7 3.5 -$20 $3 -$25 $2 -$30 $1 $0 0.9 $0 8.6 7.4 All FDIC-Insured Institutions Billions of Dollars $5 All FDIC-Insured Institutions 1 2 3 2012 Source: FDIC. FDIC Quarterly 4 1 2 3 2013 4 1 2 3 2014 -$35 -30.7 2 3 2011 Source: FDIC. 4 3 1 4 1 2 3 2012 4 1 2 3 2013 4 1 2 3 2014 4 2015, Volume 9, No. 1 new bank charters. There were 2,047,879 full-time equivalent employees reported at year-end 2014, down 761 from September 30, and down 20,840 from yearend 2013. The number of banks on the FDIC’s “Problem List” declined from 329 to 291 during the fourth quarter, and total assets of “problem” banks fell from $102 billion to $87 billion. The “Problem List” is at its lowest level since year-end 2008. No New Charters Added in 2014 The number of FDIC-insured commercial banks and savings institutions reporting financial results fell to 6,509 at year-end, from 6,589 at the end of September, and 6,812 at the end of 2013. During the fourth quarter, mergers absorbed 75 institutions, while four insured institutions failed. For the full year, there were 274 institutions absorbed by mergers and 18 failures. This is the smallest number of bank failures in a year since 2007. In 2013, there were 24 failures. No new banks were chartered in 2014, marking the second time in the last three years that there have been no Author: Chart 7 Chart 8 Noncurrent Loan Rate and Quarterly Net Charge-Off Rate Annual Net Income All FDIC-Insured Institutions Billions of Dollars $180 Securities and Other Gains/Losses, Net Net Operating Income $160 $80 141.1 120.6 122.2 $120 104.7 81.5 Percent 6 154.4 152.7 145.2 133.8 $140 $100 Ross Waldrop, Senior Banking Analyst Division of Insurance and Research (202) 898-3951 All FDIC-Insured Institutions Noncurrent Loan Rate 5 118.4 4 99.9 87.4 85.5 3 $60 2 $40 $20 1 4.5 $0 -$20 Quarterly Net Charge-Off Rate 0 2006 -10.0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Chart 9 2008 2009 2010 2011 2012 2013 2014 Chart 10 Number and Assets of Banks on the “Problem List” Quarterly Change in Loan Balances All FDIC-Insured Institutions Assets (Billions of Dollars) $500 Billions of Dollars $300 237 $250 221* 203 189 178 $200 149 134 $150 102 118 91 $100 74 67 65 70 61 51 38 28 $50 43 24 $0 -7 -14 -6 -$50 -37 -63 -$100 -107 -116 -109 -126 -$150 -133 -140 -$200 -210 -$250 $450 Number 1,000 Number of Problem Banks 900 $400 800 $350 700 $300 600 $250 500 $200 400 $150 291 $50 Source: FDIC. *FASB Statements 166 and 167 resulted in the consolidation of large amounts of securitized loan balances back onto banks’ balance sheets in the first quarter of 2010. Although the total amount consolidated cannot be precisely quantified, the industry would have reported a decline in loan balances for the quarter absent this change in accounting standards. 300 87 200 $100 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 2007 2008 2009 2010 2011 2012 2013 2014 FDIC Quarterly 2007 Source: FDIC. Source: FDIC. Problem Bank Assets $0 2006 2007 2008 2009 2010 2011 2012 2013 2014 100 0 Source: FDIC. 4 2015, Volume 9, No. 1 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�������������������������������������������������������������������������������������� 2014 1.01 9.03 9.46 1.20 0.49 5.58 3.14 -0.43 6,509 5,642 867 6.13 291 $87 18 0 2013 1.07 9.54 9.40 1.63 0.69 1.94 3.26 12.83 6,812 5,876 936 8.15 467 $153 24 0 2012 1.00 8.91 9.15 2.20 1.10 4.03 3.42 17.81 7,083 6,096 987 10.98 651 $233 51 0 2011 0.88 7.79 9.07 2.61 1.55 4.30 3.60 43.56 7,357 6,291 1,066 16.23 813 $319 92 0 2010 0.65 5.85 8.89 3.11 2.55 1.77 3.76 1,594.54 7,658 6,530 1,128 22.15 884 $390 157 0 2009 -0.08 -0.73 8.60 3.37 2.52 -5.45 3.49 -155.98 8,012 6,840 1,172 30.84 702 $403 140 8 2008 0.03 0.35 7.47 1.91 1.29 6.19 3.16 -90.71 8,305 7,087 1,218 24.89 252 $159 25 5 * Excludes insured branches of foreign banks (IBAs). TABLE II-A. Aggregate Condition and Income Data, All FDIC-Insured Institutions 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�������������������������������������������������������������������������������������������������������� 4th Quarter 2014 6,509 2,047,879 3rd Quarter 2014 6,589 2,048,640 4th Quarter 2013 6,812 2,068,719 %Change 13Q4-14Q4 -4.4 -1.0 $15,553,660 4,170,832 1,842,131 1,150,052 238,587 492,329 1,715,395 1,418,259 718,467 77,599 929,376 1,991 8,309,470 122,630 8,186,839 3,219,058 21,979 360,214 3,765,569 $15,349,215 4,136,122 1,838,272 1,133,309 230,646 496,129 1,673,177 1,382,425 683,022 72,946 897,347 1,922 8,160,094 125,265 8,034,829 3,166,177 24,890 363,942 3,759,377 $14,731,284 4,065,706 1,829,850 1,109,351 210,132 509,517 1,566,544 1,353,299 691,394 70,645 838,819 1,895 7,893,117 135,910 7,757,207 3,001,760 30,208 368,318 3,573,792 5.6 2.6 0.7 3.7 13.5 -3.4 9.5 4.8 3.9 9.8 10.8 5.1 5.3 -9.8 5.5 7.2 -27.2 -2.2 5.4 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������������������������������������������������������������������������������������������� 15,553,660 11,763,885 10,367,939 1,395,946 1,387,688 98,083 561,780 1,742,224 1,734,848 15,349,215 11,596,584 10,172,706 1,423,878 1,393,691 97,389 534,016 1,727,535 1,719,110 14,731,284 11,192,129 9,791,027 1,401,102 1,311,851 99,618 472,983 1,654,703 1,643,415 5.6 5.1 5.9 -0.4 5.8 -1.5 18.8 5.3 5.6 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��������������������������������������������������������������������������������������� Full Year INCOME DATA 2014 Total interest income������������������������������������������������������������������� $469,776 Total interest expense����������������������������������������������������������������� 47,126 Net interest income�������������������������������������������������������������� 422,650 Provision for loan and lease losses�������������������������������������������� 29,739 Total noninterest income������������������������������������������������������������� 246,723 Total noninterest expense����������������������������������������������������������� 421,904 Securities gains (losses)������������������������������������������������������������� 3,201 Applicable income taxes������������������������������������������������������������� 67,493 Extraordinary gains, net�������������������������������������������������������������� -116 Total net income (includes minority interests)��������������������� 153,321 Bank net income������������������������������������������������������������ 152,685 Net charge-offs���������������������������������������������������������������������������� 39,489 Cash dividends���������������������������������������������������������������������������� 90,212 Retained earnings����������������������������������������������������������������������� 62,473 Net operating income����������������������������������������������������������� 151,154 69,968 162,686 84,019 1,728,580 13,882,348 464,272 6,478,463 18,365,112 972,438 221,922,457 Full Year 2013 $470,430 53,286 417,144 32,456 252,220 416,751 4,473 69,699 240 155,172 154,387 53,571 93,158 61,229 151,803 (dollar figures in millions) FDIC Quarterly 66,217 171,931 89,187 1,718,438 13,695,290 443,155 6,435,169 18,189,653 967,824 242,940,419 4th Quarter %Change 2014 -0.1 $119,029 -11.6 11,549 1.3 107,480 -8.4 8,213 -2.2 59,679 1.2 107,616 -28.4 860 -3.2 15,117 N/M 0 -1.2 37,073 -1.1 36,919 -26.3 9,852 -3.2 23,016 2.0 13,903 -0.4 36,439 75,897 207,255 99,212 1,673,882 13,076,173 406,163 6,120,553 19,655,376 742,448 237,016,804 4th Quarter 2013 $118,933 12,536 106,397 7,335 59,839 102,725 497 16,707 73 40,039 39,820 12,062 35,041 4,778 39,676 -7.8 -21.5 -15.3 3.3 6.2 14.3 5.8 -6.6 31.0 -6.4 %Change 13Q4-14Q4 0.1 -7.9 1.0 12.0 -0.3 4.8 73.0 -9.5 -99.9 -7.4 -7.3 -18.3 -34.3 191.0 -8.2 N/M - Not Meaningful 5 2015, Volume 9, No. 1 TABLE III-A. Full Year 2014, All FDIC-Insured Institutions Asset Concentration Groups* FULL YEAR All Insured (The way it is...) Institutions Number of institutions reporting����������������������� 6,509 Commercial banks������������������������������������� 5,642 Savings institutions����������������������������������� 867 Total assets (in billions)������������������������������������ $15,553.7 Commercial banks������������������������������������� 14,484.2 Savings institutions����������������������������������� 1,069.4 Total deposits (in billions)��������������������������������� 11,763.9 Commercial banks������������������������������������� 10,945.5 Savings institutions����������������������������������� 818.4 Bank net income (in millions)��������������������������� 152,685 Commercial banks������������������������������������� 140,663 Savings institutions����������������������������������� 12,023 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���������������� Credit Card International Agricultural Commercial Banks Banks Banks Lenders 15 3 1,515 3,222 12 3 1,496 2,912 3 0 19 310 $484.1 $3,735.9 $273.5 $4,878.1 389.4 3,735.9 268.6 4,477.1 94.7 0.0 4.8 401.0 259.7 2,633.3 226.8 3,795.3 192.4 2,633.3 223.6 3,501.1 67.3 0.0 3.2 294.2 14,689 27,134 3,103 43,915 10,622 27,134 3,002 40,751 4,067 0 101 3,164 Mortgage Consumer Lenders Lenders 553 52 166 41 387 11 $439.6 $176.0 156.6 89.9 283.0 86.1 328.0 148.1 122.4 76.0 205.5 72.1 4,313 1,787 2,518 968 1,795 819 Other Specialized All Other <$1 Billion <$1 Billion 374 708 335 618 39 90 $61.9 $129.1 56.9 107.8 5.0 21.3 49.9 108.2 46.4 91.1 3.5 17.1 1,336 1,109 720 1,004 616 105 All Other >$1 Billion 67 59 8 $5,375.5 5,201.9 173.6 4,214.6 4,059.2 155.4 55,300 53,943 1,356 3.49 0.35 3.14 1.63 2.79 0.20 1.00 1.46 1.01 9.03 0.49 10.68 0.83 9.85 5.01 6.63 2.39 3.22 5.02 3.22 20.87 2.81 2.77 0.37 2.41 1.68 2.58 0.13 0.74 1.06 0.74 7.83 0.73 4.14 0.48 3.65 0.62 2.52 0.11 1.15 1.38 1.17 10.30 0.13 3.84 0.41 3.43 1.18 2.85 0.12 0.93 1.31 0.94 7.79 0.24 3.45 0.67 2.78 1.00 2.17 0.05 0.95 1.43 0.96 8.10 0.21 3.96 0.47 3.49 1.37 2.61 0.47 1.05 1.65 1.05 10.78 0.62 3.13 0.38 2.74 5.68 5.12 0.07 2.16 3.04 2.21 15.32 0.33 3.95 0.47 3.48 0.93 3.01 0.11 0.85 1.06 0.87 7.51 0.24 2.97 0.20 2.77 1.80 2.60 0.13 1.04 1.55 1.06 9.43 0.41 75.31 61.88 6.13 63.90 107.55 46.32 0.00 66.67 52.28 67.64 0.00 33.33 137.01 62.66 2.64 64.16 71.34 65.42 6.64 68.19 35.52 59.51 9.76 51.54 107.81 54.46 3.85 59.62 70.59 62.32 9.36 54.55 82.85 72.48 7.34 59.60 66.17 59.76 2.99 55.22 89.25 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 ���������������������������� 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�������������������� 92.17 86.95 92.40 90.19 94.12 96.70 91.04 92.40 88.84 1.48 75.38 3.13 284.22 1.85 80.12 1.40 146.48 1.28 96.89 1.14 38.27 1.15 73.82 1.85 114.52 1.43 81.13 1.36 50.03 1.20 11.15 9.46 12.96 14.42 69.59 52.64 66.66 0.88 15.13 12.33 12.33 14.72 144.30 77.41 51.66 0.85 9.48 8.32 12.63 13.49 47.81 33.70 45.71 0.83 11.42 10.50 14.52 15.62 76.51 63.46 82.94 1.17 11.97 10.20 12.83 14.29 86.99 67.68 77.27 2.19 12.07 11.53 21.43 22.46 82.52 61.56 74.58 1.19 9.87 9.81 13.82 14.64 83.73 70.49 84.18 0.73 14.78 13.97 31.51 32.54 33.76 27.22 79.77 1.39 11.83 11.49 20.01 21.18 63.98 53.61 83.80 1.43 11.12 8.97 12.48 14.28 61.63 48.32 70.33 Structural Changes New reporters�������������������������������������������� Institutions absorbed by mergers������������� Failed institutions�������������������������������������� 0 274 18 0 0 0 0 0 0 0 45 1 0 193 13 0 9 2 0 0 0 0 3 0 0 12 2 0 12 0 PRIOR FULL YEARS (The way it was...) Number of institutions������������������������������2013 ��������������������������������������2011 ������������������������������������� 2009 6,812 7,357 8,012 16 18 23 4 4 4 1,532 1,545 1,568 3,378 3,769 4,453 588 732 766 55 59 83 405 377 289 772 790 770 62 63 56 Total assets (in billions)����������������������������2013 ��������������������������������������2011 ������������������������������������� 2009 $14,731.3 13,891.4 13,086.8 $590.9 538.7 501.6 $3,700.5 3,456.4 3,107.1 $261.6 215.7 182.0 $4,921.3 4,086.2 4,546.7 $486.9 825.4 810.1 $162.5 97.2 96.5 $62.8 56.1 38.1 $137.6 138.6 116.1 $4,407.1 4,477.2 3,688.7 Return on assets (%)��������������������������������2013 ��������������������������������������2011 ������������������������������������� 2009 1.07 0.88 -0.08 3.35 3.49 -4.51 0.86 0.74 0.08 1.15 1.11 0.81 0.91 0.63 -0.43 0.98 0.56 0.65 1.15 1.68 0.33 1.93 1.92 0.74 0.85 0.92 0.80 1.11 0.89 0.53 Net charge-offs to loans & leases (%)�����2013 ��������������������������������������2011 ������������������������������������� 2009 0.69 1.55 2.52 3.20 5.26 9.77 0.97 1.97 3.07 0.14 0.40 0.65 0.43 1.18 2.02 0.37 0.90 1.24 0.80 1.87 2.74 0.48 0.56 0.78 0.33 0.54 0.54 0.49 1.25 2.19 Noncurrent assets plus OREO to assets (%)������������������������������2013 ��������������������������������������2011 ������������������������������������� 2009 1.63 2.61 3.37 0.93 1.41 2.40 1.07 1.61 2.75 0.95 1.46 1.55 1.65 3.05 3.87 2.14 2.61 3.17 1.23 1.28 1.45 0.84 1.11 0.69 1.44 1.69 1.34 2.18 3.25 3.66 Equity capital ratio (%)�����������������������������2013 ��������������������������������������2011 ������������������������������������� 2009 11.16 11.16 10.88 14.73 15.11 21.49 9.28 8.89 8.75 10.97 11.22 10.95 11.79 11.69 10.48 11.62 10.39 9.48 9.51 9.82 11.15 13.50 14.51 17.74 11.34 11.45 11.27 11.52 12.08 11.95 * See Table V-A (page 10) for explanations. Note: Blue font identifies data that are also presented in the prior years’ data at the bottom of the table. FDIC Quarterly 6 2015, Volume 9, No. 1 Quarterly Banking Profile TABLE III-A. Full Year 2014, All FDIC-Insured Institutions Asset Size Distribution FULL YEAR All Insured (The way it is...) Institutions Number of institutions reporting����������������������������� 6,509 Commercial banks������������������������������������������� 5,642 Savings institutions����������������������������������������� 867 Total assets (in billions)������������������������������������������ $15,553.7 Commercial banks������������������������������������������� 14,484.2 Savings institutions����������������������������������������� 1,069.4 Total deposits (in billions)��������������������������������������� 11,763.9 Commercial banks������������������������������������������� 10,945.5 Savings institutions����������������������������������������� 818.4 Bank net income (in millions)��������������������������������� 152,685 Commercial banks������������������������������������������� 140,663 Savings institutions����������������������������������������� 12,023 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���������������������� Geographic Regions* Less Than $100 $1 Billion Greater $100 Million to to Than Million $1 Billion $10 Billion $10 Billion New York 1,872 3,956 574 107 807 1,645 3,439 467 91 449 227 517 107 16 358 $109.8 $1,232.0 $1,576.4 $12,635.4 $2,956.0 96.8 1,045.3 1,288.1 12,054.1 2,488.9 13.1 186.7 288.3 581.3 467.1 92.5 1,024.3 1,227.9 9,419.3 2,180.6 82.3 876.8 1,013.0 8,973.5 1,841.5 10.2 147.5 214.9 445.8 339.0 864 12,032 16,538 123,251 24,056 754 10,366 14,195 115,348 21,016 110 1,667 2,343 7,903 3,040 Atlanta 812 735 77 $3,217.9 3,131.2 86.8 2,477.2 2,412.5 64.6 32,087 31,375 712 Chicago 1,406 1,176 230 $3,595.8 3,489.7 106.1 2,634.6 2,555.0 79.5 30,462 29,378 1,084 Kansas City 1,599 1,530 69 $3,404.4 3,344.7 59.7 2,567.0 2,520.3 46.8 35,362 34,869 493 San Dallas Francisco 1,372 513 1,282 470 90 43 $904.4 $1,475.1 798.0 1,231.7 106.4 243.4 751.7 1,152.8 663.6 952.6 88.1 200.3 10,063 20,656 8,743 15,282 1,320 5,374 3.49 0.35 3.14 1.63 2.79 0.20 1.00 1.46 1.01 9.03 0.49 4.13 0.47 3.66 1.13 3.45 0.11 0.78 0.93 0.80 6.54 0.23 4.19 0.50 3.69 1.10 3.16 0.12 0.98 1.26 1.00 9.08 0.22 4.19 0.43 3.76 1.21 3.00 0.17 1.08 1.49 1.08 9.12 0.27 3.33 0.32 3.00 1.74 2.73 0.21 1.00 1.48 1.00 9.04 0.56 3.51 0.42 3.09 1.49 2.74 0.27 0.83 1.23 0.84 7.03 0.55 3.65 0.28 3.37 1.62 2.97 0.23 0.97 1.44 1.00 8.16 0.53 2.76 0.28 2.47 1.82 2.68 0.10 0.88 1.22 0.88 8.96 0.36 3.72 0.39 3.32 1.46 2.68 0.17 1.06 1.57 1.07 10.31 0.60 3.96 0.33 3.63 1.37 3.07 0.13 1.13 1.50 1.14 10.34 0.23 4.07 0.44 3.63 2.10 2.88 0.32 1.49 2.27 1.49 11.80 0.47 75.31 61.88 6.13 63.90 86.89 76.92 11.38 58.17 85.17 69.73 4.35 66.15 92.08 63.55 2.26 67.07 73.46 60.74 0.93 63.55 94.26 62.53 7.81 59.23 72.59 63.75 9.61 65.27 64.50 66.36 7.54 60.24 52.66 59.38 3.75 65.60 93.98 64.94 3.72 67.06 111.65 52.20 7.99 65.30 89.25 91.66 92.49 91.70 88.61 89.27 88.27 88.67 88.62 91.60 92.83 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 ����������������������������������� 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��������������������������� 1.48 75.38 1.54 101.34 1.44 106.32 1.37 84.79 1.50 71.47 1.36 92.44 1.52 65.88 1.57 71.64 1.58 62.15 1.34 97.03 1.31 144.64 1.20 11.15 9.46 12.96 14.42 69.59 52.64 66.66 1.46 12.30 11.99 19.56 20.65 67.40 56.74 84.18 1.38 11.21 10.80 15.75 16.89 77.13 64.12 83.08 1.41 11.91 10.63 14.36 15.45 85.72 66.77 77.52 1.15 11.04 9.15 12.48 14.01 66.69 49.72 63.55 0.89 11.83 9.55 13.40 15.09 71.32 52.61 65.41 1.55 12.45 9.70 12.94 14.60 75.24 57.92 74.28 1.11 9.81 8.73 12.21 13.35 60.01 43.97 61.90 1.46 10.21 8.93 12.25 13.85 67.37 50.80 56.84 1.18 11.07 10.02 13.85 15.00 74.32 61.77 82.77 0.65 12.47 11.39 15.02 16.17 77.96 60.93 76.93 Structural Changes New reporters�������������������������������������������������� Institutions absorbed by mergers������������������� Failed institutions�������������������������������������������� 0 274 18 0 87 10 0 162 8 0 22 0 0 3 0 0 26 3 0 46 4 0 60 6 0 58 1 0 57 2 0 27 2 PRIOR FULL YEARS (The way it was…) Number of institutions������������������������������������2013 �������������������������������������������� 2011 ������������������������������������������� 2009 6,812 7,357 8,012 2,056 2,415 2,848 4,090 4,284 4,492 559 551 565 107 107 107 840 915 986 869 957 1,121 1,470 1,552 1,647 1,659 1,773 1,879 1,431 1,542 1,660 543 618 719 Total assets (in billions)����������������������������������2013 �������������������������������������������� 2011 ������������������������������������������� 2009 $14,731.3 13,891.4 13,086.8 $119.7 138.7 158.9 $1,246.1 1,279.9 1,354.4 $1,468.7 1,410.9 1,461.4 $11,896.8 11,061.8 10,112.1 $2,927.3 2,864.6 2,567.2 $2,998.8 2,942.8 3,427.3 $3,376.9 3,184.5 2,934.4 $3,223.2 2,918.2 1,145.6 $870.0 813.0 784.8 $1,335.1 1,168.4 2,227.5 Return on assets (%)��������������������������������������2013 �������������������������������������������� 2011 ������������������������������������������� 2009 1.07 0.88 -0.08 0.70 0.52 -0.05 0.91 0.56 -0.10 1.16 0.79 -0.37 1.07 0.93 -0.03 0.88 1.01 -0.83 0.98 0.52 0.01 0.95 0.78 0.18 1.24 0.95 0.76 1.08 0.95 0.34 1.55 1.47 -0.25 Net charge-offs to loans & leases (%)�����������2013 �������������������������������������������� 2011 ������������������������������������������� 2009 0.69 1.55 2.52 0.35 0.62 0.88 0.36 0.90 1.25 0.41 1.18 1.91 0.78 1.72 2.87 0.93 1.86 2.76 0.66 1.66 2.29 0.49 1.19 2.36 0.87 1.85 2.40 0.32 0.89 1.35 0.57 1.15 3.44 Noncurrent assets plus OREO to assets (%)������������������������������������2013 �������������������������������������������� 2011 ������������������������������������������� 2009 1.63 2.61 3.37 1.75 2.34 2.24 1.81 3.01 3.29 1.89 3.13 3.58 1.57 2.50 3.36 1.12 1.78 2.33 2.23 3.84 4.16 1.47 2.31 3.20 1.99 2.76 4.28 1.58 2.60 3.04 0.91 1.97 3.19 Equity capital ratio (%)�����������������������������������2013 �������������������������������������������� 2011 ������������������������������������������� 2009 11.16 11.16 10.88 11.68 11.83 11.96 10.78 10.65 9.86 11.80 11.73 10.72 11.11 11.14 11.02 12.02 12.26 12.53 12.19 11.98 11.66 9.66 8.68 8.59 10.43 11.12 10.70 10.87 10.93 10.28 12.65 13.48 11.11 * See Table V-A (page 11) for explanations. Note: Blue font identifies data that are also presented in the prior years’ data at the bottom of the table. FDIC Quarterly 7 2015, Volume 9, No. 1 TABLE IV-A. Fourth Quarter 2014, All FDIC-Insured Institutions Asset Concentration Groups* FOURTH QUARTER All Insured (The way it is...) Institutions Number of institutions reporting����������������������� 6,509 Commercial banks������������������������������������� 5,642 Savings institutions����������������������������������� 867 Total assets (in billions)������������������������������������ $15,553.7 Commercial banks������������������������������������� 14,484.2 Savings institutions����������������������������������� 1,069.4 Total deposits (in billions)��������������������������������� 11,763.9 Commercial banks������������������������������������� 10,945.5 Savings institutions����������������������������������� 818.4 Bank net income (in millions)��������������������������� 36,919 Commercial banks������������������������������������� 33,772 Savings institutions����������������������������������� 3,147 Credit Card International Agricultural Commercial Banks Banks Banks Lenders 15 3 1,515 3,222 12 3 1,496 2,912 3 0 19 310 $484.1 $3,735.9 $273.5 $4,878.1 389.4 3,735.9 268.6 4,477.1 94.7 0.0 4.8 401.0 259.7 2,633.3 226.8 3,795.3 192.4 2,633.3 223.6 3,501.1 67.3 0.0 3.2 294.2 3,702 4,830 741 11,554 2,592 4,830 721 10,724 1,110 0 20 830 Mortgage Consumer Lenders Lenders 553 52 166 41 387 11 $439.6 $176.0 156.6 89.9 283.0 86.1 328.0 148.1 122.4 76.0 205.5 72.1 997 403 552 220 445 182 Other Specialized All Other <$1 Billion <$1 Billion 374 708 335 618 39 90 $61.9 $129.1 56.9 107.8 5.0 21.3 49.9 108.2 46.4 91.1 3.5 17.1 382 267 190 245 192 21 All Other >$1 Billion 67 59 8 $5,375.5 5,201.9 173.6 4,214.6 4,059.2 155.4 14,044 13,696 348 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���������������� 3.46 0.34 3.12 1.55 2.79 0.21 0.94 1.35 0.96 8.56 0.48 10.59 0.83 9.76 4.95 6.68 2.54 3.08 4.71 3.08 20.43 2.74 2.73 0.33 2.39 1.46 2.66 0.17 0.51 0.72 0.52 5.48 0.73 4.17 0.47 3.70 0.63 2.65 0.14 1.08 1.29 1.10 9.55 0.19 3.81 0.41 3.40 1.20 2.85 0.12 0.95 1.31 0.96 7.97 0.24 3.39 0.69 2.70 1.01 2.26 0.01 0.86 1.35 0.91 7.54 0.12 4.05 0.46 3.58 1.32 2.75 0.57 0.93 1.46 0.93 9.36 0.65 3.10 0.37 2.72 6.41 5.45 0.06 2.43 3.44 2.49 16.89 0.45 3.95 0.45 3.50 0.95 3.12 0.11 0.81 0.99 0.83 7.02 0.26 2.90 0.18 2.72 1.66 2.49 0.12 1.03 1.50 1.05 9.44 0.38 83.37 63.46 9.37 61.22 118.44 47.25 0.00 80.00 69.08 74.50 0.00 33.33 114.60 64.95 7.72 58.09 73.61 65.96 8.91 65.64 16.59 63.13 12.48 54.43 122.69 56.93 5.77 57.69 49.88 61.09 14.17 54.55 76.07 74.14 11.02 56.92 66.72 59.44 4.48 58.21 Structural Changes New reporters�������������������������������������������� Institutions absorbed by mergers������������� Failed institutions�������������������������������������� 0 75 4 0 0 0 0 0 0 0 8 0 0 54 4 0 3 0 0 0 0 0 1 0 0 5 0 0 4 0 PRIOR FOURTH QUARTERS (The way it was...) Return on assets (%)��������������������������������2013 ��������������������������������������2011 ������������������������������������� 2009 1.09 0.73 -0.05 3.65 3.13 0.53 0.92 0.60 0.29 1.08 1.04 0.54 0.96 0.38 -0.84 0.96 0.48 0.65 0.91 1.39 0.32 2.18 2.11 1.25 0.76 0.85 0.73 1.04 0.86 0.31 Net charge-offs to loans & leases (%)�����2013 ��������������������������������������2011 ������������������������������������� 2009 0.62 1.38 3.00 3.09 4.34 9.50 0.81 1.72 3.59 0.20 0.51 1.04 0.38 1.12 2.59 0.28 0.90 1.34 0.88 1.88 2.66 0.66 0.65 0.77 0.37 0.73 0.84 0.40 1.10 2.80 * See Table V-A (page 10) for explanations. Note: Blue font identifies data that are also presented in the prior quarters’ data at the bottom of the table. FDIC Quarterly 8 2015, Volume 9, No. 1 Quarterly Banking Profile TABLE IV-A. Fourth Quarter 2014, All FDIC-Insured Institutions Asset Size Distribution FOURTH QUARTER All Insured (The way it is...) Institutions Number of institutions reporting����������������������������� 6,509 Commercial banks������������������������������������������� 5,642 Savings institutions����������������������������������������� 867 Total assets (in billions)������������������������������������������ $15,553.7 Commercial banks������������������������������������������� 14,484.2 Savings institutions����������������������������������������� 1,069.4 Total deposits (in billions)��������������������������������������� 11,763.9 Commercial banks������������������������������������������� 10,945.5 Savings institutions����������������������������������������� 818.4 Bank net income (in millions)��������������������������������� 36,919 Commercial banks������������������������������������������� 33,772 Savings institutions����������������������������������������� 3,147 Geographic Regions* Less Than $100 $1 Billion Greater $100 Million to to Than Million $1 Billion $10 Billion $10 Billion New York 1,872 3,956 574 107 807 1,645 3,439 467 91 449 227 517 107 16 358 $109.8 $1,232.0 $1,576.4 $12,635.4 $2,956.0 96.8 1,045.3 1,288.1 12,054.1 2,488.9 13.1 186.7 288.3 581.3 467.1 92.5 1,024.3 1,227.9 9,419.3 2,180.6 82.3 876.8 1,013.0 8,973.5 1,841.5 10.2 147.5 214.9 445.8 339.0 190 3,128 4,199 29,403 6,209 164 2,668 3,600 27,339 5,435 25 460 599 2,064 775 Atlanta 812 735 77 $3,217.9 3,131.2 86.8 2,477.2 2,412.5 64.6 8,150 7,984 165 Chicago 1,406 1,176 230 $3,595.8 3,489.7 106.1 2,634.6 2,555.0 79.5 7,450 7,111 339 Kansas City 1,599 1,530 69 $3,404.4 3,344.7 59.7 2,567.0 2,520.3 46.8 7,314 7,196 118 San Dallas Francisco 1,372 513 1,282 470 90 43 $904.4 $1,475.1 798.0 1,231.7 106.4 243.4 751.7 1,152.8 663.6 952.6 88.1 200.3 2,500 5,297 2,206 3,841 294 1,456 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���������������������� 3.46 0.34 3.12 1.55 2.79 0.21 0.94 1.35 0.96 8.56 0.48 4.17 0.46 3.71 1.16 3.67 0.12 0.68 0.79 0.69 5.63 0.28 4.22 0.49 3.73 1.16 3.24 0.13 1.00 1.27 1.03 9.14 0.30 4.21 0.43 3.78 1.21 3.08 0.18 1.07 1.42 1.08 9.04 0.25 3.27 0.31 2.97 1.63 2.70 0.23 0.92 1.35 0.94 8.46 0.54 3.49 0.42 3.06 1.42 2.70 0.27 0.84 1.20 0.85 7.13 0.51 3.56 0.26 3.30 1.47 2.82 0.22 0.98 1.38 1.01 8.17 0.49 2.71 0.27 2.45 1.69 2.65 0.11 0.84 1.10 0.84 8.51 0.38 3.69 0.36 3.33 1.34 2.81 0.21 0.85 1.30 0.86 8.43 0.61 4.02 0.32 3.69 1.41 3.17 0.16 1.11 1.46 1.12 10.08 0.27 4.04 0.44 3.60 2.19 2.94 0.37 1.46 2.23 1.47 11.64 0.44 83.37 63.46 9.37 61.22 73.01 80.36 18.22 55.66 67.89 70.09 6.17 63.04 110.19 65.12 4.36 65.85 82.46 62.38 0.00 66.36 101.83 63.86 9.79 56.88 76.68 63.17 13.42 64.53 65.38 68.25 9.74 59.03 65.03 64.09 7.88 61.66 97.49 65.72 7.65 63.34 134.49 52.79 10.53 61.79 Structural Changes New reporters�������������������������������������������������� Institutions absorbed by mergers������������������� Failed institutions�������������������������������������������� 0 75 4 0 18 2 0 52 2 0 4 0 0 1 0 0 8 1 0 8 0 0 20 1 0 15 1 0 17 0 0 7 1 PRIOR FOURTH QUARTERS (The way it was…) Return on assets (%)��������������������������������������2013 �������������������������������������������� 2011 ������������������������������������������� 2009 1.09 0.73 -0.05 0.59 0.30 -0.51 0.88 0.40 -0.67 1.07 0.60 -0.57 1.12 0.79 0.11 1.05 0.83 0.16 0.86 0.25 -0.41 1.06 0.69 0.06 1.20 0.86 0.77 0.98 0.82 0.17 1.55 1.44 -0.38 Net charge-offs to loans & leases (%)�����������2013 �������������������������������������������� 2011 ������������������������������������������� 2009 0.62 1.38 3.00 0.44 0.78 1.23 0.41 1.09 1.99 0.38 1.22 2.42 0.68 1.46 3.32 0.80 1.55 2.96 0.59 1.45 2.78 0.46 1.21 2.98 0.73 1.58 2.71 0.32 1.00 1.62 0.57 1.06 4.28 * See Table V-A (page 11) for explanations. Note: Blue font identifies data that are also presented in the prior quarters’ data at the bottom of the table. FDIC Quarterly 9 2015, Volume 9, No. 1 TABLE V-A. Loan Performance, All FDIC-Insured Institutions Asset Concentration Groups* December 31, 2014 All Insured Institutions Credit Card Banks International Agricultural Commercial Mortgage Banks Banks Lenders Lenders Consumer Lenders Other All Other All Other Specialized <$1 >$1 <$1 Billion Billion 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������������������������������������������������������ 1.01 0.48 0.34 0.19 0.70 1.77 0.26 1.34 1.14 1.55 0.44 0.84 0.13 0.00 0.00 0.00 0.67 0.13 0.85 1.20 1.21 1.17 0.01 1.17 1.58 0.87 0.49 0.20 1.03 2.55 0.35 1.35 1.14 1.73 0.39 1.00 0.66 0.83 0.51 0.25 0.45 1.33 0.76 1.51 1.28 1.52 0.35 0.63 0.62 0.40 0.33 0.18 0.56 1.16 0.22 1.23 1.20 1.23 0.19 0.54 1.09 0.68 0.38 0.22 0.70 1.22 0.53 1.07 1.49 1.03 0.14 1.02 0.68 1.00 0.86 0.57 0.46 0.73 0.17 0.77 0.38 0.89 0.25 0.71 1.55 1.59 0.94 0.76 0.33 2.24 1.29 1.76 1.20 1.82 0.41 1.47 1.45 1.02 1.08 0.90 0.86 1.83 0.93 1.99 1.35 2.00 0.38 1.38 1.47 0.57 0.25 0.22 0.72 2.32 0.20 1.60 1.10 1.91 0.64 1.09 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������������������������������������������������������ 3.35 2.09 1.33 0.44 2.63 5.63 0.50 0.89 1.12 0.66 0.20 1.96 0.43 0.00 0.00 0.00 0.00 0.46 0.72 1.14 1.16 0.55 0.00 1.10 5.41 1.29 0.88 0.28 3.87 9.07 0.45 1.08 1.07 1.09 0.16 2.31 1.18 1.97 1.65 0.86 0.82 1.22 1.23 0.55 0.36 0.57 0.31 0.95 1.78 2.15 1.27 0.48 1.45 2.77 0.60 0.74 1.11 0.71 0.30 1.32 3.28 1.48 1.75 0.69 2.04 3.64 0.88 0.55 1.13 0.48 0.10 2.97 3.70 20.81 8.62 2.65 2.72 2.97 0.51 0.75 1.16 0.62 6.30 1.56 1.88 1.92 2.02 1.61 1.00 1.84 1.58 0.64 0.62 0.64 0.31 1.62 1.98 3.50 2.25 1.49 0.63 1.89 1.54 1.05 0.58 1.05 0.40 1.76 5.52 1.79 1.36 0.35 3.42 8.40 0.32 0.72 1.08 0.48 0.10 2.71 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������������������������������������������������������ 0.20 0.03 0.10 0.02 0.59 0.20 0.24 1.95 3.12 0.77 0.09 0.49 0.05 0.00 0.00 0.00 0.00 0.06 2.06 2.89 2.96 1.31 0.00 2.81 0.34 -0.17 0.03 0.00 0.62 0.38 0.21 2.75 3.62 1.26 0.09 0.73 0.09 0.04 0.13 0.12 0.19 0.13 0.32 0.43 0.90 0.40 0.00 0.13 0.20 0.16 0.13 0.05 0.39 0.27 0.21 0.76 3.33 0.54 0.17 0.24 0.15 0.16 0.15 0.11 0.56 0.13 0.79 1.52 3.39 1.12 0.11 0.21 0.32 -0.14 0.25 -0.02 0.86 0.15 0.16 0.78 2.10 0.38 0.07 0.62 0.21 0.27 0.22 -0.55 0.16 0.25 0.50 0.60 1.72 0.50 0.94 0.33 0.18 0.39 0.23 0.04 0.14 0.17 0.46 0.46 1.56 0.44 0.00 0.24 0.16 -0.42 -0.01 -0.05 0.78 0.10 0.17 1.69 3.05 0.85 0.03 0.41 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)�������������� $4,170.8 238.6 1,150.1 297.4 492.3 1,842.1 1,715.4 1,418.3 718.5 699.8 1,007.0 8,311.5 $0.3 0.0 0.0 0.0 0.0 0.3 31.8 354.6 338.9 15.7 0.2 386.9 $466.8 6.8 34.6 53.1 78.2 236.4 267.6 253.5 161.0 92.5 295.3 1,283.2 $104.7 5.9 29.1 3.1 2.2 26.7 21.5 6.6 0.5 6.1 43.3 176.1 $2,067.0 167.5 805.0 193.8 196.0 671.1 793.9 243.9 19.8 224.1 240.4 3,345.2 $244.5 4.6 19.7 5.6 13.6 200.3 6.5 6.6 0.7 6.0 16.2 273.8 $29.0 0.5 2.5 0.3 6.4 19.2 6.8 86.5 19.9 66.6 3.2 125.5 $12.1 0.9 4.1 0.3 0.4 5.7 2.2 1.8 0.2 1.6 1.0 17.2 $53.4 3.1 12.9 1.4 2.2 29.8 6.2 6.0 0.1 5.9 4.7 70.2 $1,193.0 49.5 242.2 39.6 193.4 652.6 578.8 458.6 177.4 281.2 402.9 2,633.3 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������������������������������������������������������ 21,978.8 6,379.6 5,121.9 444.7 5,980.4 257.0 3,756.9 0.2 0.0 0.0 0.0 0.2 0.0 0.0 1,124.0 3.0 59.0 1.0 563.0 0.0 462.0 585.8 216.9 209.4 20.6 98.0 40.8 0.1 12,699.2 4,934.5 3,796.6 351.8 2,939.6 192.6 483.8 1,415.4 155.8 85.1 9.0 389.5 2.0 774.1 136.2 25.4 38.0 0.1 64.7 0.0 8.0 167.4 63.8 54.2 6.2 40.4 2.8 0.0 540.1 173.0 167.2 10.3 178.7 10.9 0.1 5,310.4 807.1 712.4 45.6 1,706.3 7.9 2,029.0 * 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. FDIC Quarterly 10 2015, Volume 9, No. 1 Quarterly Banking Profile TABLE V-A. Loan Performance, All FDIC-Insured Institutions Asset Size Distribution December 31, 2014 Geographic Regions* Less Than $100 $1 Billion Greater All Insured $100 Million to to Than Institutions Million $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��������������������������������������������� 1.01 0.48 0.34 0.19 0.70 1.77 0.26 1.34 1.14 1.55 0.44 0.84 1.35 0.96 1.14 0.75 0.86 1.92 1.06 2.03 3.28 2.01 0.33 1.23 0.78 0.53 0.52 0.43 0.56 1.28 0.61 1.80 1.58 1.82 0.31 0.78 0.65 0.46 0.30 0.14 0.52 1.28 0.36 1.47 1.85 1.29 0.21 0.65 1.15 0.46 0.27 0.17 0.73 1.94 0.21 1.32 1.11 1.55 0.46 0.88 0.70 0.55 0.39 0.19 0.51 1.16 0.23 1.12 0.94 1.46 1.24 0.76 1.21 0.58 0.32 0.27 0.80 1.98 0.15 1.78 1.30 2.30 0.20 0.97 1.07 0.52 0.39 0.18 0.85 1.79 0.35 1.27 0.93 1.38 0.59 0.87 1.41 0.25 0.26 0.12 0.71 2.50 0.27 1.34 1.22 1.50 0.08 0.95 0.91 0.53 0.42 0.38 0.52 1.79 0.35 0.91 0.36 1.19 0.27 0.74 0.42 0.32 0.22 0.13 0.34 0.71 0.26 1.09 1.39 0.83 0.29 0.52 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��������������������������������������������� 3.35 2.09 1.33 0.44 2.63 5.63 0.50 0.89 1.12 0.66 0.20 1.96 1.72 2.72 2.09 1.63 0.79 1.71 1.85 0.86 1.05 0.86 0.50 1.52 1.48 2.65 1.45 0.96 0.78 1.51 1.18 1.07 1.06 1.07 0.36 1.35 1.92 2.30 1.35 0.53 0.99 3.06 0.91 0.79 1.59 0.40 0.66 1.61 4.19 1.73 1.25 0.32 2.96 6.87 0.39 0.89 1.10 0.66 0.15 2.10 2.16 2.69 1.60 0.32 2.02 3.12 0.63 0.91 0.96 0.81 0.27 1.47 4.24 2.98 1.26 0.49 3.31 6.63 0.40 1.02 1.21 0.80 0.14 2.31 3.85 1.95 1.43 0.58 2.81 6.52 0.50 0.84 0.98 0.79 0.15 2.19 4.83 1.59 1.32 0.53 2.77 8.33 0.47 0.88 1.15 0.51 0.22 2.54 1.87 1.29 1.01 0.71 1.73 3.34 0.68 0.71 1.15 0.49 0.25 1.38 1.28 1.63 1.13 0.33 0.98 1.59 0.45 0.78 1.30 0.31 0.22 0.90 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��������������������������������������������� 0.20 0.03 0.10 0.02 0.59 0.20 0.24 1.95 3.12 0.77 0.09 0.49 0.19 0.20 0.26 0.14 0.13 0.21 0.38 0.60 4.00 0.56 0.00 0.23 0.17 0.24 0.17 0.15 0.21 0.17 0.41 0.76 3.78 0.54 0.17 0.22 0.15 0.04 0.12 0.07 0.25 0.22 0.26 1.55 3.40 0.70 0.19 0.27 0.22 -0.07 0.06 -0.01 0.66 0.20 0.22 2.01 3.11 0.79 0.08 0.56 0.20 0.33 0.12 0.01 0.37 0.26 0.28 2.03 2.71 0.81 0.10 0.55 0.22 0.17 0.15 0.05 0.85 0.10 0.21 2.02 3.10 0.82 0.06 0.53 0.25 0.13 0.17 0.04 0.54 0.25 0.24 1.27 3.12 0.65 0.12 0.36 0.25 -0.46 0.00 0.02 0.68 0.33 0.19 2.57 3.67 1.15 0.07 0.60 0.10 0.02 0.07 0.05 0.47 0.11 0.19 1.10 1.99 0.65 0.21 0.23 0.02 -0.31 0.04 0.01 0.12 0.03 0.36 1.68 3.23 0.37 0.08 0.47 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)����� $4,170.8 238.6 1,150.1 297.4 492.3 1,842.1 1,715.4 1,418.3 718.5 699.8 1,007.0 8,311.5 $43.5 2.6 11.4 1.3 1.1 19.9 7.5 4.0 0.0 3.9 8.3 63.3 $612.9 53.0 238.4 32.2 27.6 218.9 105.1 34.8 2.4 32.5 49.1 801.9 $765.4 62.5 304.1 68.1 48.4 264.1 169.1 78.8 25.8 53.0 54.4 1,067.6 $2,749.1 120.5 596.2 195.8 415.2 1,339.2 1,433.7 1,300.7 690.2 610.4 895.2 6,378.6 $851.5 44.8 264.9 105.5 91.2 341.0 259.7 301.1 194.4 106.7 164.8 1,577.1 $896.1 50.7 233.5 36.2 128.5 436.6 424.0 360.6 189.4 171.2 211.9 1,892.7 $812.0 38.6 185.2 79.4 123.1 365.0 350.7 206.3 52.0 154.3 237.3 1,606.4 $822.7 35.7 166.7 25.6 101.0 403.1 352.5 296.9 170.4 126.5 285.6 1,757.7 $346.9 46.7 136.5 12.5 19.5 118.0 122.3 56.8 19.1 37.7 40.5 566.5 $441.5 22.1 163.2 38.2 29.1 178.5 206.2 196.5 93.2 103.3 66.8 911.1 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��������������������������������������������� 21,978.8 6,379.6 5,121.9 444.7 5,980.4 257.0 3,756.9 633.8 217.5 207.9 21.7 175.5 11.3 0.0 6,117.9 2,771.7 1,965.1 158.9 1,073.3 135.3 13.7 4,897.4 1,860.5 1,441.8 97.7 1,042.1 87.7 367.5 10,329.7 1,529.9 1,507.2 166.4 3,689.5 22.7 3,375.7 2,994.3 678.6 777.4 154.5 1,134.9 18.4 230.6 6,142.2 1,813.9 1,117.5 46.9 1,581.5 59.3 1,523.0 4,285.4 857.9 1,050.6 83.5 1,352.6 53.3 887.6 4,434.6 1,358.8 930.0 79.6 1,007.1 33.2 988.0 2,736.0 1,170.4 855.9 48.0 524.4 70.5 66.9 1,386.3 500.1 390.5 32.3 379.9 22.3 60.9 * 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 2015, Volume 9, No. 1 Table VI-A. Derivatives, All FDIC-Insured Call Report Filers Asset Size Distribution 4th Quarter 2014 3rd Quarter 2014 2nd Quarter 2014 1st Quarter 2014 4th Quarter 2013 (dollar figures in millions; notional amounts unless otherwise indicated) ALL DERIVATIVE HOLDERS Number of institutions reporting derivatives����������������� 1,399 1,391 1,405 1,399 1,389 Total assets of institutions reporting derivatives���������� $13,921,587 $13,713,773 $13,522,747 $13,250,723 $13,073,465 Total deposits of institutions reporting derivatives������� 10,461,400 10,291,404 10,169,200 9,980,762 9,855,694 Total derivatives������������������������������������������������������������� 221,922,457 242,940,419 239,124,560 231,754,089 237,016,804 % Change Less $100 $1 Billion 13Q4Than $100 Million to to $10 14Q4 Million $1 Billion Billion Greater Than $10 Billion 0.7 6.5 6.1 -6.4 70 $4,983 4,141 251 839 390 100 $350,914 $1,174,734 $12,390,956 288,543 931,509 9,237,207 19,663 94,141 221,808,402 Derivative Contracts by Underlying Risk Exposure Interest rate�������������������������������������������������������������������� 173,939,550 190,894,481 191,553,140 184,417,973 193,081,248 Foreign exchange*�������������������������������������������������������� 34,745,833 37,993,284 33,394,780 32,803,408 29,508,031 Equity����������������������������������������������������������������������������� 2,577,118 2,317,271 2,135,462 2,105,011 2,028,018 Commodity & other (excluding credit derivatives)�������� 1,210,879 1,327,011 1,214,397 1,263,060 1,208,874 Credit������������������������������������������������������������������������������ 9,449,078 10,408,372 10,826,781 11,164,636 11,190,633 Total�������������������������������������������������������������������������������� 221,922,457 242,940,419 239,124,560 231,754,089 237,016,804 -9.9 17.8 27.1 0.2 -15.6 -6.4 250 0 0 0 0 251 17,310 2,212 63 3 75 19,663 88,503 173,833,486 4,717 34,738,904 327 2,576,728 102 1,210,773 492 9,448,511 94,141 221,808,402 Derivative Contracts by Transaction Type Swaps���������������������������������������������������������������������������� 135,167,761 148,328,645 146,511,551 141,282,323 152,466,706 Futures & forwards�������������������������������������������������������� 43,368,380 45,058,906 45,263,675 42,478,719 40,026,988 Purchased options��������������������������������������������������������� 16,370,106 17,990,978 17,268,335 17,177,576 16,107,374 Written options��������������������������������������������������������������� 16,004,450 17,560,543 16,843,011 16,905,448 16,197,549 Total�������������������������������������������������������������������������������� 210,910,697 228,939,072 225,886,572 217,844,066 224,798,616 -11.3 8.3 1.6 -1.2 -6.2 41 53 19 138 251 7,275 7,181 750 4,378 19,585 52,920 21,348 5,381 13,833 93,482 135,107,524 43,339,799 16,363,957 15,986,100 210,797,379 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����������������������������������� 60,026 -4,845 3,769 -3,376 47,533 -36,635 65,132 13,334 -657 219 67,082 -62,731 72,249 4,729 412 965 95,094 -90,465 72,732 5,563 1,548 -893 80,869 -77,438 71,270 5,991 32 1,350 74,838 -71,220 -15.8 N/M 11,678.1 N/M -36.5 N/M 0 0 0 0 0 0 2 0 3 0 0 0 -192 2 0 1 0 -25 60,217 -4,848 3,766 -3,378 47,533 -36,609 Derivative Contracts by Maturity** Interest rate contracts����������������������������� < 1 year ������������������������������������������ 1-5 years ������������������������������������������ > 5 years Foreign exchange contracts������������������� < 1 year ������������������������������������������ 1-5 years ������������������������������������������ > 5 years Equity contracts��������������������������������������� < 1 year ������������������������������������������ 1-5 years ������������������������������������������ > 5 years Commodity & other contracts����������������� < 1 year ������������������������������������������ 1-5 years ������������������������������������������ > 5 years 71,808,679 33,727,298 22,213,805 22,074,006 2,574,448 968,769 996,138 351,853 100,903 347,453 179,386 20,727 79,984,759 40,334,338 22,393,371 22,803,490 2,446,736 1,021,146 763,470 323,010 77,484 391,671 217,997 19,107 81,212,198 38,531,826 24,203,418 20,746,687 2,420,184 1,016,489 698,674 292,130 81,116 360,565 150,937 18,082 77,787,391 37,365,369 24,025,868 20,017,155 2,297,506 974,355 673,720 305,141 89,804 379,469 140,984 18,960 77,758,364 44,157,011 24,629,775 18,289,804 2,324,853 1,029,279 645,046 291,190 135,907 338,091 163,812 5,903 -7.7 -23.6 -9.8 20.7 10.7 -5.9 54.4 20.8 -25.8 2.8 9.5 251.1 52 32 26 0 0 0 0 0 0 0 0 0 4,719 3,502 3,980 1,739 0 0 4 11 15 3 0 0 18,001 25,561 24,859 3,350 57 0 31 102 21 41 3 0 71,785,908 33,698,202 22,184,939 22,068,917 2,574,391 968,769 996,103 351,741 100,866 347,409 179,383 20,727 28.7 48.5 26.0 53.2 23.5 55.1 23.5 56.2 26.1 58.1 0.1 0.1 0.4 0.3 0.6 0.5 32.7 55.3 77.3 79.2 78.6 79.7 84.3 0.2 0.7 1.1 87.9 Credit losses on derivatives***���������������������������������� 91.0 83.0 69.0 13.0 264.0 -65.5 0.0 0.0 0.0 91.0 HELD FOR TRADING Number of institutions reporting derivatives����������������� Total assets of institutions reporting derivatives���������� Total deposits of institutions reporting derivatives������� 250 11,275,850 8,458,142 244 11,015,493 8,262,859 247 10,889,636 8,185,855 243 10,638,660 7,997,380 252 10,559,491 7,964,587 -0.8 6.8 6.2 11 759 634 86 39,941 32,879 90 314,083 247,290 63 10,921,068 8,177,340 Derivative Contracts by Underlying Risk Exposure Interest rate�������������������������������������������������������������������� 170,690,631 187,909,519 188,493,096 181,282,028 189,138,537 Foreign exchange���������������������������������������������������������� 32,536,146 33,675,874 30,164,255 29,208,486 27,636,688 Equity����������������������������������������������������������������������������� 2,559,758 2,300,741 2,119,239 2,089,047 2,011,294 Commodity & other�������������������������������������������������������� 1,205,276 1,320,794 1,206,811 1,256,235 1,200,547 Total�������������������������������������������������������������������������������� 206,991,811 225,206,928 221,983,401 213,835,794 219,987,066 -9.8 17.7 27.3 0.4 -5.9 75 0 0 0 75 1,934 0 0 0 1,934 85.7 83.2 31.2 -49.9 51.4 0 0 0 0 0 0 0 0 0 0 29 3 -1 -1 31 633 2,837 644 255 4,370 0.0 0.0 0.1 0.5 0.9 5.5 3.9 19.2 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 (%)����������������������������������������������������� 22,353 170,666,270 3,570 32,532,576 0 2,559,758 15 1,205,261 25,938 206,963,864 Trading Revenues: Cash & Derivative Instruments Interest rate�������������������������������������������������������������������� Foreign exchange���������������������������������������������������������� Equity����������������������������������������������������������������������������� Commodity & other (including credit derivatives)�������� Total trading revenues��������������������������������������������������� 663 2,840 643 255 4,401 -826 4,892 652 946 5,664 2,878 2,026 722 795 6,421 2,010 2,137 608 1,427 6,183 357 1,550 490 509 2,906 Share of Revenue Trading revenues to gross revenues (%)���������������������� Trading revenues to net operating revenues (%)���������� 3.8 18.8 4.8 23.8 5.4 24.6 5.4 26.9 2.5 11.3 HELD FOR PURPOSES OTHER THAN TRADING Number of institutions reporting derivatives����������������� Total assets of institutions reporting derivatives���������� Total deposits of institutions reporting derivatives������� 1,274 13,613,308 10,218,363 1,271 13,421,530 10,061,662 1,287 13,229,856 9,938,935 1,282 12,945,001 9,738,920 1,253 12,763,130 9,611,265 1.7 6.7 6.3 59 4,225 3,507 768 321,833 264,712 353 1,058,035 839,661 94 12,229,215 9,110,483 Derivative Contracts by Underlying Risk Exposure Interest rate�������������������������������������������������������������������� Foreign exchange���������������������������������������������������������� Equity����������������������������������������������������������������������������� Commodity & other�������������������������������������������������������� Total notional amount���������������������������������������������������� 3,248,919 647,004 17,361 5,602 3,918,885 2,984,963 724,435 16,530 6,216 3,732,144 3,060,043 819,319 16,223 7,586 3,903,171 3,135,945 849,536 15,965 6,825 4,008,271 3,942,711 843,789 16,724 8,327 4,811,550 -17.6 -23.3 3.8 -32.7 -18.6 176 0 0 0 176 15,376 2,209 63 3 17,651 66,151 979 327 87 67,544 3,167,217 643,816 16,970 5,512 3,833,515 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. FDIC Quarterly 12 2015, Volume 9, No. 1 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 4th Quarter 2014 3rd Quarter 2014 2nd Quarter 2014 1st Quarter 2014 4th % Change Less Than $100 $1 Billion Greater Quarter 13Q4$100 Million to to $10 Than $10 2013 14Q4 Million $1 Billion Billion Billion 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������������������������������������������������������������������������������������������ 77 74 73 76 83 -7.2 1 24 18 34 $847,494 36 18,499 3,951 6,191 11 96,257 972,438 $845,272 38 16,782 4,198 6,425 10 95,099 967,824 $844,184 39 16,692 4,312 4,945 1,217 94,757 966,146 $598,462 41 16,349 4,735 4,462 1,881 96,071 722,001 $610,275 42 19,405 4,676 4,607 1,987 101,456 742,448 38.9 -14.3 -4.7 -15.5 34.4 -99.4 -5.1 31.0 $16 0 0 0 0 0 0 16 $2,399 0 75 0 2 9 3,538 6,022 $19,105 0 0 1,276 0 0 4,927 25,308 $825,974 36 18,424 2,675 6,189 2 87,791 941,091 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��� 2,915 0 1,529 0 194 0 1,369 6,007 17 2,806 0 1,418 0 188 0 1,129 5,541 17 2,908 0 1,450 0 192 25 1,416 5,991 17 2,912 0 1,455 5 174 38 1,308 5,892 120 2,809 0 603 0 164 27 1,633 5,236 121 3.8 0.0 153.6 0.0 18.3 -100.0 -16.2 14.7 -86.0 0 0 0 0 0 0 0 0 0 5 0 30 0 0 0 1 37 0 51 0 0 0 0 0 0 51 0 2,858 0 1,499 0 194 0 1,368 5,919 17 3.9 7.5 0.7 0.9 4.9 0.0 0.3 3.5 3.9 8.0 0.8 0.7 4.8 0.0 0.4 3.5 3.5 9.1 0.8 0.7 5.5 0.0 0.4 3.2 3.3 8.8 0.9 0.6 5.2 0.0 0.3 2.9 4.3 10.4 0.8 1.0 5.6 0.0 0.8 3.7 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1.4 0.0 1.7 0.0 0.0 0.0 0.5 0.9 4.3 0.0 0.0 0.0 0.0 0.0 0.1 3.3 3.9 7.5 0.7 1.3 4.9 0.0 0.3 3.5 2.2 43.3 0.5 0.1 5.3 2.4 3.3 2.3 2.2 42.0 0.5 0.1 5.2 3.0 6.5 2.6 2.3 40.3 0.6 0.1 6.3 0.0 9.2 2.9 3.3 37.8 0.7 0.1 6.7 0.0 8.7 3.9 3.4 36.5 0.6 0.1 7.3 0.0 9.2 4.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1.6 0.0 1.7 0.0 0.0 2.9 0.7 1.1 5.0 0.0 0.0 0.0 0.0 0.0 1.1 4.0 2.1 43.3 0.5 0.1 5.3 0.0 3.5 2.2 0.4 1.0 1.7 0.2 0.8 0.0 0.9 0.4 0.3 0.1 1.5 0.1 0.6 0.0 0.6 0.3 0.2 0.1 1.2 0.1 0.3 0.0 0.9 0.3 0.1 -0.1 0.6 0.0 0.2 0.0 0.7 0.2 0.9 0.2 2.2 0.2 0.9 0.0 0.9 0.9 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.2 0.0 7.9 0.0 0.0 0.0 0.0 0.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.4 1.0 1.7 0.3 0.8 0.0 0.9 0.4 0 12,247 0 0 12,198 0 0 12,905 2 0 13,116 2 0 12,850 3 0.0 -4.7 -100.0 0 0 0 0 324 0 0 0 0 0 11,923 0 0 0 0 0 0 0 0 0 0 0 0 48 0 0 52 0.0 0.0 -100.0 0 0 0 0 0 0 0 0 0 0 0 0 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����������������������������������������������������������������������� 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����������������������������������������������������������������������������������� 1,104 1,104 1,101 1,088 1,084 1.8 135 744 176 49 40,885 714 91 69,561 111,251 41,064 709 52 66,271 108,096 42,240 727 53 65,112 108,131 43,720 755 69 65,974 110,518 46,519 776 62 67,794 115,150 -12.1 -8.0 46.8 2.6 -3.4 1,605 0 0 1 1,606 14,621 2 13 95 14,731 8,993 29 77 1,195 10,295 15,666 683 0 68,270 84,618 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������������������������������������������������������������������������������������������������� 9,887 137 27 17,955 28,006 9,848 140 23 17,233 27,244 9,646 141 24 16,849 26,660 9,573 155 33 16,970 26,732 10,756 160 27 17,058 28,002 -8.1 -14.4 0.0 5.3 0.0 113 0 0 1 114 2,171 2 13 15 2,201 3,367 3 13 71 3,454 4,236 131 0 17,869 22,237 Support for Securitization Facilities Sponsored by Other Institutions Number of institutions reporting securitization facilities sponsored by others������� Total credit exposure������������������������������������������������������������������������������������������������� 126 44,248 132 41,590 134 42,375 138 42,058 148 44,707 -14.9 -1.0 12 9 70 170 25 276 19 43,793 Total unused liquidity commitments������������������������������������������������������������������������� 1,150 918 1,122 1,017 981 17.2 0 0 0 1,150 4,412,810 4,461,406 4,556,249 4,712,533 3,920,955 Other Assets serviced for others*��������������������������������������������������������������������������������������� 4,416,458 Asset-backed commercial paper conduits Credit exposure to conduits sponsored by institutions and others������������������ 11,981 Unused liquidity commitments to conduits sponsored by institutions 28,924 and others������������������������������������������������������������������������������������������������������� Net servicing income (for the quarter)���������������������������������������������������������������������� 1,207 Net securitization income (for the quarter)��������������������������������������������������������������� 339 Total credit exposure to Tier 1 capital (%)**������������������������������������������������������������� 5.5 -6.3 5,279 193,041 297,183 10,189 12,129 12,110 12,317 -2.7 5 0 5 11,972 27,948 2,886 384 5.3 28,274 2,773 318 5.4 30,515 2,142 285 5.4 31,113 4,627 377 5.8 -7.0 -73.9 -10.1 0 7 0 0.9 0 187 5 1.8 178 105 13 2.3 28,746 908 322 6.5 * 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 2015, Volume 9, No. 1 TABLE VIII-A. Trust Services (All FDIC-Insured Institutions) All Insured Institutions (dollar figures in millions) Number of institutions reporting������������������������������������������������ Number of institutions with fiduciary powers���������������������������� Commercial banks�������������������������������������������������������������� Savings institutions������������������������������������������������������������ Number of institutions exercising fiduciary powers������������������ Commercial banks�������������������������������������������������������������� Savings institutions������������������������������������������������������������ Number of institutions reporting fiduciary activity�������������������� Commercial banks�������������������������������������������������������������� Savings institutions������������������������������������������������������������ Fiduciary and related assets - managed assets Personal trust and agency accounts���������������������������������������� Noninterest-bearing deposits�������������������������������������������� Interest-bearing deposits��������������������������������������������������� U.S. Treasury and U.S. Government agency obligations��� State, county and municipal obligations���������������������������� Money market mutual funds����������������������������������������������� Other short-term obligations���������������������������������������������� Other notes and bonds������������������������������������������������������� Common and preferred stocks������������������������������������������ Real estate mortgages������������������������������������������������������� Real estate�������������������������������������������������������������������������� Miscellaneous assets��������������������������������������������������������� Employee benefit and retirement-related trust and agency accounts: Employee benefit - defined contribution���������������������������� Employee benefit - defined benefit������������������������������������ Other employee benefit and retirement-related accounts�������������������������������������������������������������������������� Corporate trust and agency accounts��������������������������������������� Investment management and investment advisory agency accounts�������������������������������������������������������������������� Other fiduciary accounts����������������������������������������������������������� Total managed fiduciary accounts: Assets��������������������������������������������������������������������������������� Number of accounts����������������������������������������������������������� Fiduciary and related assets - nonmanaged assets Personal trust and agency accounts���������������������������������������� Employee benefit and retirement-related trust and agency accounts: Employee benefit - defined contribution���������������������������� Employee benefit - defined benefit������������������������������������ Other employee benefit and retirement-related accounts�� Corporate trust and agency accounts��������������������������������������� Other fiduciary accounts����������������������������������������������������������� Total nonmanaged fiduciary accounts: Assets��������������������������������������������������������������������������������� Number of accounts����������������������������������������������������������� Custody and safekeeping accounts: Assets��������������������������������������������������������������������������������� Number of accounts����������������������������������������������������������� Fiduciary and related services income Personal trust and agency accounts���������������������������������������� Retirement-related trust and agency accounts: Employee benefit - defined contribution���������������������������� Employee benefit - defined benefit������������������������������������ Other employee benefit and retirement-related accounts�� Corporate trust and agency accounts��������������������������������������� Investment management agency accounts������������������������������ Other fiduciary accounts����������������������������������������������������������� Custody and safekeeping accounts������������������������������������������ Other fiduciary and related services income���������������������������� Total gross fiduciary and related services income������������������� Less: Expenses������������������������������������������������������������������ Less: Net losses from fiduciary and related services������� Plus: Intracompany income credits for fiduciary and related services�������������������������������������������������������������� Net fiduciary and related services income������������������������������� Collective investment funds and common trust funds (market value) Domestic equity funds�������������������������������������������������������� International/global equity funds��������������������������������������� Stock/bond blend funds����������������������������������������������������� Taxable bond funds������������������������������������������������������������ Municipal bond funds��������������������������������������������������������� Short-term investments/money market funds������������������� Specialty/other funds��������������������������������������������������������� Total collective investment funds���������������������������������������������� FDIC Quarterly Asset Size Distribution Dec 31 2014 6,509 1,925 1,786 139 1,437 1,322 115 1,358 1,250 108 Dec 31 2013 6,812 1,991 1,847 144 1,474 1,356 118 1,397 1,287 110 Dec 31 2012 7,083 2,035 1,890 145 1,509 1,391 118 1,425 1,316 109 Dec 31 2011 7,357 2,103 1,945 158 1,549 1,424 125 1,475 1,356 119 % Change 2013-2014 -4.4 -3.3 -3.3 -3.5 -2.5 -2.5 -2.5 -2.8 -2.9 -1.8 Less Than $100 Million 1,872 272 252 20 170 151 19 157 138 19 689,810 8,695 79,671 101,054 180,592 106,171 189,900 198,865 2,913,836 1,997 44,090 124,397 671,348 7,903 97,316 127,030 176,967 113,048 210,851 224,723 2,696,901 1,936 47,344 101,484 620,437 6,888 73,891 127,203 188,959 123,659 216,496 249,140 2,285,814 1,979 47,780 130,329 590,720 2,513 32,497 105,356 190,756 120,634 168,266 250,388 1,914,375 1,676 42,400 111,270 2.7 10.0 -18.1 -20.4 2.0 -6.1 -9.9 -11.5 8.0 3.2 -6.9 22.6 16,306 28 724 2,467 6,357 3,034 31 7,614 38,271 357 1,250 1,037 70,392 1,038 5,803 3,672 9,001 7,512 185 6,510 130,790 282 7,281 14,708 71,058 187 6,109 13,569 20,084 13,114 574 14,065 191,690 317 6,492 9,239 532,054 7,442 67,035 81,346 145,150 82,511 189,110 170,676 2,553,085 1,041 29,067 99,413 361,688 612,609 403,358 582,751 391,320 536,981 350,146 509,157 -10.3 5.1 1,076 1,984 7,348 8,621 10,761 20,125 342,502 581,879 310,988 20,957 276,831 22,832 232,272 26,349 226,786 26,208 12.3 -8.2 3,620 7 27,252 453 37,050 3,666 243,066 16,832 1,562,067 391,149 1,299,675 548,705 1,205,463 439,316 1,008,692 227,747 20.2 -28.7 36,072 2,103 62,184 10,533 109,908 22,874 1,353,902 355,639 3,949,267 1,640,907 3,805,501 1,557,892 3,452,138 1,432,574 2,939,455 1,384,740 3.8 5.3 61,169 79,733 186,782 260,251 275,442 291,057 3,425,874 1,009,866 289,438 277,994 263,746 270,066 4.1 9,816 22,361 20,590 236,672 2,208,443 4,208,533 1,633,203 2,572,387 3,503,841 3,122,490 3,983,936 2,637,899 2,473,708 3,353,847 2,572,659 3,488,956 2,302,988 2,621,721 2,826,297 2,244,273 3,921,237 1,815,808 2,813,065 2,520,115 -29.3 5.6 -38.1 4.0 4.5 101,516 14,420 1,836 919 2,483 8,435 23,989 26,807 21,574 30,239 88,352 21,443 33,394 397,085 24,317 2,010,140 4,148,681 1,571,166 2,152,809 3,446,802 14,415,844 3,875,917 15,849,875 14,373,918 14,076,366 14,124,850 13,584,563 13,399,102 -9.0 -73.0 130,991 281,081 133,404 475,186 585,181 187,487 13,566,269 2,932,163 83,495,451 9,339,740 80,166,103 9,477,551 74,236,727 10,381,593 74,108,600 11,127,410 4.2 -1.5 364,875 6,185,016 906,097 552,483 724,417 461,239 81,500,062 2,141,002 4,872 4,655 4,417 4,376 4.7 116 320 523 3,914 1,190 1,382 1,498 1,371 6,995 827 13,088 1,155 32,522 30,804 224 1,281 1,336 1,350 1,318 6,125 816 12,493 1,451 30,992 29,523 245 1,202 1,283 1,194 1,306 5,400 847 11,559 1,386 28,766 28,034 274 1,171 1,755 1,041 1,636 4,952 1,640 9,348 2,137 28,221 25,118 206 -7.1 3.4 11.0 4.0 14.2 1.3 4.8 -20.4 4.9 4.3 -8.6 20 10 38 0 165 2 68 17 438 282 0 50 51 240 37 445 21 324 99 1,684 1,227 3 193 46 204 250 773 7 510 141 2,658 2,115 10 927 1,276 1,016 1,084 5,612 797 12,186 899 27,742 27,180 210 5,406 6,756 5,507 6,562 6,001 6,273 5,374 8,104 -1.8 3.0 0 153 19 374 231 755 5,155 5,475 615,200 193,624 143,065 154,239 4,374 178,284 47,543 1,336,330 373,714 186,382 125,635 145,958 4,263 178,395 77,419 1,091,766 299,291 147,535 114,754 183,240 5,649 163,709 80,365 994,544 274,259 123,322 99,901 212,230 5,981 204,104 81,065 1,000,862 64.6 3.9 13.9 5.7 2.6 -0.1 -38.6 22.4 7,692 8,196 2,641 3,122 43 1,697 618 24,009 761 2,635 290 3,090 332 186 328 7,622 10,568 3,422 1,322 1,976 280 25 5,807 23,399 596,179 179,372 138,813 146,052 3,719 176,375 40,790 1,281,300 14 $100 $1 Billion Greater Million to to Than $1 Billion $10 Billion $10 Billion 3,956 574 107 1,238 339 76 1,169 294 71 69 45 5 912 285 70 858 248 65 54 37 5 860 273 68 810 239 63 50 34 5 2015, Volume 9, No. 1 Quarterly Banking Profile COMMUNITY BANK PERFORMANCE Net Income of $4.8 Billion Increased 28 Percent From Fourth Quarter 2013 Higher Net Operating Revenue and Lower Loan Loss Provisions Boosted Earnings Full-Year 2014 Net Income Increased From Higher Net Interest Income All Major Loan Balances Increased From the Previous Quarter and the Year Before ■ ■ ■ ■ Earnings Increased From Fourth Quarter 2013, Outpacing Industry Net Interest Margin Widened 51 Basis Points Between Community Banks and Industry Community banks reported net income of $4.8 billion in fourth quarter 2014, up $1 billion (27.7 percent) from the year before.1 Higher net operating revenue (the sum of net interest income and total noninterest income) and lower loan loss provisions lifted earnings for the 6,037 community banks. Despite the improved earnings at community banks, yearly earnings declined 7 percent for the banking industry. About 61 percent of community banks reported higher year-over-year earnings, while 9.7 percent were unprofitable during the quarter. The pretax return on assets was 1.18 percent, down 6 basis points from third quarter 2014, but up 21 basis points from fourth quarter 2013.2 Net interest income—which accounts for about 79 percent of net operating revenue at community banks—totaled $17.2 billion during fourth quarter 2014, up $1 billion (6.4 percent) from fourth quarter 2013. Community banks contributed more than half (56 percent) of the banking industry’s annual growth (up $1.8 billion, or 1.7 percent) in net interest income. Close to 71 percent of community banks increased net interest income from the year-earlier quarter. The net interest margin (NIM) stood at 3.63 percent, down 2 basis points from fourth quarter 2013, as average asset yields fell more rapidly than the average funding costs. Community banks posted a NIM 51 basis points above the industry average—the largest gap since fourth quarter 2006. About 81 percent of community banks reported NIM above the industry’s average of 3.12 percent. Prior-period dollar amounts used for comparisons are mergeradjusted, meaning the same institutions identified as community banks and the industry in the current quarter are used to determine dollar amounts in prior periods, after taking into account acquisitions. Performance ratios are not merger-adjusted. 2 Pretax ROA is used for comparison because C corporations are taxed at the bank level, while S corporations pass tax obligations to their shareholders—58 percent of community banks were C corporations, while 35 percent were S corporations during the fourth quarter of 2014. 1 Chart 1 Chart 2 Net Interest Margin Contributors to the Year-Over-Year Change in Income FDIC-Insured Community Banks Positive Factor Negative Factor Billions of Dollars $1.5 $1.04 Percent $1.03 -$0.19 $0.53 $0.46 $0.15 Community Banks All Insured Institutions 4.0 $0.40 $1.0 3.65 3.63 $0.5 3.5 $0.0 -$0.5 3.27 +28% +6% Net Income Net Interest Income -23% +13% +3% Loan Loss Noninterest Noninterest Provisions Income Expense +990% +49% Realized Gains on Securities Income Taxes 3.12 3.0 2006 Source: FDIC. FDIC Quarterly 2007 2008 2009 2010 2011 2012 2013 2014 Source: FDIC. 15 2015, Volume 9, No. 1 average asset per employee was $4.7 million in the most recent quarter, up from $4.5 million in fourth quarter 2013. Noninterest Income Expanded 12.8 Percent From Fourth Quarter 2013 Noninterest income totaled $4.6 billion in the fourth quarter 2014, up $526 million (12.8 percent) from the 2013 quarter—outperforming the industry (up $37.9 million, or 0.1 percent). More than half (54 percent) of community banks reported higher noninterest income than a year earlier. Close to 85 percent of the annual increase in noninterest income was contributed by all other noninterest income (up $262.6 million, or 16.3 percent) and loan sale r evenue (up $182.9 million, or 26.3 percent).3 Full-Year 2014 Earnings Increased 9.1 Percent to $18.6 Billion Full-year 2014 net income totaled $18.6 billion, an increase of $1.6 billion (9.1 percent) from 2013. Higher net interest income (up $3.9 billion, or 6.2 percent) and lower loan-loss provisions (down $658 million, or 20.8 percent) offset a decline in noninterest income (down $329 million, or 1.8 percent) and an increase in noninterest expense (up $1.6 billion, or 2.8 percent). Almost three out of every four community banks (74 percent) reported higher net interest income from 2013. Noninterest Expense Increased From Fourth Quarter 2013 Noninterest expense of $15.3 billion in fourth quarter 2014 increased $458.2 million (3.1 percent) from the 2013 quarter. The annual increase was led by higher salary employee benefits (up $505 million, or 6.5 percent). Almost two out of every three community banks (62 percent) reported higher noninterest expense from fourth quarter 2013. Full-time employees at community banks totaled 442,233 in fourth quarter 2014, up 5,371 (1.2 percent) from a year earlier. The Close to 77 Percent of Community Banks Increased Loans From the Year Before All other noninterest income includes items that are greater than $25,000 and exceed 3 percent of all other noninterest income reported. They include income and fees from printing and sale of checks, earnings on increase in value of cash surrender value of life insurance, income and fees from automated teller machines, rent and other income from other real estate owned, safe deposit box rent, net change in the fair values of financial instruments accounted for under a fair value option, bank card and credit card interchange fees, and gains on bargain purchases. Loan balances at community banks totaled $1.4 trillion during the fourth quarter, up $33 billion (2.5 percent) from the third quarter 2014. With close to 70 percent of community banks increasing loans from the previous quarter, quarterly loan growth at community banks outperformed the banking industry (1.8 percent). All major loan categories increased from the previous quarter, led by nonfarm nonresidential loans (up $7.7 billion, or 2 percent), commercial and industrial loans (up $6.3 billion, or 3.4 percent), 1-to-4 family (up $5.4 billion, or 1.5 percent), construction and development (up $2.7 billion, or 3.3 percent), and agricultural production loans (up $2.7 billion, or 5.9 percent). With more than a quarter (26 percent) of the annual industry Chart 3 Chart 4 3 Noncurrent Loan Rates for FDIC-Insured Community Banks Change in Loan Balances and Unused Commitments Billions of Dollars FDIC-Insured Community Banks 25.4 Percent of Loan Portfolio Noncurrent 16 C&D Loans Change 4Q 2014 vs. 4Q 2013 14 Change 4Q 2014 vs. 3Q 2014 19.8 18.6 12 10 12.9 8 10.5 7.7 6.3 2.7 2.7 Nonfarm Nonresidential RE C&I Loans Source: FDIC. FDIC Quarterly 1-to-4 Family Residential RE 7.7 5.7 5.4 C&D Loans 4.2 3.8 1.2 Agricultural Loans to Production Individuals Loans Loan Balances 1.2 Home Equity Nonfarm Nonresidential RE 1-to-4 Family RE C&I Loans Home Equity Credit Cards 2.3 CRE & C&D 6 4 1.1 2 C&I Loans 0 2006 Unused Commitments 2007 2008 2009 2010 2011 2012 2013 2014 Source: FDIC. 16 2015, Volume 9, No. 1 Quarterly Banking Profile loan growth being contributed by community banks, loan balances for community banks grew $108.1 billion (8.6 percent) from fourth quarter 2013. With a yearover-year growth of 8.6 percent, community banks outpaced the industry (5.3 percent). All major loan categories at community banks increased from the year earlier, with 42 percent of the yearly increase being driven by nonfarm nonresidential (up $25.4 billion, or 6.8 percent) and 1-to-4 family (up $19.8 billion, or 5.7 percent). Total unused commercial real estate (CRE) loan commitments—including construction and development—totaled $66.6 billion during the fourth quarter 2014, an increase of $2.3 billion (3.6 percent) from the previous quarter. Growth in unused CRE loan commitments indicates continued credit extension, as off-balance and on-balance CRE loans increased from third quarter 2014. Noncurrent Rate Continued to Decline Community banks reported noncurrent loan balances of $18.7 billion, down $4.4 billion (19.1 percent) from fourth quarter 2013. Close to 61 percent of community banks lowered their noncurrent loan balances from the year before. The noncurrent rate stood at 1.36 percent in the most current quarter, a decline of 14 basis points from the previous quarter, and 43 basis points from the 2013 quarter. The noncurrent rate was down 60 basis points from the banking industry rate of 1.96 percent. Major loan categories had a decline in noncurrent rates from fourth quarter 2013, except for credit cards (up 5 basis points). Construction and development loans continued to have the highest noncurrent rate (2.64 percent), 55 basis points higher than the industry rate of 2.09 percent. However, the noncurrent rate for construction and development loans has declined for 17 consecutive quarters. The quarterly net charge-off rate was 0.25 percent, down 12 basis points from fourth quarter 2013, and it remained below the industry rate of 0.48 percent. Major loan categories had a decline in net charge-off rate from the year earlier, except for credit cards, which grew 87 basis points. Credit cards continued to have the highest net charge-off rate among the major loan categories (4.88 percent); however, this level is well below the 11.9 percent reported in fourth quarter 2008. Small Loans to Businesses Increased From the Previous Quarter and the Year Before Small loans to businesses—loans to commercial borrowers up to $1 million, and farm loans up to $500,000—at community banks totaled $299.6 billion in fourth quarter 2014, up $3.2 billion (1.1 percent) from third quarter 2014. All small loan categories increased, led by commercial and industrial loans (up $1.8 billion, or 2 percent), agricultural production loans (up $0.8 billion, or 2.8 percent), nonfarm nonresidential loans (up $0.5 billion, or 0.3 percent), and farmland loans (up $0.1 billion, or 0.4 percent). Close to 60 percent of community banks reported higher volume in small loans to business from fourth quarter 2013, resulting in an increase of $10 billion (3.4 percent). More than half (52 percent) of the yearly increase in small loans to businesses at community banks was led by commercial and industrial loans (up $5.1 billion, or 5.9 percent). Community banks continued to hold 45 percent of small loans to businesses. FDIC Quarterly Four Community Banks Failed in the Fourth Quarter The number of FDIC-insured community banks totaled 6,037 in fourth quarter 2014, down 70 banks from the previous quarter. Four community banks failed during the quarter. Author: 17 Benjamin Tikvina, Financial Analyst Division of Insurance and Research (202) 898-6578 2015, Volume 9, No. 1 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 (%)�������������������������������������������������������������������� 2014 0.93 8.49 10.58 1.34 0.21 2.31 3.61 5.37 6,037 6.31 2013 0.90 8.28 10.44 1.73 0.32 0.33 3.59 14.49 6,306 8.40 2012 0.83 7.68 10.18 2.27 0.58 2.25 3.67 56.06 6,541 11.15 2011 0.55 5.19 9.98 2.84 0.87 1.60 3.74 207.25 6,798 16.34 2010 0.21 2.07 9.57 3.25 1.11 -2.27 3.71 211.87 7,014 22.16 2009 -0.14 -1.39 9.30 3.26 1.25 3.50 3.56 -157.91 7,249 29.70 2008 0.18 1.69 9.57 2.29 0.68 4.42 3.63 -69.03 7,445 23.71 * Excludes insured branches of foreign banks (IBAs). TABLE II-B. Aggregate Condition and Income Data, FDIC-Insured Community Banks 4th Quarter 2014 6,037 442,233 3rd Quarter 2014 6,107 445,091 4th Quarter 2013 6,306 452,938 %Change 13Q4-14Q4 -4.3 -2.4 $2,064,114 1,039,753 364,961 400,398 85,104 50,063 190,501 59,009 1,826 48,599 31,168 590 1,368,438 18,991 1,349,447 448,768 8,743 12,604 244,551 $2,031,691 1,017,248 355,435 396,549 82,913 49,205 186,274 58,288 1,790 46,094 29,467 573 1,336,798 19,460 1,317,338 452,683 9,449 12,569 239,651 $2,017,457 993,090 349,488 392,183 77,261 47,635 179,463 55,611 1,850 43,287 27,910 553 1,298,806 20,264 1,278,542 461,415 11,358 12,639 253,503 2.3 4.7 4.4 2.1 10.2 5.1 6.2 6.1 -1.3 12.3 11.7 6.6 5.4 -6.3 5.5 -2.7 -23.0 -0.3 -3.5 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������������������������������������������������������������������������������������������� 2,064,114 1,693,611 1,693,380 230 60,581 1,305,346 125,406 497 15,617 228,983 228,852 2,031,691 1,672,415 1,672,198 217 59,437 1,300,099 117,201 400 15,625 226,049 225,895 2,017,457 1,667,710 1,667,469 241 53,555 1,313,732 118,379 447 14,294 216,628 216,485 2.3 1.6 1.6 -4.5 13.1 -0.6 5.9 11.2 9.3 5.7 5.7 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��������������������������������������������������������������������������������������� Full Year INCOME DATA 2014 Total interest income������������������������������������������������������������������� $75,696 Total interest expense����������������������������������������������������������������� 9,102 Net interest income�������������������������������������������������������������� 66,594 Provision for loan and lease losses�������������������������������������������� 2,505 Total noninterest income������������������������������������������������������������� 17,686 Total noninterest expense����������������������������������������������������������� 58,516 Securities gains (losses)������������������������������������������������������������� 559 Applicable income taxes������������������������������������������������������������� 5,194 Extraordinary gains, net�������������������������������������������������������������� 2 Total net income (includes minority interests)��������������������� 18,627 Bank net income������������������������������������������������������������ 18,603 Net charge-offs���������������������������������������������������������������������������� 2,711 Cash dividends���������������������������������������������������������������������������� 9,172 Retained earnings����������������������������������������������������������������������� 9,431 Net operating income����������������������������������������������������������� 18,180 9,515 18,686 10,815 195,080 1,911,229 92,918 250,284 286,949 15,945 43,789 Full Year 2013 $75,695 10,338 65,357 3,196 18,553 59,083 564 4,503 40 17,732 17,709 3,983 8,712 8,997 17,253 9,026 20,022 11,347 197,944 1,879,870 85,853 248,670 238,806 18,900 43,486 4th Quarter 2014 $19,443 2,271 17,172 643 4,628 15,290 167 1,219 1 4,815 4,807 838 3,005 1,802 4,677 10,769 23,245 12,461 203,738 1,858,757 83,871 233,843 275,818 14,862 40,543 4th Quarter 2013 $19,255 2,456 16,799 827 4,218 15,368 25 887 -5 3,954 3,951 1,187 2,654 1,297 3,942 (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�������������������������������������������������������������������������������������������������������� FDIC Quarterly %Change 0.0 -11.96 1.9 -21.6 -4.7 -1.0 -0.8 15.3 -94.1 5.1 5.1 -31.9 5.3 4.8 5.4 -11.6 -19.6 -13.2 -4.2 2.8 10.8 7.0 4.0 7.3 8.0 %Change 13Q4-14Q4 1.0 -7.6 2.2 -22.3 9.7 -0.5 575.1 37.5 N/M 21.8 21.7 -29.4 13.2 38.9 18.7 N/M - Not Meaningful 18 2015, Volume 9, No. 1 Quarterly Banking Profile TABLE III-B. Aggregate Condition and Income Data by Geographic Region, FDIC-Insured Community Banks Geographic Regions* Fourth Quarter 2014 (dollar figures in millions) All Community Banks Number of institutions reporting����������������������������������� 6,037 Total employees (full-time equivalent)������������������������� 442,233 New York 711 87,336 Atlanta 749 58,874 Chicago 1,338 94,098 Kansas City 1,541 72,043 Dallas San Francisco 1,296 402 95,923 33,959 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������������������������������������������������������ $2,064,114 1,039,753 364,961 400,398 85,104 50,063 190,501 59,009 1,826 48,599 31,168 590 1,368,438 18,991 1,349,447 448,768 8,743 12,604 244,551 $524,271 303,519 123,359 106,515 16,419 16,510 45,246 11,623 201 494 8,910 157 369,635 4,395 365,240 103,299 1,151 4,122 50,459 $253,194 135,639 43,334 59,415 14,957 7,897 20,459 7,818 144 1,063 2,082 96 166,964 2,495 164,469 51,089 2,296 1,274 34,067 $387,949 194,622 71,614 70,898 11,802 12,059 35,084 11,952 466 7,820 5,670 85 255,062 3,812 251,251 87,478 1,767 2,184 45,271 $328,097 143,127 47,107 47,953 10,969 4,483 31,129 10,150 468 27,788 5,324 29 217,490 3,078 214,413 73,990 1,367 1,653 36,675 $402,497 177,804 59,036 73,056 24,226 4,522 41,599 13,735 330 9,091 6,567 119 248,677 3,461 245,216 99,284 1,628 2,432 53,938 $168,106 85,042 20,511 42,560 6,731 4,591 16,983 3,731 217 2,343 2,614 103 110,610 1,750 108,860 33,628 535 940 24,143 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����������������������������������������� 2,064,114 1,693,611 1,693,380 230 60,581 1,305,346 125,406 497 15,617 228,983 228,852 524,271 412,609 412,476 133 19,134 310,757 48,069 312 5,291 57,991 57,941 253,194 210,481 210,435 47 6,731 163,188 12,774 44 1,669 28,226 28,209 387,949 321,632 321,605 27 11,427 262,863 20,200 68 2,872 43,177 43,142 328,097 268,642 268,642 0 9,316 214,592 21,522 4 1,845 36,084 36,081 402,497 340,105 340,105 0 8,861 252,169 16,294 7 2,338 43,753 43,728 168,106 140,141 140,118 23 5,112 101,776 6,547 63 1,602 19,754 19,752 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������������������������������������� 9,515 18,686 10,815 195,080 1,911,229 92,918 250,284 286,949 15,945 43,789 2,691 6,122 2,590 57,569 488,524 38,468 62,408 61,702 5,672 15,338 1,480 3,056 1,923 22,340 232,088 9,624 29,952 12,472 520 5,753 1,791 3,885 2,867 35,103 358,514 13,902 46,735 78,826 6,220 6,749 1,089 1,864 1,264 25,388 304,533 14,912 42,408 76,397 766 5,629 2,035 2,655 1,265 38,400 371,243 12,063 45,335 48,588 672 7,100 430 1,104 907 16,280 156,326 3,949 23,447 8,964 2,095 3,221 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�������������������������������������������� $19,443 2,271 17,172 643 4,628 15,290 167 1,219 1 4,815 4,807 838 3,005 1,802 4,677 $4,750 705 4,045 216 857 3,482 76 392 0 888 884 165 386 499 830 $2,471 293 2,178 78 557 2,072 17 88 0 514 513 134 303 210 499 $3,588 409 3,180 97 1,214 3,040 23 267 2 1,014 1,012 241 717 295 992 $3,107 367 2,740 102 722 2,341 25 157 -1 885 885 119 522 363 865 $3,920 370 3,549 138 923 3,064 19 184 0 1,106 1,104 151 840 264 1,089 $1,607 126 1,481 13 354 1,290 7 131 0 408 408 28 237 171 403 * See Table V-A (page 11) for explanations. FDIC Quarterly 19 2015, Volume 9, No. 1 Table IV-B. Fourth Quarter 2014, FDIC-Insured Community Banks All Community Banks 4th Quarter 2014 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������������������������������ 4.11 0.48 3.63 0.91 2.99 0.13 0.92 1.18 0.94 8.48 0.25 76.79 69.80 78.77 9.71 61.17 3rd Quarter 2014 Fourth Quarter 2014, Geographic Regions* New York 4.14 0.49 3.65 0.90 2.94 0.11 0.95 1.24 0.97 8.74 0.17 103.18 68.36 78.95 6.76 62.94 3.93 0.58 3.34 0.66 2.68 0.17 0.64 0.98 0.68 6.15 0.18 130.71 70.69 82.51 10.13 57.38 Atlanta Chicago 4.30 0.51 3.79 0.89 3.31 0.12 0.80 0.96 0.82 7.34 0.32 58.38 75.32 79.63 14.15 63.82 4.03 0.46 3.57 1.26 3.16 0.10 1.03 1.33 1.05 9.46 0.38 40.34 68.87 72.37 10.09 58.82 Kansas City Dallas 4.13 0.49 3.64 0.89 2.89 0.13 1.07 1.29 1.09 9.90 0.22 85.78 67.24 79.13 8.05 61.78 4.28 0.40 3.87 0.93 3.09 0.14 1.10 1.30 1.11 10.22 0.25 90.91 68.24 79.37 7.79 63.35 San Francisco 4.18 0.33 3.85 0.86 3.12 0.03 0.97 1.30 0.99 8.34 0.10 45.58 70.03 80.69 11.94 61.44 Table V-B. Full Year 2014, FDIC-Insured Community Banks All Community Banks Full Year 2014 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������������������������������ 4.10 0.49 3.61 0.89 2.93 0.13 0.91 1.19 0.93 8.49 0.21 92.42 69.10 79.01 6.31 64.12 Full Year 2013 Full Year 2014, Geographic Regions* New York 4.16 0.57 3.59 0.94 2.99 0.16 0.87 1.12 0.90 8.28 0.32 80.24 69.87 77.89 8.40 53.49 3.93 0.60 3.34 0.64 2.65 0.17 0.61 0.96 0.65 5.89 0.21 117.15 70.61 82.91 8.02 59.35 Atlanta 4.32 0.53 3.79 0.86 3.22 0.12 0.77 1.02 0.79 7.23 0.28 65.81 73.92 80.09 10.15 65.55 Chicago 4.02 0.47 3.55 1.20 3.08 0.12 0.99 1.30 1.00 9.16 0.28 66.25 68.44 73.16 7.77 60.01 Kansas City Dallas 4.09 0.50 3.59 0.89 2.79 0.10 1.13 1.36 1.15 10.54 0.16 97.85 65.70 78.85 3.76 66.26 4.25 0.42 3.84 0.91 3.02 0.13 1.11 1.32 1.13 10.47 0.18 115.23 67.54 79.49 3.78 67.05 San Francisco 4.15 0.34 3.81 0.88 3.08 0.04 0.96 1.31 0.98 8.25 0.07 90.06 69.62 80.17 9.20 65.92 * See Table V-A (page 11) for explanations. FDIC Quarterly 20 2015, Volume 9, No. 1 Quarterly Banking Profile Table VI-B. Loan Performance, FDIC-Insured Community Banks Geographic Regions* December 31, 2014 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���������������������������������������������������������� 0.71 0.52 0.44 0.25 0.54 1.21 0.48 1.75 1.84 1.74 0.29 0.70 0.72 0.76 0.44 0.18 0.64 1.14 0.37 2.72 3.26 2.71 0.33 0.73 0.88 0.55 0.54 0.29 0.61 1.59 0.65 1.89 1.46 1.90 0.34 0.89 0.74 0.45 0.44 0.43 0.55 1.25 0.51 1.21 1.22 1.21 0.23 0.70 0.52 0.37 0.32 0.17 0.34 0.93 0.51 1.02 2.91 0.93 0.26 0.50 0.83 0.52 0.55 0.44 0.52 1.44 0.51 2.14 1.14 2.17 0.33 0.82 0.37 0.27 0.25 0.18 0.30 0.73 0.43 0.68 0.91 0.66 0.42 0.39 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���������������������������������������������������������� 1.51 2.64 1.40 0.63 0.82 1.76 1.08 0.84 0.99 0.83 0.58 1.37 1.74 3.13 1.58 0.33 0.90 2.24 1.14 0.95 1.72 0.94 2.30 1.66 1.96 4.38 1.69 1.44 0.81 1.74 1.14 1.88 0.56 1.90 0.61 1.83 1.72 3.13 1.62 1.29 1.01 1.94 1.21 0.48 0.83 0.46 0.45 1.52 0.99 2.03 1.11 0.56 0.48 1.07 1.00 0.49 1.41 0.45 0.27 0.86 1.18 1.46 1.05 0.82 0.59 1.33 0.93 0.83 0.52 0.84 0.33 1.07 1.04 2.00 1.04 0.28 0.60 1.05 1.06 0.37 0.76 0.35 0.52 1.00 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���������������������������������������������������������� 0.17 0.21 0.15 0.10 0.21 0.20 0.31 0.72 4.30 0.60 0.15 0.21 0.19 0.35 0.12 0.03 0.19 0.27 0.28 0.75 5.54 0.66 0.10 0.21 0.23 0.43 0.22 0.28 0.25 0.19 0.39 0.77 1.59 0.75 0.53 0.28 0.26 0.36 0.27 0.24 0.32 0.27 0.36 0.59 3.28 0.48 0.15 0.28 0.11 0.07 0.15 0.13 0.13 0.12 0.31 0.69 8.73 0.31 0.06 0.16 0.09 0.11 0.08 0.18 0.17 0.11 0.30 0.86 1.68 0.84 0.26 0.18 0.01 -0.28 0.05 0.00 0.00 0.01 0.21 0.51 2.05 0.40 0.25 0.07 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���������������������������������������������������������� $1,039.8 85.1 400.4 80.4 50.1 365.0 190.5 59.0 1.8 57.2 79.8 1,369.0 $303.5 16.4 106.5 39.2 16.5 123.4 45.2 11.6 0.2 11.4 9.4 369.8 $135.6 15.0 59.4 5.9 7.9 43.3 20.5 7.8 0.1 7.7 3.1 167.1 $194.6 11.8 70.9 14.0 12.1 71.6 35.1 12.0 0.5 11.5 13.5 255.1 $143.1 11.0 48.0 7.2 4.5 47.1 31.1 10.1 0.5 9.7 33.1 217.5 $177.8 24.2 73.1 6.1 4.5 59.0 41.6 13.7 0.3 13.4 15.7 248.8 $85.0 6.7 42.6 8.0 4.6 20.5 17.0 3.7 0.2 3.5 5.0 110.7 Memo: Unfunded Commitments (in millions) Total Unfunded Commitments��������������������������������������������� Construction and development: 1-4 family residential�� Construction and development: CRE and other����������� Commercial and industrial�������������������������������������������� 250,284 19,549 45,722 85,978 62,408 4,292 13,854 20,058 29,952 3,535 6,469 8,837 46,735 2,106 6,504 17,706 42,408 2,305 5,402 14,634 45,335 5,568 10,139 16,093 23,447 1,743 3,354 8,651 * 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. FDIC Quarterly 21 2015, Volume 9, No. 1 INSURANCE FUND INDICATORS ■ ■ ■ Insured Deposits Grow by 1 Percent DIF Reserve Ratio Rises 13 Basis Points to 1.01 Percent Four Institutions Fail During Fourth Quarter Total assets of the 6,509 FDIC-insured institutions increased by 1.3 percent ($204.4 billion) during the fourth quarter of 2014. Total deposits increased by 1.4 percent ($167.3 billion), domestic office deposits increased by 1.9 percent ($195.2 billion), and foreign office deposits decreased by 2 percent ($27.9 billion). Domestic noninterest-bearing deposits increased by 1.7 percent ($46.6 billion), savings deposits and interest-bearing checking accounts increased by 0.9 percent ($51.8 billion), and domestic time deposits increased by 6 percent ($96.8 billion). For the twelve months ending December 31, total domestic deposits grew by 5.9 percent ($576.9 billion), with interest-bearing deposits increasing by 4.7 percent ($336 billion) and noninterest-bearing deposits rising by 9.2 percent ($240.9 billion).1 Foreign deposits decreased by 0.4 percent, other borrowed money increased by 15.3 percent, while securities sold under agreements to repurchase declined by 9.3 percent over the same twelve-month period.2 At the end of the fourth quarter, domestic deposits funded 66.7 percent of industry assets, the largest share since the fourth quarter of 1993, when the share was 67.9 percent. The condition of the Deposit Insurance Fund (DIF) continues to improve. The DIF increased by $8.5 billion during the fourth quarter to $62.8 billion. The main drivers of the increase were a negative provision for insurance losses of $6.8 billion—reflecting a reduction in estimated losses from failed institution assets—and assessment income of $2 billion. Interest revenue, combined with unrealized gains on availablefor-sale securities and all other revenue (net of expenses) added another $51 million. Fourth quarter operating expenses reduced the fund balance by $408 million. For all of 2014, 18 insured institutions with combined assets of $2.9 billion failed, down from 24 failures with combined assets of $6 billion in 2013. The DIF’s reserve ratio—the fund balance as a percent of estimated insured deposits—was 1.01 percent as of the fourth quarter, up from 0.88 percent in the prior quarter and 0.79 percent one year earlier. Effective April 1, 2011, the deposit insurance assessment base changed to average consolidated total assets minus average tangible equity.4 Revisions to insurance assessment rates and risk-based pricing rules for large banks (banks with assets greater than $10 billion) also became effective on that date.5 Table 1 shows the distribution of the assessment base by institution asset size category as of the fourth quarter. Total estimated insured deposits increased by 1 percent in the quarter ending December 31, and by 3.2 percent for all of 2014.3 For institutions existing at the start and the end of the fourth quarter, insured deposits increased during the quarter at 3,752 institutions (58 percent), decreased at 2,735 institutions (42 percent), and remained unchanged at 31 institutions. 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. 1 FDIC Quarterly There is an additional adjustment to the assessment base for banker’s banks and custodial banks, as permitted under Dodd-Frank. 5 The Fourth Quarter 2010 Quarterly Banking Profile includes a more detailed explanation of these changes. 4 22 2015, Volume 9, No. 1 Quarterly Banking Profile Table 1 Distribution of the Assessment Base for FDIC-Insured Institutions* by Asset Size Data as of December 31, 2014 Asset Size Less Than $1 Billion $1 - $10 Billion $10 - $50 Billion $50 - $100 Billion Over $100 Billion Total Number of Institutions 5,828 574 72 12 23 6,509 Percent of Assessment Base** Total Institutions ($ Bil.) 89.5 $1,184.8 8.8 1,398.9 1.1 1,449.5 0.2 819.2 0.4 8,433.4 100.0 13,285.9 Percent of Base 8.9 10.5 10.9 6.2 63.5 100.0 * 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. Dodd-Frank requires that, for at least five years, the FDIC must make available to the public the reserve ratio and the Designated Reserve Ratio (DRR) using both estimated insured deposits and the new assessment base. As of December 31, 2014, the FDIC reserve ratio would have been 0.47 percent using the new assessment base (compared to 1.01 percent using estimated insured FDIC Quarterly deposits), and the 2 percent DRR using estimated insured deposits would have been 0.93 percent using the new assessment base. Author: 23 Kevin Brown, Senior Financial Analyst Division of Insurance and Research (202) 898-6817 2015, Volume 9, No. 1 Table I-C. Insurance Fund Balances and Selected Indicators 4th Quarter 2014 $54,320 3rd Quarter 2014 $51,059 2nd Quarter 2014 $48,893 1st Quarter 2014 $47,191 2,030 2,009 2,224 2,393 70 80 87 45 0 408 0 406 0 428 0 422 -6,787 -1,663 -204 348 -43 6 6 9 24 8,460 -91 3,261 73 2,166 Ending Fund Balance������� Percent change from four quarters earlier������� 62,780 54,320 33.03 33.27 Reserve Ratio (%)������������� 1.01 (dollar figures in millions) Beginning Fund Balance��� 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��� Deposit Insurance Fund* 4th 3rd 2nd 1st Quarter Quarter Quarter Quarter 2013 2013 2013 2013 $40,758 $37,871 $35,742 $32,958 3rd Quarter 2012 $22,693 2nd Quarter 2012 $15,292 1st Quarter 2012 $11,827 4th Quarter 2011 $7,813 2,339 2,526 2,645 2,937 2,833 2,933 3,694 3,209 23 34 54 -9 66 -8 81 20 33 302 436 156 298 0 439 0 436 0 469 0 442 0 407 0 460 0 334 -4,588 -539 -33 -499 -3,344 -84 -807 12 1,533 9 46 51 55 1,878 57 4,095 63 2,599 25 1,702 -277 6,433 71 2,887 -96 2,129 30 2,784 -22 7,734 7 2,531 -108 7,401 160 3,465 40 4,014 51,059 48,893 47,191 40,758 37,871 35,742 32,958 25,224 22,693 15,292 11,827 34.82 36.79 43.19 61.58 66.88 133.73 178.67 222.85 479.49 NM NM 0.88 0.84 0.80 0.79 0.68 0.64 0.60 0.45 0.35 0.32 0.22 0.17 6,203,524 6,139,153 6,110,547 6,120,779 6,010,854 5,967,558 5,951,124 5,999,614 7,405,043 7,248,466 7,081,206 7,031,331 6,973,468 3.21 2.88 2.68 2.02 -18.83 -17.67 -15.96 -14.67 6.19 7.32 8.55 10.22 10.66 Domestic Deposits����������� 10,408,068 10,213,079 10,099,338 Percent change from four quarters earlier������� 5.93 6.04 7.16 9,962,453 9,825,398 9,631,580 9,424,504 9,454,658 9,474,585 9,084,803 8,937,725 8,848,706 8,782,134 5.37 3.70 6.02 5.45 6.85 7.88 6.55 8.40 10.51 11.34 6,739 6,821 6,900 6,949 7,028 7,092 7,190 7,254 7,317 7,366 Estimated Insured Deposits**�������������������������� Percent change from four quarters earlier������� Number of Institutions Reporting����������������������� 6,518 6,598 6,665 2,224 4th Quarter 2012 $25,224 DIF Reserve Ratios Deposit Insurance Fund Balance and Insured Deposits ($ Millions) Percent of Insured Deposits 1.01 0.80 0.79 0.60 0.64 0.68 0.45 0.32 0.17 0.35 0.22 12/11 6/12 12/12 6/13 12/13 DIF Balance DIF-Insured Deposits 12/11 $11,827 $6,973,468 3/12 15,292 7,031,331 6/12 22,693 7,081,206 0.88 0.84 6/14 12/14 9/12 25,224 7,248,466 12/12 32,958 7,405,043 5,999,614 3/13 35,742 6/13 37,871 5,951,124 9/13 40,758 5,967,558 12/13 47,191 6,010,854 3/14 48,893 6,120,779 6/14 51,059 6,110,547 9/14 54,320 6,139,153 12/14 62,780 6,203,524 Table II-C. Problem Institutions and Failed/Assisted Institutions (dollar figures in millions) Problem Institutions Number of institutions���������������������������������������������������������������������� Total assets��������������������������������������������������������������������������������������� 2014 2013 291 $86,712 467 $152,687 2012 651 $232,701 2011 813 $319,432 2010 884 $390,017 2009 702 $402,782 Failed Institutions 92 157 Number of institutions���������������������������������������������������������������������� 18 24 51 140 $34,923 $92,085 Total assets***���������������������������������������������������������������������������������� $2,914 $6,044 $11,617 $169,709 Assisted Institutions**** 0 0 Number of institutions���������������������������������������������������������������������� 0 0 0 8 $0 $0 $0 $0 $0 Total assets��������������������������������������������������������������������������������������� $1,917,482 * Quarterly financial statement results are unaudited. NM - Not meaningful ** Beginning in the third quarter of 2009, estimates of insured deposits are based on a $250,000 general coverage limit. The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) temporarily provided unlimited coverage for noninterest-bearing transaction accounts for two years beginning December 31, 2010, and ending December 31, 2012. *** Total assets are based on final Call Reports submitted by failed institutions. **** Assisted institutions represent eight institutions under a single holding company that received assistance in 2009. FDIC Quarterly 24 2015, Volume 9, No. 1 Quarterly Banking Profile Table III-C. Estimated FDIC-Insured Deposits by Type of Institution (dollar figures in millions) December 31, 2014 Commercial Banks and Savings Institutions Number of Institutions Total Assets Domestic Deposits* Est. Insured Deposits FDIC-Insured Commercial Banks����������������������������������������������� FDIC-Supervised������������������������������������������������������������������� OCC-Supervised�������������������������������������������������������������������� Federal Reserve-Supervised������������������������������������������������� 5,642 3,719 1,065 858 $14,484,233 2,296,401 9,955,158 2,232,674 $9,549,646 1,780,740 6,272,963 1,495,944 $5,498,463 1,310,632 3,437,487 750,344 FDIC-Insured Savings Institutions���������������������������������������������� OCC-Supervised Savings Institutions����������������������������������� FDIC-Supervised Savings Institutions����������������������������������� 867 448 419 1,069,427 706,826 362,601 818,292 546,639 271,654 676,165 456,501 219,664 Total Commercial Banks and Savings Institutions���������������������� 6,509 15,553,660 10,367,939 6,174,628 Other FDIC-Insured Institutions U.S. Branches of Foreign Banks������������������������������������������������� 9 96,701 40,130 28,895 Total FDIC-Insured Institutions���������������������������������������������������� .. 6,518 15,650,361 10,408,068 6,203,524 * Excludes $1.4 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 September 30, 2014 (dollar figures in billions) Number of Annual Rate in Basis Points Institutions 2.50-5.00 1,476 5.01-7.50 3,043 7.51-10.00 1,177 10.01-15.00 553 15.01-20.00 25 20.01-25.00 267 25.01-30.00 4 30.01-35.00 49 greater than 35.00 4 Percent of Total Institutions 22.37 46.12 17.84 8.38 0.38 4.05 0.06 0.74 0.06 Amount of Assessment Base* $3,451.2 7,985.7 1,007.4 477.4 92.6 54.4 20.5 9.7 8.3 Percent of Total Assessment Base 26.33 60.93 7.69 3.64 0.71 0.42 0.16 0.07 0.06 * 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 25 2015, Volume 9, No. 1 Notes to Users 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 activi ties 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. 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 FDICinsured 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 geographic 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. Summary of FDIC Research Definition of Community Banking Organizations 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 nonbrokered 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. FDIC Quarterly Community banks are designated at the level of the banking. (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 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. 1 26 2015, Volume 9, No. 1 Quarterly Banking Profile • Number of large MSAs with offices ≤ 2 • Number of states with offices ≤ 3 • No single office with deposits > indexed maximum branch deposit size.4 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. Tables I-C through IV-C. 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 CHANGES Private Company Accounting Alternatives, Including Accounting for Goodwill On January 16, 2014, the FASB issued Accounting Standards Update (ASU) No. 2014-02, “Accounting for Goodwill.” 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, existing U.S. GAAP does not 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 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 is permitted, but not required, to adopt this ASU for Call Report purposes and may choose to early adopt the ASU. For example, a calendar year private institution could begin to apply the provisions of ASU 201402 in its Call Report for September 30, 2014, in which case it would report nine months’ amortization of goodwill existing as of January 1, 2014, and the amortization of any new goodwill recognized in the first nine months of 2014. Goodwill amortization expense should be reported unless the amortization is associated with a discontinued operation, in which case the goodwill amortization should be included within the results of discontinued as “Extraordinary items and other adjustments, net of income taxes.” For additional information on the private company accounting alternative for goodwill, institutions should refer to ASU 2014-02, 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 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 double-counting. 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 asset and liability figures used in calculating performance ratios represent average amounts for the period (beginning-ofperiod amount plus end-of-period amount plus any interim periods, divided by the total number of periods). For “poolingof-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. Maximum branch deposit size indexed to equal $1.25 billion in 1985 and $5 billion in 2010. 4 FDIC Quarterly 27 2015, Volume 9, No. 1 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 business 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 Government-Guaranteed 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. This guidance is applicable to fully and partially governmentguaranteed mortgage loans. 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. This other receivable should be reported in “All other assets.” Any interest income earned on the other receivable would be reported in “Other interest income.” Other real estate owned would not be recognized by the institution. For institutions that are public business entities, as defined under U.S. GAAP, 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 201414 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.” Entities can elect to apply ASU 2014-14 on either a modified retrospective transition basis or a prospective transition basis. For additional information, institutions should refer to ASU 2014-14, which is available at http://www.fasb.org/jsp/FASB/Page/SectionPage&cid= 1176156316498. FDIC Quarterly 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 residential 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 foreclosure 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 28 2015, Volume 9, No. 1 Quarterly Banking Profile 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 portion 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 loss-sharing 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 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 loss-sharing 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 loss-sharing 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. 201206 – 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 FDIC Quarterly 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 FDICassisted 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. 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. 29 2015, Volume 9, No. 1 forming TDR loan, if it is in compliance with its modified terms. If a TDR is not in compliance with its modified terms, it is reported as a past-due and nonaccrual loan in the appropriate loan category, as well as distinguished from other past due and nonaccrual loans. To be considered in compliance with its modified terms, a loan that is a TDR must not be in nonaccrual status and must be current or less than 30 days past due on its contractual principal and interest payments under the modified repayment terms. A loan restructured in a TDR is an impaired loan. Thus, all TDRs must be measured for impairment in accordance with ASC Subtopic 310-10, Receivables – Overall (formerly FASB Statement No. 114, “Accounting by Creditors for Impairment of a Loan,” as amended), and the Call Report Glossary entry for “Loan Impairment.” Consistent with ASC Subtopic 310-10, TDRs may be aggregated and measured for impairment with other impaired loans that share common risk characteristics by using historical statistics, such as average recovery period and average amount recovered, along with a composite effective interest rate. The outcome of such an aggregation approach must be consistent with the impairment measurement methods prescribed in ASC Subtopic 310-10 and Call Report instructions for loans that are “individually” considered impaired instead of the measurement method prescribed in ASC Subtopic 450-20, Contingencies – Loss Contingencies (formerly FASB Statement No. 5, “Accounting for Contin gencies”) for loans not individually considered impaired that are collectively evaluated for impairment. When a loan not previously considered individually impaired is restructured and determined to be a TDR, absent a partial charge-off, it generally is not appropriate for the impairment estimate on the loan to decline as a result of the change from the impairment measurement method prescribed in ASC Subtopic 450-20 to the methods prescribed in ASC Subtopic 310-10. Troubled Debt Restructurings and Accounting Standards Update No. 2011-02 – In April 2011, the FASB issued Accounting Standards Update (ASU) No. 2011-02, “A Creditor’s Determination of Whether a Restructuring Is a Troubled Debt Restructuring,” to provide additional guidance to help creditors determine whether a concession has been granted to a borrower and whether a borrower is experiencing financial difficulties. The guidance is also intended to reduce diversity in practice in identifying and reporting TDRs. This ASU was effective for public companies for interim and annual periods beginning on or after June 15, 2011, and should have been applied retrospectively to the beginning of the annual period of adoption for purposes of identifying TDRs. The measurement of impairment for any newly identified TDRs resulting from retrospective application should have been applied prospectively in the first interim or annual period beginning on or after June 15, 2011. (For most public institutions, the ASU takes effect July 1, 2011, but retrospective application begins as of January 1, 2011.) Nonpublic companies should apply the new guidance for annual periods ending after December 15, 2012, including interim periods within those annual periods. (For most nonpublic institutions, the ASU took effect January 1, 2012.) Early adoption of the ASU was permitted for both public and nonpublic entities. Nonpublic entities that adopt early are subject to a retrospective identi fication requirement. For additional information, refer to ASU 2011-02, available at http://www.fasb.org/jsp/FASB/ Page/SectionPage&cid=1176156316498. Extended Net Operating Loss Carryback Period – The Worker, Homeownership, and Business Assistance Act of 2009, which was enacted on November 6, 2009, permits banks and other businesses, excluding those banking organizations that received capital from the U.S. Treasury under the Troubled Asset Relief Program, to elect a net operating loss carryback period of three, four, or five years instead of the usual carryback period of two years for any one tax year ending after December 31, 2007, and beginning before January 1, 2010. For calendar-year banks, this extended carryback period applies to either the 2008 or 2009 tax year. The amount of the net operating loss that can be carried back to the fifth carryback year is limited to 50 percent of the available taxable income for that fifth year, but this limit does not apply to other carryback years. Under generally accepted accounting principles, banks may not record the effects of this tax change in their balance sheets and income statements for financial and regulatory reporting purposes until the period in which the law was enacted, i.e., the fourth quarter of 2009. Therefore, banks should recognize the effects of this fourth quarter 2009 tax law change on their current and deferred tax assets and liabilities, including valuation allowances for deferred tax assets, in their Call Reports for December 31, 2009. Banks should not amend their Call Reports for prior quarters for the effects of the extended net operating loss carryback period. The American Recovery and Reinvestment Act of 2009, which was enacted on February 17, 2009, permits qualifying small businesses, including FDIC-insured institutions, to elect a net operating loss carryback period of three, four, or five years instead of the usual carryback period of two years for any tax year ending in 2008 or, at the small business’s election, any tax year beginning in 2008. Under generally accepted accounting principles, institutions may not record the effect of this tax change in their balance sheets and income statements for financial and regulatory reporting purposes until the period in which the law was enacted, i.e., the first quarter of 2009. Troubled Debt Restructurings and Current Market Interest Rates – Many institutions are restructuring or modifying the terms of loans to provide payment relief for those borrowers who have suffered deterioration in their financial condition. Such loan restructurings may include, but are not limited to, reductions in principal or accrued interest, reductions in interest rates, and extensions of the maturity date. Modifications may be executed at the original contractual interest rate on the loan, a current market interest rate, or a below-market interest rate. Many of these loan modifications meet the definition of a troubled debt restructuring (TDR). The TDR accounting and reporting standards are set forth 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). This guidance specifies that a restructuring of a debt constitutes a TDR if, at the date of restructuring, the creditor for economic or legal reasons related to a debtor’s financial difficulties grants a concession to the debtor that it would not otherwise consider. In the Call Report, until a loan that is a TDR is paid in full or otherwise settled, sold, or charged off, it must be reported in the appropriate loan category, as well as identified as a per- FDIC Quarterly 30 2015, Volume 9, No. 1 Quarterly Banking Profile interim and annual reporting periods thereafter (i.e., as of January 1, 2010, for banks with a calendar year fiscal year). Earlier application is prohibited. Banks are expected to adopt FAS 166 and FAS 167 for Call Report purposes in accordance with the effective date of these two standards. Also, FAS 166 has 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. These changes apply to transfers of loan participations on or after the effective date of FAS 166. Therefore, banks with a calendar year fiscal year must account for transfers of loan participations on or after January 1, 2010, in accordance with FAS 166. In general, loan participations transferred before the effective date of FAS 166 (January 1, 2010, for calendar year banks) are not affected by this new accounting standard and pre-FAS 166 participations that were properly accounted for as sales under FASB Statement No. 140 will continue to be reported as having been sold. Accounting Standards Codification – refer to previously published Quarterly Banking Profile notes: http://www2.fdic. gov/qbp/2011sep/qbpnot.html. 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. These changes apply to transfers of loan participations on or after the effective date of amended ASC Topic 860 (January 1, 2010, for banks with calendar year fiscal year), including advances under lines of credit that are transferred on or after the effective date of amended ASC Topic 860 even if the line of credit agreements were entered into before this effective date. Therefore, banks with a calendar-year fiscal year must account for transfers of loan participations on or after January 1, 2010, in accordance with amended ASC Topic 860. In general, loan participations transferred before the effective date of amended ASC Topic 860 are not affected by this new accounting standard. Under amended ASC Topic 860, if a transfer of a portion of an entire financial asset meets the definition of a “participating interest,” then the transferor (normally the lead lender) must evaluate whether the transfer meets all of the conditions in this accounting standard to qualify for sale accounting. Other-Than-Temporary Impairment – When the fair value of an investment in an individual available-for-sale or held-tomaturity 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://www2.fdic.gov/qbp/2011mar/qbpnot.html. ASC Topics 860 & 810 (formerly FASB Statements 166 & 167) – In June 2009, the FASB issued Statement No. 166, Accounting for Transfers of Financial Assets (FAS 166), and Statement No. 167, Amendments to FASB Interpretation No. 46(R) (FAS 167), which change the way entities account for securitizations and special purpose entities. FAS 166 revised FASB Statement No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities, by eliminating the concept of a “qualifying specialpurpose entity,” creating the concept of a “participating interest,” changing the requirements for derecognizing financial assets, and requiring additional disclosures. FAS 167 revised FASB Interpretation No. 46(R), Consolidation of Variable Interest Entities, by changing how a bank or other company determines when an entity that is insufficiently capitalized or is not controlled through voting or similar rights, i.e., a “variable interest entity” (VIE), should be consolidated. Under FAS 167, a bank must perform a qualitative assessment to determine whether its variable interest or interests give it a controlling financial interest in a VIE. If a bank’s variable interest or interests provide it with the power to direct the most significant activities of the VIE, and the right to receive benefits or the obligation to absorb losses that could potentially be significant to the VIE, the bank is the primary beneficiary of, and therefore must consolidate, the VIE. Both FAS 166 and FAS 167 take effect as of the beginning of each bank’s first annual reporting period that begins after November 15, 2009, for interim periods therein, and for FDIC Quarterly 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 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 seller-provided 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 noncumulative 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.” 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 31 2015, Volume 9, No. 1 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 credit exposure based on the notional amount, the remaining maturity and type of the contract. 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 noninterestbearing transaction accounts as a new temporary deposit insurance account category. All funds held in noninterestbearing 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 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 servicing 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 seller-provided credit enhancements provided by the reporting bank to securitizations. 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. FDIC Quarterly 32 2015, Volume 9, No. 1 Quarterly Banking Profile Mortgage-backed securities – certificates of participation in pools of residential mortgages and collateralized mortgage obligations issued or guaranteed by government-sponsored or private enterprises. Also, see “Securities,” below. Net charge-offs – total loans and leases charged off (removed from balance sheet because of uncollectibility), 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. 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 valuation 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. FDIC Quarterly 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 aver age 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 – definition: (Percent) Well-capitalized Tier 1 Risk-Based Capital* Total Risk-Based Capital* ≥10 and ≥6 and Tier 1 Leverage Tangible Equity ≥5 – Adequately capitalized ≥8 and ≥4 and ≥4 – Undercapitalized ≥6 and ≥3 and ≥3 – Significantly undercapitalized <6 or <3 or <3 Critically undercapitalized – – – and >2 ≤2 * As a percentage of risk-weighted assets. 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. 33 2015, Volume 9, No. 1 Supervisory Group Capital Category A 1. Well Capitalized I 5–9 bps 2. Adequately Capitalized 3. Undercapitalized II 14 bps Total Base Assessment Rates* B C II 14 bps III 23 bps III 23 bps Large and Risk Risk Risk Risk Highly Category Category Category Category Complex I II III IV Institutions 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 longterm 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 longterm 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: FDIC Quarterly 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. [Note: Effective January 1, 2014, a small number of “advanced approach institutions” began reporting Tier 1 capital based on regulatory capital standards approved by the banking agencies in July 2013. For all other FDIC-insured institutions, prior existing reporting will continue until January 2015 when mandatory compliance for all institutions is scheduled to begin. http://www.fdic.gov/regulations/capital/. At that time a revised assessment rate schedule will be used to reflect the changes in the regulatory capital rules. http://www.fdic.gov/ news/news/financial/2014/fil14037.html] 34 2015, Volume 9, No. 1 Quarterly Banking Profile Qualifying Subchapter S corporations and mutual institutions issue unsecured subordinated debentures to the Treasury Department through the SBLF. Depository institutions that issued these 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. 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-balancesheet accounts. Securities – excludes securities held in trading accounts. Banks’ securities portfolios consist of securities designated as “held-to-maturity,” 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-tomaturity 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. FDIC Quarterly 35 2015, Volume 9, No. 1 Brick-and-Mortar Banking Remains Prevalent in an Increasingly Virtual World The lobbies, tellers, drive-through lanes, and vaults associated with physical banking offices have long represented the public face of U.S. banks and thrift institutions. These offices have traditionally provided customers with a full spectrum of financial transactions that support the ordinary business of life: cashing a check, getting a small business loan, applying for a mortgage, opening a savings account. Over time, the spread of automated teller machines (ATMs), the rise of online and mobile banking, and the formation of nonbank sources of credit and transaction services have reduced customers’ day-to-day dependence on physical offices. Nonetheless, as of June 2014, some 6,669 banks and thrifts continued to operate 94,725 brick-andmortar offices, providing testament to the enduring value of physical access to banking services in an increasingly virtual banking world. • Growing population and geographic shifts in population, • Banking crises, • Federal and state legislative changes that relaxed branching laws, and • Technological innovation and the rise of electronic banking. This study discusses the notion of office density in terms of the number of offices per 10,000 people, facilitating a comparison of how “well-banked” an area is compared with other areas at particular points in time. It also takes a closer look at office growth in the most recent period from 2008 to 2014, using more detailed data to go beyond studying net changes and explore the components of gross openings and closings. Overall, the data provide a better understanding of how bank office trends affect community banks, as defined in the 2012 FDIC Community Banking Study.2 This report chronicles long-term trends in the banking offices—the headquarters and branches operated by federally insured banks and thrift institutions—from 1935 to 2014.1 While the number of offices and their density relative to population are estimated back to 1935, this report focuses on the period from 1987 to 2014. The availability of detailed, office-level data for federally insured banks and thrifts during this period provided the FDIC the ability to explore how population and economic growth, as well as technological and legislative forces, have shaped the nation’s bank office footprint over almost three decades. What are the key considerations in an institution’s decision to open or close an office? Many of the factors that determine where to open a new office are specific to the institution and the market in which it operates: its business strategy, competition, experience, real estate costs, and the demographics of the market. Other factors, such as traffic flow and access to a site from nearby roads, are also considered. For an office that is already operating, the institution has data on transactions volume and profitability that can be used when determining whether it should be closed. The collective decisions of individual institutions to open and close offices create the geographic distribution of offices across cities, counties, states, and ultimately the nation. The long-term growth of offices in the United States is highlighted in three distinct cyclical periods since 1987. The total number of offices declined nearly every year between 1989 and 1995, and again between 2009 and 2014. These two periods of decline bracketed a period of significant expansion between 1995 and 2009, when the total number of offices increased each year. This expansion varied geographically and occurred along with the rise of large branch office networks. Four main factors contributed to changes in the distribution of offices since 1987: The number of offices in the United States has increased over the long term. The interval between 1935 and 2014 can be divided into five distinct periods: two periods of expansion and three periods of contraction (see Chart 1). The two expansions occurred between 1945 and 1989, and between 1995 and 2009. Contractions occurred between 1935 and 1945, and between 1989 and 1995, and another that began in 2009. Far more offices have been added during In this paper, “office” refers to the deposit-taking headquarters and branch offices of federally insured banks and thrifts that are identified in the FDIC’s annual Summary of Deposits survey. For years before 1987, offices are identified from historical sources. For the Summary of Deposits definition of “office,” see the 2014 Summary of Deposits Reporting Instructions, p. 9, https://www2.fdic.gov/sod/pdf/ SOD_Instructions.pdf. 1 FDIC Quarterly FDIC, 2012 FDIC Community Banking Study (Washington, DC: Federal Deposit Insurance Corporation, December 2012), https://www. fdic.gov/regulations/resources/cbi/report/cbi-full.pdf. 2 37 2015, Volume 9, No. 1 e xpansions than have been removed during contractions, so that the total number of offices increased by 67,222, or 244 percent, between 1935 and 2014. Chart 1 Retail Offices of U.S. Commercial Banks and Thrifts Have Increased Over Time Total Number of U.S. Bank and Thrift Offices, 1935–2014 Office growth has outpaced the nation’s population growth over the long term and has tended to follow regional migration patterns. Between 1970 and 2014, the U.S. population grew by over 50 percent, while the number of offices more than doubled. Much of the nation’s population growth occurred in the Sunbelt states of the South and West and many of these states also experienced strong office growth. 100,000 80,000 40,000 Based on Historical Sources (1935–1950) Every Five Years Based on Historical Sources (1935–1994) Based on FDIC Summary of Deposits (1987–2014) 20,000 Domestic migration since 1991 has tended to be from states in the Northeast and Midwest to those in the South and West, as shown in Table 1. The patterns of office changes observed in the Northeast and the South suggest that migration can exert a strong influence on where banks locate offices. The Midwest appears to be an outlier. While net migration to the Midwest was negative, the institutions there nevertheless added offices. Factors other than population that help explain the growth in offices are explored in subsequent sections. 0 1935 1941 1947 1953 1959 1965 1971 1977 1983 1989 1995 2001 2007 2013 Historical sources include: FDIC, Historical Statistics on Banking; U.S. League of Savings Associations, Savings and Loan Fact Book; America’s Community Bankers, Savings Institution Sourcebook. Chart 2 The Number of Offices Has Been Highly Cyclical Since the 1980s Total Number of U.S. Bank and Thrift Offices, 1989–2014 100,000 4.8% decline in banking offices 95,000 Most offices in the United States are located in metropolitan (metro) areas, and most of the net office growth since 1987 has occurred in metro areas. Just over 79 percent of offices in 2014 were located in metro areas, up from 77.8 percent in 1987, with 11 percent located in micropolitan (micro) areas and the remaining 10 percent located in rural areas.3 Over 90 percent of the net growth in offices since 1987 occurred in metro areas, 7 percent occurred in micro areas, and slightly more than 2 percent in rural areas. Four of the ten large metropolitan areas that experienced the greatest proportional growth in offices during this period were located in Texas.4 Six of the ten large metros that experienced the greatest proportional loss of offices were located in California. 90,000 5.7% decline in banking offices 22.9% growth in banking offices 85,000 80,000 75,000 1989 1994 1999 2004 2009 2014 Source: FDIC. Table 1 Net Domestic Migration Has Favored the South and West The ten metropolitan areas with the largest proportional increases in population between 1987 and 2013 were located primarily in the Sunbelt. All but one of these metros saw at least 32 percent growth in offices between 1987 and 2014 (see Table 2). Region The metropolitan and micropolitan area definitions used in this study are from the Office of Management and Budget’s 2013 definitions, which are available at http://www.whitehouse.gov/sites/default/files/ omb/bulletins/2013/b-13-01.pdf. The most recent metro area population data are from 2013. A few dozen offices are located outside of the 50 states, the District of Columbia, and Puerto Rico, in other U.S. territories or outlying areas that are not assigned a metropolitan, micropolitan, or rural designation. 4 Large metros had at least 500,000 people in 2013. 3 FDIC Quarterly Contraction Cycle Expansion Cycle 60,000 Annual Average Net Domestic Migration, 1991–2014 Absolute Change in Offices, 1991–2014 Northeast -266,512 -232 Midwest -128,922 2,949 West 28,828 1,390 South 366,606 5,570 Sources: FDIC and U.S. Census Bureau. Population declined or stagnated in some large metros between 1987 and 2013, and nearly all of these cities saw declines in the number of offices. The ten large metro areas in Table 3 that lost the largest percentage of population 38 2015, Volume 9, No. 1 Brick-and-Mortar Banking Table 2 The Top Ten Large Metro Areas by Population Growth Have Tended to See Growth in Banking Offices Percent Change in Population, 1987–2013 Metro Percent Change in Banking Offices, 1987–2014 Absolute Change in Banking Offices, 1987–2014 Las Vegas-Henderson-Paradise, NV 231.5 169.9 231 Raleigh, NC 145.6 35.4 79 Austin-Round Rock, TX 133.2 91.9 228 McAllen-Edinburg-Mission, TX 127.7 135.9 87 Cape Coral-Fort Myers, FL 123.9 42.7 67 Provo-Orem, UT 119.5 32.8 21 Boise City, ID 114.1 82.2 83 Orlando-Kissimmee-Sanford, FL 109.6 57.8 214 Phoenix-Mesa-Scottsdale, AZ 109.2 36.6 241 Riverside-San Bernardino-Ontario, CA 106.4 9.6 52 Sources: FDIC and U.S. Census Bureau. Table 3 The Bottom Ten Large Metro Areas by Population Growth Have Tended to See Declines in Banking Offices Percent Change in Population, 1987–2013 Metro Youngstown-Warren-Boardman, OH-PA Percent Change in Banking Offices, 1987–2014 Absolute Change in Banking Offices, 1987–2014 -10.3 -15.5 -34 New Orleans-Metairie, LA -6.5 -14.0 -59 Pittsburgh, PA -5.4 -11.5 -111 Buffalo-Cheektowaga-Niagara Falls, NY -3.9 2.8 8 Scranton-Wilkes-Barre-Hazleton, PA -2.4 12.4 25 Cleveland-Elyria, OH -2.3 -12.1 -97 Toledo, OH -0.8 -18.9 -41 Dayton, OH 0.8 -12.1 -31 San Juan-Carolina-Caguas, PR 1.1 -3.5 -10 Detroit-Warren-Dearborn, MI 1.3 -3.7 -42 a Sources: FDIC and U.S. Census Bureau. a Population change in Puerto Rico is from 1991 to 2013. between 1987 and 2013, or gained only a small percentage, are located primarily in post-industrial sections of northeastern and midwestern states. The fact that New Orleans experienced the second-largest proportional decline in population speaks to the extraordinary effects of Hurricane Katrina. 1989.5 Growth began to slow down in the early 1980s and plateaued in the late 1980s, before it contracted between 1989 and 1995. Sustained growth in the number of offices reemerged between 1995 and 2009, before once again declining after the financial crisis. The decline from 2009 through 2014 has been about as large in absolute terms as that which occurred from 1989 to 1995 (see Chart 2). Office growth has become more cyclical since the 1980s. The total number of U.S. banking offices expanded almost continuously between 1945 and 5 FDIC Quarterly 39 In 1982, the number of offices declined by 0.3 percent. 2015, Volume 9, No. 1 Map 1 Most States Have Gained Offices Since 1987 Net Gains and Losses in Bank and Thrift Offices, by State, 1987–2014 States by Net Change in Offices, 1987–2014 Lost Offices (15) Gained < 350 Offices (25) Gained > 350 Offices (12) Source: FDIC. Like the period that followed the Great Depression, the two recent periods of decline in banking offices followed major banking crises. Each of these crisis periods was characterized by weak earnings and bank failures, and many institutions were forced to make tough decisions about their use of physical assets. By contrast, the intervening periods of stability were characterized by relatively strong earnings and few failures, enabling many institutions to pursue strategies of growth and expansion. Between 1943 and 1981, the number of FDIC-insured bank failures averaged fewer than five per year. However, the onset of problems in the banking and thrift industries in the early 1980s raised the average number of bank failures to 180 per year between 1982 and 1994. After this crisis subsided, the annual number of failures fell once again to fewer than five per year on average between 1995 and 2007. The onset of the 2008 financial crisis brought about an increase in failures, with over 100 bank failures on average each year between 2008 and 2012. the pattern of office growth has not been uniform across the country (see Map 1). From 1987 to 2014, the number of banking offices declined in 13 states, the District of Columbia, and Puerto Rico, while offices increased in 37 states. The states that gained the most offices during this period lie in a band that stretches through the Midwest from Minnesota to Texas, and that also includes the southeastern states of Tennessee, Georgia, and Florida. In cases such as Texas, where population increased 62 percent, and Florida, where population increased 66 percent, large increases in population help explain increases in the number of bank offices. Legislative changes have been an important driver of geographic differences in office growth since the 1980s. One of the most important legislative changes affecting the geography of banking since the 1980s has been the relaxation of state unit banking laws.6 In 1979, 12 states were unit banking states that prohibited branching outright: Colorado, Illinois, Kansas, Minnesota, Missouri, Montana, Nebraska, North Dakota, Expansion and contraction of offices varied geographically across the United States. As might be expected, FDIC Quarterly 6 40 Unit banking states prohibited banks from branching. 2015, Volume 9, No. 1 Brick-and-Mortar Banking Chart 3 Chart 4 Large Banks Expanded Their Geographic Scope After the Relaxation of Geographic Restrictions on Branching Large Banks, in Particular, Grew the Size of Their Office Networks After the Relaxation of Geographic Restrictions on Banking Average Number of States in Which an Institution Operates Offices, 1987–2014 7 6 Average Size of Office Network, 1987–2014 8 Banks Less Than $10 Billion 5.9 Banks More Than $10 Billion 5 Riegle-Neal Enacted 4 500 7 400 Banks More Than $10 Billion (Right Scale) 2 1.1 1.0 250 200 0 1992 1997 2002 2007 2012 Source: FDIC. 150 186 100 Riegle-Neal Enacted 1 0 1987 300 3 1.8 450 350 4 4 3 1 450 6 5 2 Banks Less Than $10 Billion (Left Scale) 7 1987 1992 1997 50 2002 2007 2012 0 Source: FDIC. Oklahoma, Texas, West Virginia, and Wyoming.7 By 1991, all of these former unit banking states had removed these restrictions.8 As branching restrictions were removed, many of these states saw large increases in total banking offices. Of the ten states that gained the most banking offices between 1987 and 2014, five were former unit banking states and five were states that had imposed other types of geographic restrictions on branching as of 1979.9 The number of offices in the 12 unit banking states increased more than 1.5 percent from 1989 to 1995, during a time when the total number of U.S. banking offices was contracting. Before Riegle-Neal, the permissibility of interstate acquisitions varied by state.11 Another result of legislative change was the nationwide expansion of interstate banking. The Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 (Riegle-Neal) established a uniform standard by which an institution headquartered in one state could branch into, or acquire banks in, any other state, and allowed institutions operating subsidiary charters in different states to combine them into a single interstate bank.10 Both large and small institutions were able to expand geographically as restrictions were relaxed. The effects were especially pronounced in the years between the passage of Riegle-Neal and its nationwide implementation in 1997, when the banking industry experienced its highest annual rates of voluntary charter consolidation.12 Banking consolidation during this period led to more expansive geographic footprints and larger office networks. In 1987, prior to the relaxation of interstate banking restrictions, large institutions (those with at least $10 billion in total assets) operated offices in only 1.8 states on average. Chart 3 shows that these large institutions substantially expanded the number of states in which they operated offices beginning around the same time that interstate banking restrictions were relaxed nationally; Chart 4 shows that the size of their office networks began to rise about the same time. David L. Mengle, “The Case for Interstate Branch Banking,” Economic Review (November/December 1990): p. 6, https://www.richmondfed. org/publications/research/economic_review/1990/pdf/er760601.pdf. 8 B. A. Rehm, “Colorado Ready to Finally Allow Branch Banking,” American Banker (May 10, 1991). 9 Mengle, “Interstate Branch Banking,” 6. Pennsylvania is an example of a state with some historical geographic restrictions on branching: Banks were permitted to branch only into counties contiguous with the county in which they were headquartered. See Jith Jayaratne and Philip E. Strahan, “The Benefits of Branching Deregulation,” Economic Policy Review 3, no. 4 (1997): p. 14, http://www.newyorkfed.org/ research/epr/97v03n4/9712jaya.pdf. 10 Susan McLaughlin, “The Impact of Interstate Banking and Branching Reform: Evidence from the States,” Current Issues in Economics and Finance 1, no. 2 (1995): p. 1, http://www.newyorkfed.org/research/ current_issues/ci1-2.pdf. Some states permitted de novo entry by out-of-state institutions, others permitted entry via acquisition by out-of-state institutions regardless of where they were headquartered, and others permitted entry only to out-of-state banks headquartered in certain regions of the country. See History of the Eighties—Lessons for the Future, vol. 1, chap. 2 (Washington, DC: Federal Deposit Insurance Corporation, 1997), p. 130, https://www.fdic.gov/bank/historical/history/87_136.pdf. 12 Benjamin R. Backup and Richard A. Brown, “Community Banks Remain Resilient Amid Industry Consolidation,” FDIC Quarterly, Vol. 8, No. 2 (2014), p. 34, Chart 2, https://fdic.gov/bank/analytical/ quarterly/2014_vol8_2/article.pdf. 7 FDIC Quarterly 11 41 2015, Volume 9, No. 1 Another ramification of consolidation was the rise of very large office networks.13 In 1987, only one federally insured banking institution operated a network with more than 1,000 offices; most offices were operated by banks and thrifts that had fewer than 50 offices each. By 2014, 11 institutions operated about one-third of all U.S. banking offices, with networks of more than 1,000 offices each (see Chart 5). Chart 5 Consolidation Has Moved Offices Into Large Office Networks Total Offices of Banks and Thrifts, by Office Network Size of Institution,1987–2014 100,000 >1,000 51–1,000 1–50 90,000 80,000 31,874 70,000 60,000 Amid demographic and legislative changes that helped reshape branch banking in the United States, farreaching changes in technology have been transforming how people access banking services. In recent decades, technology has introduced a variety of new ways for customers to access their accounts and interact with their banks. The important banking technologies introduced over the past 50 years include: 50,000 26,905 40,000 30,000 20,000 35,946 10,000 0 1987 Source: FDIC. 1992 1997 2002 2007 2012 for consumers: According to data from the Pew Research Center, 61 percent of Internet users banked online in 2013, up from 44 percent in 2005, and 18 percent in 2000.16 The past ten years have seen the advent of RDC, a technological alternative for one of the most common teller transactions: depositing checks. After the 2004 Check Clearing for the 21st Century Act, banks were authorized to accept electronic deposits based on digital images of checks. Most recently, the widespread adoption of internet-enabled smartphones and tablets has given even more impetus to the development of mobile banking and payments. In 2013, 35 percent of cell phone users said they had used their phone to check their bank account or perform transactions, up from 18 percent in 2011.17 • ATMs; • credit and debit cards; • telephone banking; • remote deposit capture (RDC)—scanning checks from a home or business and sending them to the bank electronically for deposit; • online (internet) banking—accessing a bank account via a laptop, desktop, or tablet computer; and • mobile banking—accessing a bank account via cell phone or smartphone. The cumulative effect of these new technologies has been a decline in the number of transactions taking place at physical banking offices. One study shows that the average number of teller transactions per office declined by 45 percent between 1992 and 2013, from 11,700 transactions per month to 6,400.18 Using a credit or debit card has become more common than writing a check. According to Federal Reserve data, paper checks accounted for only 15 percent of noncash payments in 2012, down from 46 percent in 2003. By contrast, universal credit and debit cards accounted for 58 percent of noncash payments in 2012, up from 38 percent in 2003. The total number of noncash trans- ATMs made their U.S. debut in 1969 and soon spread across the nation, reaching 425,000 by 2010.14 Universal credit cards became more common in the 1970s, followed by debit cards in the 1990s, giving consumers new payment alternatives at the point of sale.15 Telephone banking appeared in the 1970s, followed by the beginning of online banking in the 1990s. Online banking has become an increasingly popular channel For more about consolidation among FDIC-insured banks and thrifts, see Backup and Brown, “Community Banks Remain Resilient Amid Industry Consolidation.” 14 National ATM Council Inc., http://natmc.org/documents/2012/10/ about-the-atm-industry.pdf. 15 For credit cards see Thomas A. Durkin, “Credit Cards: Use and Consumer Attitudes, 1970–2000,”Federal Reserve Bulletin, September 2000, pp. 624–625, http://www.federalreserve.gov/pubs/ bulletin/2000/0900lead.pdf. For debit cards see Fumiko Hayashi, Richard Sullivan, and Stuart E. Weiner, “A Guide to the ATM and Debit Card Industry,”Federal Reserve Bank of Kansas City, 2003, pp. 41–42, http://www.kc.frb.org/publicat/psr/bksjournarticles/atmpaper.pdf. 13 FDIC Quarterly Size of Office Network Susannah Fox, “51% of U.S. Adults Bank Online,” Pew Research Center (August 7, 2013), p. 9, http://www.pewinternet.org/files/oldmedia//Files/Reports/2013/PIP_OnlineBanking.pdf. 17 Ibid, p. 10. Pew first asked about mobile banking in 2011. 18 Financial Management Solutions Inc., 2013 FMSI Teller Line Study (N.P., 2013), http://www.fmsi.com/fullpanel/uploads/files/2013-fmsiteller-line-study-white-paper-00001.pdf. 16 42 2015, Volume 9, No. 1 Brick-and-Mortar Banking actions grew by 50 percent from 2003 to 2012, as the number of checks written declined.19 Types of Banking Offices Not all physical banking offices take the same form. According to the 2014 FDIC Summary of Deposits survey, more than 90 percent of total banking offices take the form of stand-alone, full-service offices. At a distant second are those offices located in another retail establishment, such as a grocery store (see Chart 6). Together, in-store offices and stand-alone offices make up 96 percent of the offices operated by FDIC-insured institutions. Even with the innovations of the past 50 years, consumers continue to value and use physical banking offices. Today there are more banking offices per capita than in 1970, when many of today’s most popular electronic banking alternatives either did not yet exist or were not yet widely available. Moreover, according to the 2013 FDIC National Survey of Unbanked and Underbanked Households, visiting a teller remains the most common way for households to access their accounts.20 Although mobile banking would appear to be an appealing substitute for bank office visits, and is a fast-growing option, it remains one of the least common ways for consumers to access their accounts.21 Among households that preferred online or mobile banking, most also reported visiting tellers to access their accounts.22 Historical sources suggest that in-store branches were rare among commercial banks until they boomed in the late 1980s. The number of these offices grew an average of nearly 30 percent per year from 1986 to 1996.a Although in-store offices can cost considerably less to open (from one-fifth to one-third of the startup cost of a stand-alone office), for many banks they tend to generate fewer loans and deposits—and thus less income—than stand-alone, full-service offices.b Nonetheless, as alternative payment and banking methods become more mainstream, fewer transactions are being conducted at offices. The rise of RDC, more sophisticated ATM terminals, and the proliferation of smartphones appear to be reducing the frequency with which bank customers are visiting their local branch to perform simple transactions. Moreover, the frequency of visits is lower for younger individuals. A recent survey indicates that 19 percent of people ages 18 to 29 visited a bank or credit union branch in the previous week, compared with 29 percent of those ages 30 to 49.23 However, the available data on balance show that most bank customers continue to place value on physical offices as part of a diverse suite of retail banking options. Chart 6 Ninety-Six Percent of Offices Are Stand-Alone or Located Within a Retail Establishment Percent of Total Offices, by Type of Office, June 2014 100% 90.2% 80% 60% 40% 20% 0% In order to evaluate how technological alternatives may affect the total number of physical banking offices, a measure of how prevalent those offices are relative to the total demand for banking services is needed. If physical banking offices were indeed becoming less prevalent over time, then that would provide some Stand-Alone In-Store Full-Service Full-Service Offices Offices Source: FDIC. 0.2% 1.1% 2.7% Home LimitedOther Banking Service LimitedOffices Drive-Through Service Offices Offices Christopher A. Williams, “Banks Go Shopping for Customers,” The Regional Economist (October 1997), N.P., https://www. stlouisfed.org/publications/re/articles/?id=1789. b “US Bank Excels in In-Store Banking” (Retail Banking Strategies, February 2010); “BOK’s Decision to Ditch In-Store Branches Shows Banks’ Predicament” (Barlow Research Associates Inc., November 2014). a Federal Reserve System, The 2013 Federal Reserve Payments Study—Summary Report and Initial Data Release (Federal Reserve System, 2013, revised July 2014), p. 42, http://www.frbservices.org/ files/communications/pdf/general/2013_fed_res_paymt_study_ summary_rpt.pdf. 20 FDIC, 2013 FDIC National Survey of Unbanked and Underbanked Households (Washington, DC: Federal Deposit Insurance Corporation, October 2014), p. 53, Figure 8.1, https://fdic.gov/householdsurvey/ 2013report.pdf. 21 Ibid. 22 Ibid, p. 59, Table 8.3. 23 Chris Kahn, “March 2014 Financial Security Survey,” BankRate.com (2014), N.P., http://www.bankrate.com/finance/consumer-index/ financial-security-charts-0314.aspx. 19 FDIC Quarterly 5.8% evidence that new banking technologies may represent substitutes for those banking offices in serving bank customers. But if physical banking offices are as prevalent or more prevalent today than they were in the past, then perhaps technology should not be viewed as a perfect substitute for brick-and-mortar banking offices. 43 2015, Volume 9, No. 1 Measuring Office Density Chart 7 There are a number of alternative ways one might attempt to measure the prevalence of physical banking offices. All of them are related in some way to population density. For example, because the population of New York City is more than 125 times greater than that of Bismarck, North Dakota, the fact that New York City has more banking offices than Bismarck does not necessarily mean that banking offices are more prevalent in New York. The density of banking offices should be expressed by a measure that scales the number of offices in different places so they can be compared. Past researchers have taken several approaches to make this comparison. A recent FDIC study estimated service areas for offices based on reasonable travel distances.24 Similarly, Ergungor (2010) calculated a measure of office access for Census tracts in Ohio that uses all offices within ten miles of a tract’s center.25 Office Density Has Declined in Recent Years, but Remains Higher Than at Any Time Before 1977 Estimated Number of Bank and Thrift Offices per 10,000 People, United States, 1935–2014 4.0 3.4 3.5 3.0 2.9 2.5 2.2 2.0 1.5 1.0 0.5 0.0 Based on Historical Sources (1935–1950) Every Five Years Based on Historical Sources (1935–1986) and FDIC Summary of Deposits (1987–2014) 1935 1941 1947 1953 1959 1965 1971 1977 1983 1989 1995 2001 2007 2013 Sources: FDIC and U.S. Census Bureau. Historical sources include: FDIC, Historical Statistics on Banking; U.S. League of Savings Associations, Savings and Loan Fact Book; America’s Community Bankers, Savings Institution Sourcebook. Chart 8 Office Density Declined Overall Between 1987 and 2014, but Rose in Former Unit Banking States A simpler way to express the density of banking offices is to calculate the number of offices per 10,000 people for a location. Offices per 10,000 people is easy to construct and understand, and although other measures might include additional relevant variables, offices per 10,000 people still can be used to make meaningful comparisons over time and across geographies. Chart 7 depicts the density of banking offices between 1935 and 2014 in terms of this definition. State Branching Category as of 1979 Statewide Branching -0.9 Other Geographic Restrictions on Branching -0.5 0.2 Unit Banking The factors that determine the number of offices also help shape changes in density. Chart 7 shows that the density of banking offices increased from 2.2 in 1970 to 2.9 in 2014—a period during which population grew by 56 percent and the number of offices grew by 109 percent. Thus the per capita density of offices increased by about one-third during a period when a number of important banking technologies were being introduced. Like the total number of banking offices, the density of banking offices follows cyclical patterns. Clear and substantial declines in office density were observed after the banking crises of the 1930s, the 1980s, and the 2000s. Nation -0.5 -1.2 -0.8 -0.4 0.0 0.4 Change in Number of Bank and Thrift Offices per 10,000 People From 1987 to 2014 Sources: FDIC and U.S. Census Bureau. state restrictions on branching. States with the strongest restrictions on branching in 1979 saw an increase in office density once those restrictions were lifted, while states with some geographic restrictions on branching saw a decline in density equal to the national average. The largest decline in density after 1987 was observed among states that already allowed statewide branching in 1979. These results are consistent with the idea that unit banking laws had restricted the desired prevalence of banking offices in these states before 1987, and that the elimination of the restrictions contributed to increases in banking offices since then (see Chart 8). There is evidence that changes in density at the state level also have been influenced by the relaxation of Eric C. Breitenstein, Karyen Chu, Kathy Kalser, and Eric W. Robbins, “Minority Depository Institutions: Structure, Performance, and Social Impact,” FDIC Quarterly, Vol. 8, No. 3 (2014): p. 56. https://fdic.gov/ bank/analytical/quarterly/2014_vol8_3/mdi_study.pdf. 25 Ozgur Emre Ergungor, “Bank Branch Presence and Access to Credit in Low- to Moderate-Income Neighborhoods,” Journal of Money, Credit, and Banking, Vol. 42, No. 7 (October 2010): pp. 1327–28. 24 FDIC Quarterly Changes in the density of offices since the 1970s further suggest that new technologies have had, at best, a limited effect on the prevalence of offices. Because mobile, ATM, online, and other alternative banking channels reduce the number of transactions that require 44 2015, Volume 9, No. 1 Brick-and-Mortar Banking Changes in Density at the State and County Level Per capita density can be used to compare the relative prevalence of physical banking services across geographies as well as over time. For the United States as a whole, the density of banking offices has declined by about 15 percent since 1987. But to the extent that the measure of density expresses how “well banked” a specific area is, one might expect to see less well banked areas become more dense over time, while more densely banked areas become less dense over time. To the extent that this is the case, the location of banking offices would represent a “meanreverting” process, where extremes to the high side or the low side are narrowed by market forces over time. The data, however, suggest that changes in banking density over time at the state and county level are generally not mean-reverting. Chart 9 shows that changes in state-level density between 1987 and 2014 appear to be unrelated to the density of banking offices in each state at the beginning of the period. Similarly, Chart 10 shows that changes in county-level density between 1987 and 2013 also were unrelated to density at the beginning of the period.a Taken together, these charts suggest that states and counties that started out with higher-thanaverage density tended to stay that way over time, as did states and counties with below-average density. One reason why density tends not to be mean-reverting across states and counties is the presence of relatively stable long-term differences in density between metro, micro, and rural counties. Chart 11 shows that among these three county types, rural counties exhibit the highest average density, followed by micro counties, with metro counties showing the lowest average density. The intuition behind these differences seems clear: Because people live farther apart in less populated rural areas, a higher number of banking offices per 10,000 people is necessary to adequately serve those areas. Chart 11 also shows that the differences in density between county types have remained fairly stable over time. Average density in rural and micro counties, in particular, has declined very little since 1987. It takes about as many offices, in per capita terms, to serve rural and micro counties today as it did in 1987. By contrast, density in metro counties has undergone a 15 percent decline since 1987. accelerated compared with the period between 1970 and 2000. With rural counties having an average office density that was nearly twice that of metro counties in 2013, the movement of people out of rural counties and into metro counties had the effect of lowering the density of banking offices for the nation as a whole. Chart 9 State-Level Office Density in 1987 Did Not Predict Subsequent Changes in Density Percent Change in the Number of Bank and Thrift Offices per 10,000 People, 1987–2014 1.5 1.0 0.5 0.0 -0.5 R2 = 0.0022 -1.0 -1.5 -2.0 0 1 6 2 3 4 5 Number of Offices per 10,000 People in 1987 7 Sources: FDIC and U.S. Census Bureau. Note: Includes the District of Columbia and Puerto Rico. Chart 10 County-Level Office Density in 1987 Did Not Predict Subsequent Changes in Density Change in the Number of Bank and Thrift Offices per 10,000 People, 1987–2013 20 15 10 5 R2 = 0.0019 0 -5 -10 -15 0 5 10 15 20 Number of Offices per 10,000 People in 1987 25 Sources: FDIC and U.S. Census Bureau. Note: Includes counties of the 48 contiguous states. Chart 11 Differences in Average Density Across County Types Have Remained Stable Over Time Number of Bank and Thrift Offices per 10,000 People by County Type, 1987–2013 Part of the decline in U.S. office density that has taken place since the mid-1980s can be attributed to the multidecade trend of rural depopulation in the United States.b Between 1980 and 2010, while the nation’s population was growing by 36 percent, half of U.S. rural counties lost population. Moreover, the depopulation trend actually 6 The most recent county population data are from 2013. See John M. Anderlik and Richard D. Cofer Jr., “Long-Term Trends in Rural Depopulation and Their Implications for Community Banks,” FDIC Quarterly, Vol. 8, No. 2 (2014), https://www. fdic.gov/bank/analytical/quarterly/2014_vol8_2/article2.pdf. 1 5 4 5.1 5.0 4.1 3.9 3.3 2.8 3 2 a Metropolitan Counties Micropolitan Counties Rural Counties 1990 1999 2008 b FDIC Quarterly 0 1987 1993 1996 2002 2005 2011 Sources: FDIC and U.S. Census Bureau. 45 2015, Volume 9, No. 1 a visit to a banking office, one might expect that banks should be able to operate fewer offices and still serve the same number of customers. However, at 2.9 offices per 10,000 people in 2014, the density of offices is currently greater than at any time before 1977, when many of today’s banking technologies were either not available or had not yet become mainstream. Despite the far-reaching innovations that have occurred in the delivery of banking services, the ongoing presence of large numbers of physical offices suggests that they still create real value in allowing banks to interact with their customers. Chart 12 FDIC-Insured Institutions Have Opened and Closed Thousands of Offices Since 2008 Additions and Subtractions From Bank and Thrift Offices, by Source, 2008–2014 New Offices Opened 1,010 Offices Closed Due to Failures -1,159 Offices Closed Due to Mergers -1,087 -13,324 -20,000 -15,000 -10,000 -5,000 In addition to the long-term trends in the number and location of offices, it is also important to understand the components of structural change between periods. For example, how many new offices were opened by existing banks versus new banks? How many offices were closed as a result of failures, mergers, or charter consolidations versus rationalization of branch structures by surviving institutions? The availability of more detailed data starting in 2008 allows for a closer look at changes in office structure that can address these issues. 10,122 Offices Newly Added to Survey All Other Closings Components of Structural Change 0 5,000 10,000 15,000 20,000 Changes in Offices, 2008–2014 Sources: FDIC. Chart 13 Gross Openings of Offices Operated by FDIC-Insured Institutions, 2008–2014 3,500 81 3,000 Opened by Existing Banks Opened by New Banks 2,500 2,000 FDIC-insured institutions opened and closed thousands of offices between 2008 and 2014.26 Chart 12 shows that just more than 11,000 unique offices were added to the FDIC’s Summary of Deposits survey during this six-year period, the vast majority of which were newly created offices, as opposed to pre-existing offices being newly added to the survey. Of the 15,500 offices that were closed over this period, just a small fraction were closed as a direct result of bank failures or mergers. 15 1,500 18 2,800 1,000 1,731 500 0 2009 Source: FDIC. 2010 21 1,434 1,452 1,362 1,208 2011 2012 2013 2014 Chart 14 Another important recent trend has been a sustained slowdown in the number of newly created offices, which was exceeded in almost every year by the number of offices closed (see Charts 13 and 14). Office openings since 2008 have been held back in part by a lull in the creation of new banking charters, while office openings at existing institutions have also declined in a less than favorable economic environment. Only 15 new charters were established between 2010 and 2013, compared with 510 new charters between 2006 and 2009.27 Some Gross Closings of Offices Operated by FDIC-Insured Institutions, 2008–2014 0 -500 -1,000 -2,018 -2,190 -2,021 -2,100 -2,291 -1,500 -2,000 -2,500 -625 -230 -309 -729 Openings and closings are measured from June of each year. Backup and Brown, “Community Banks Remain Resilient,” p. 35. New charters include de novo institutions, preexisting institutions that converted to an insured bank or thrift (such as conversions from credit unions), as well as any other newly insured banking institution that filed a year-end financial report. 27 -3,500 -271 Other Office Closings 2009 Source: FDIC. 46 2010 -2,615 -171 -3,000 26 FDIC Quarterly Net Change 2008–2014: -4,438 2011 Closed After Merger or Failure 2012 2013 2014 2015, Volume 9, No. 1 Brick-and-Mortar Banking large institutions have also recently announced plans to rationalize their branch structures as a means to control costs after the financial crisis, while others pared back office expansion plans.28 Chart 15 The Vast Majority of Office Openings and Closings Occur in Metro Areas Offices Opened and Closed by FDIC-Insured Institutions, by Area, 2008–2014 Closings As a percent of offices operating in 2008, more openings and closings of banking offices occurred in metro areas between 2008 and 2014 than in micro or rural areas (see Chart 15). While 79 percent of offices were located in metro areas in 2008, some 85 percent of office closings and 89 percent of office openings through 2014 occurred in metro areas. By contrast, 11 percent of offices located in micro areas in 2008 saw only 9 percent of office closings and 7 percent of office openings through 2014. Similarly, while 10 percent of offices were located in rural areas in 2008, rural areas saw only 6 percent of office closings and 4 percent of openings through 2014. 9,049 Metro -13,292 Micro -1,372 670 Rural -890 400 -20,000 -15,000 -10,000 -5,000 0 5,000 10,000 15,000 20,000 Sources: FDIC. Chart 16 A Majority of Offices Continue to Operate Immediately After a Bank Exit Notably, the data indicate that the majority of the offices operated by FDIC-insured institutions that fail or merge out of existence continue operating under new ownership after the failure or merger. About 78 percent of the offices of failed banks continued to report in the next Summary of Deposits survey, as did nearly 85 percent of the offices operated by banks undergoing a voluntary merger or consolidation (see Chart 16). Percent of Offices Surviving Immediately After a Bank Closing, by Type of Closing, September 2008–June 2014 100% 80% 78.4% 84.6% 60.0% 60% 40% 20% Although banks of all sizes have closed offices since 2008, office closings have been concentrated among just a few large institutions. Since 2008, just 15 institutions have accounted for one-third of all gross office closings. These 15 institutions include some of the nation’s largest banks, as well as large regional banks, two of which—Washington Mutual and Wachovia—failed or were forced to merge during the crisis. Other large institutions have pared back their extensive office networks as part of their post-crisis restructuring efforts. In all, just 52 institutions have accounted for one-half of office closings since 2008. 0% Bank Failure Bank Voluntary Merger / Consolidation Other Bank Closing Type of Bank Closing Source: FDIC. Note: Reflects percent of offices appearing on next FDIC Summary of Deposits survey following bank closing. charters declined by 45 percent between 1994 and 2014, while the number of noncommunity bank charters declined by 71 percent. However, amid these substantial declines in banking charters, the number of community banking offices declined by just 6.5 percent, while the number of noncommunity banking offices increased by 36 percent (see Chart 17).30 The net result was an increase in the average size of the community bank office network, from 3.2 offices in 1994 to 5.5 offices in 2014, while the average number of offices operated by noncommunity banks rose from 26.4 to 123.5. So while community banks experienced modest increases in the size of their office networks, these networks remained at sizes that were generally more amenable to local control and decision-making than Trends in Community Bank Offices Because of their focus on relationship banking, trends in office structure are particularly important for community banks.29 Amid a long-term trend of banking industry consolidation, the number of community bank J. Ma, “Wells Fargo Mulls Fewer Branches as Rivals Cut Back,” Investor’s Business Daily, March 7, 2012. 29 For the definition of “community bank,” see Chapter 1 of the FDIC Community Banking Study, 2012, https://fdic.gov/regulations/ resources/cbi/report/cbi-full.pdf. 28 FDIC Quarterly Openings Change in banking charters and offices calculated from midyear 1994 through midyear 2014. 30 47 2015, Volume 9, No. 1 Chart 17 Chart 18 The Number of Community Bank Offices Has Remained Stable Since the Mid-1990s, While Noncommunity Banks Have Added Offices Community Banks Hold the Majority of Deposits in Micropolitan and Rural Counties Community Bank Share of Local Deposits, 1987–2014, by County Type 100% Rural Counties Total Offices of FDIC-Insured Institutions, 1987–2014 100,000 80% Micropolitan Counties 80% Metropolitan Counties 72% 80,000 60,000 60% 69% Noncommunity Banks 40% 36% 40,000 20,000 20% Community Banks 0 1987 1990 1993 1996 1999 2002 2005 2008 2011 2014 13% 0% 1987 1990 1993 1996 1999 2002 2005 2008 2011 2014 Source: FDIC. Source: FDIC. Chart 19 the dozens or hundreds of offices operated by many noncommunity banks. Community Banks Have Tended to Open More New Offices and Close Fewer Existing Offices Than Noncommunity Banks The 2012 FDIC Community Banking Study observed that community banks held the majority of local deposits in rural and micro counties through 2011.31 Data through 2014 indicate that community banks continue to maintain these majorities, and now hold 72 percent of deposits in U.S. rural counties and 56 percent of deposits in micro counties (see Chart 18). While the majority of community bank deposits continue to be held in metro counties, the community banks’ share of total metro area deposits has declined from 36 percent in 1987 to 13 percent in 2014. It is primarily this loss of market share in metro areas that has driven down the community bank share of total industry deposits from 41 percent in 1987 to 16 percent in 2014. Community Banks Source of Change: Net Change -8.8% Noncommunity Banks Net Change -1.9% +11.5% Gross Office Openings Gross Office Closings Net Transfer Between Groups New Offices Added to Survey Sources: FDIC. +9.5% -13.0% -17.3% -8.6% +5.1% +1.3% +0.8% -20 -15 -10 -5 0 5 10 15 Percent Change in Number of Offices, 2008–2014 of banking deposits in 2014. These counties accounted for nearly 40 percent of all counties and 7.3 percent of the U.S. population. Noncommunity banks held at least 75 percent of banking deposits in 738 counties, accounting for 23 percent of all counties and 64 percent of the U.S. population. The 2012 Study also identified 629 counties in which community banks operated 100 percent of all banking offices as of 2011.32 This report extends that analysis by identifying 646 counties where community banks held 100 percent of local deposits as of 2014 (see Map 2).33 Further insight into markets where community banks predominate is provided in Map 2; shaded regions indicate counties where community banks hold between 75 percent and 99 percent of total deposits. In all, there were 1,244 counties in the United States and Puerto Rico where community banks held at least 75 percent It has already been observed that the total number and density of banking offices have declined during the post-crisis period and that total office closings have exceeded office openings since 2010. However, amid these trends, community banks proved more reluctant to close branches and more willing to open new branches than did noncommunity banks. Chart 19 shows that the number of new offices opened by community banks between 2008 and 2014 was equal to 11.5 percent of the offices they operated in 2008, FDIC Community Banking Study, p. 3-6. Ibid, p. 3-5. 33 “Counties” refers to counties and other geographic areas (parishes, municipios, districts, and islands, for example) within the 50 states, the District of Columbia, and Puerto Rico that are treated as county equivalents by the U.S. Census Bureau. 31 32 FDIC Quarterly 56% 48 2015, Volume 9, No. 1 Brick-and-Mortar Banking Map 2 compared with 9.5 percent for noncommunity banks. The chart also shows that the number of offices closed by community banks during this period was equal to 13 percent of the offices they operated in 2008, compared with 17.3 percent for noncommunity banks. This comparison is consistent with the notion that community banks remain more reliant on physical banking offices than do noncommunity banks. therefore their banking offices) that fail or merge are acquired by other community banks, this percentage declines with the size of the institution.34 Between 2003 and 2013, some 85 percent of community banks with assets less than $100 million were acquired by other community banks, compared with just 10 percent of community banks with assets between $1 billion and $10 billion. Chart 19 also shows that the total number of community bank offices declined by 8.8 percent between 2008 and 2014, compared with a decline of just 1.9 percent for noncommunity banks. All of this differential in the growth rate for banking offices between community and noncommunity banks can be accounted for by the net transfer of offices between the two groups as a result of failures, mergers, branch sales, or changes in the size or structure of the institution. While previous research has shown that nearly two-thirds of community banks (and Conclusion FDIC Quarterly This paper chronicles the historical evolution of the banking industry, focusing on the physical banking offices operated by federally insured banks and thrifts. The number of U.S. banking offices has generally grown with population in recent decades, reaching an all-time peak as recently as 2009. There has also been considerable cyclicality in the number of offices that Backup and Brown, “Community Banks Remain Resilient Amid Industry Consolidation,” pp. 40–41. 34 49 2015, Volume 9, No. 1 References has coincided with banking crises that occurred in the late 1980s and again in the late 2000s. Geographic variation in office growth over time appears to be associated with differences in population growth and with the varying regional effects of legislative changes that have relaxed or eliminated restrictions on branch banking and interstate banking. New technologies introduced since at least the 1970s have expanded the number of ways that customers can interact with their bank. Yet surveys continue to show that visiting a teller continues to be the most common way for households to access their accounts. Banking offices remain prevalent. The total per capita density of banking offices in 2014 was higher than in any year before 1977, and the density of banking offices in rural and micropolitan counties has declined very little over the past 25 years. America’s Community Bankers. Savings Institution Sourcebook, 1995, Washington, D.C., 1995. Anderlik, John M. and Richard D. Cofer Jr. “Long-Term Trends in Rural Depopulation and Their Implications for Community Banks.” FDIC Quarterly, 8 (2), 2014. http:// fdic.gov/bank/analytical/quarterly/2014_vol8_2/article2.pdf Backup, Benjamin R. and Richard A. Brown. “Community Banks Remain Resilient Amid Industry Consolidation,” FDIC Quarterly, 8 (2), 2014. https://fdic.gov/bank/analytical/ quarterly/2014_vol8_2/article.pdf Barlow Research Associates Inc. “BOK’s Decision to Ditch In-Store Branches Shows Banks’ Predicament,” November 2014. Breitenstein, Eric C., Karyen Chu, Kathy Kalser, and Eric W. Robbins. “Minority Depository Institutions: Structure, Performance, and Social Impact,” FDIC Quarterly, 8, (3), 2014. https://fdic.gov/bank/analytical/quarterly/2014_ vol8_3/mdi_study.pdf More detailed office data available for the past seven years show that, although FDIC-insured institutions have opened and closed thousands of banking offices since 2008, the number of office closings has consistently outpaced openings of new offices since 2010. Over the past seven years, community banks have opened proportionately more offices and closed fewer offices than noncommunity banks. Still, the total number of community bank offices declined more than the number of noncommunity bank offices because of the conversion of charters to noncommunity status caused by failures, mergers, and changes in the size and structure of the institution. Durkin, Thomas A. “Credit Cards: Use and Consumer Attitudes, 1970–2000,” Federal Reserve Bulletin, September 2000. http://www.federalreserve.gov/pubs/bulletin/2000/ 0900lead.pdf Ergungor, Ozgur Emre. “Bank Branch Presence and Access to Credit in Low- to Moderate-Income Neighborhoods,” Journal of Money, Credit and Banking, Vol. 42, no. 7 (October 2010). Federal Deposit Insurance Corporation. 2013 FDIC National Survey of Unbanked and Underbanked Households, Washington, D.C., October 2014. https://fdic.gov/ householdsurvey/2013report.pdf Federal Deposit Insurance Corporation. FDIC Community Banking Study, Washington, D.C., December 2012. https:// www.fdic.gov/regulations/resources/cbi/report/cbi-full.pdf This analysis shows that physical offices remain a vital channel through which FDIC-insured institutions deliver financial services to their customers. New technologies have certainly created convenient new ways for bank customers to conduct business, yet there is little evidence that these new channels have done much to replace traditional brick-and-mortar offices where banking relationships are built. Convenient, online services are here to stay, but as long as personal service and relationships remain important, bankers and their customers will likely continue to do business face-to-face. Federal Deposit Insurance Corporation. Historical Statistics on Banking, https://www2.fdic.gov/hsob/ Federal Deposit Insurance Corporation. History of the Eighties—Lessons For The Future, 1, Washington, D.C., 1997. https://www.fdic.gov/bank/historical/history/vol1.html Federal Reserve System, “The 2013 Federal Reserve Payments Study—Summary Report and Initial Data Release,” 2013, Revised July 2014. http://www.frbservices.org/files/ communications/pdf/general/2013_fed_res_paymt_study_ summary_rpt.pdf Financial Management Solutions Inc. “2013 FMSI Teller Line Study,” 2013. N.P. http://www.fmsi.com/fullpanel/uploads/ files/2013-fmsi-teller-line-study-white-paper-00001.pdf Authors: Eric C. Breitenstein, Economic Analyst Division of Insurance and Research Fox, Susannah. “51% of U.S. Adults Bank Online,” Pew Research Center, August 7, 2013. http://www.pewinternet. org/files/old-media//Files/Reports/2013/PIP_OnlineBanking. pdf John M. McGee, Senior Financial Analyst Division of Insurance and Research FDIC Quarterly 50 2015, Volume 9, No. 1 Brick-and-Mortar Banking Hayashi, Fumiko, Richard Sullivan, and Stuart E. Weiner. “A Guide to the ATM and Debit Card Industry,” Federal Reserve Bank of Kansas City, 2003. http://www.kc.frb.org/ publicat/psr/bksjournarticles/atmpaper.pdf National ATM Council, Inc. “U.S. ATM Industry,” N.P., N.D., http://natmc.org/documents/2012/10/about-the-atmindustry.pdf Rehm, B.A. “Colorado Ready to Finally Allow Branch Banking.” American Banker (May 10, 1991). Kahn, Chris. “March 2014 Financial Security Survey,” BankRate.com (2014), N.P., http://www.bankrate.com/ finance/consumer-index/financial-security-charts-0314.aspx Retail Banking Strategies. “US Bank Excels in In-Store Banking,” February 2010. Ma, Jason. “Wells Fargo Mulls Fewer Branches as Rivals Cut Back,” Investor’s Business Daily, March 7, 2012. Strahan, Philip E. and Jith Jayaratne. “The Benefits of Branching Deregulation,” Economic Policy Review, 3 (4), 1997. http://www.newyorkfed.org/research/epr/97v03n4/ 9712jaya.pdf McLaughlin, Susan. “The Impact of Interstate Banking and Branching Reform: Evidence from the States,” Current Issues in Economics and Finance, 1 (2), 1995. http://www. newyorkfed.org/research/current_issues/ci1-2.pdf United States Savings and Loan League. Savings and Loan Fact Book, 1971, Chicago, IL, 1971, and Savings and Loan Fact Book, 1976, Chicago, IL, 1976. Mengle, David L. “The Case for Interstate Branch Banking,” Economic Review, November/December 1990. https://www. richmondfed.org/publications/research/economic_ review/1990/pdf/er760601.pdf FDIC Quarterly Williams, Christopher A. “Banks Go Shopping for Customers,” The Regional Economist, October 1997, N.P. https://www.stlouisfed.org/publications/re/articles/?id=1789 51 2015, Volume 9, No. 1