The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
FDIC Quarterly Quarterly Banking Profile: Third Quarter 2014 Highlights: ■ Quarterly Earnings of $38.7 Billion Are 7.3 Percent Higher Than a Year Ago ■ Revenue Growth Is Key to Net Income Improvement ■ Loan Balances for Community Banks Increased, Outpacing Industry Growth ■ Net Interest Margin for Community Banks Continued to Improve ■ DIF Reserve Ratio Rises 5 Basis Points to 0.89 Percent ■ Two Institutions Fail During Third Quarter 2014, Volume 8, Number 4 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 Peggi Gill Frank Solomon Publication Manager Lynne Montgomery Media Inquiries (202) 898-6993 FDIC Quarterly 2014, Volume 8, Number 4 Quarterly Banking Profile: Third Quarter 2014 FDIC-insured institutions reported aggregate net income of $38.7 billion in the third quarter of 2014, up $2.6 billion (7.3 percent) from earnings of $36.1 billion the industry reported a year earlier. The increase in earnings was mainly attributable to a $7.8 billion (4.8 percent) increase in net operating revenue, the biggest since the fourth quarter of 2009. Almost two-thirds of the 6,589 insured institutions reporting (62.9 percent) had year-over-year growth in quarterly earnings. The proportion of banks that were unprofitable during the third quarter fell to 6.4 percent from 8.7 percent a year earlier. See page 1. Community Bank Performance Community banks—which represent 93 percent of insured institutions—reported net income of $4.9 billion in the third quarter, up $470.7 million (10.7 percent) from third quarter 2013. The increase was driven by improved net operating revenue and lower provision expenses. In the third 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 0.4 percent from the prior quarter and increased 2.8 percent over the 12 months ending September 30, 2014. The DIF reserve ratio was 0.89 percent at September 30, 2014, up from 0.84 percent at June 30, 2014, and 0.68 percent at September 30, 2013. Two FDIC-insured institutions failed during the quarter. See page 22. 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 Third Quarter 2014 INSURED INSTITUTION PERFORMANCE Quarterly Earnings of $38.7 Billion Are 7.3 Percent Higher Than a Year Ago Revenue Growth Is Key to Net Income Improvement Loan-Loss Provisions Post First Year-Over-Year Increase Since 2009 Balances of Troubled Loans Continue to Decline ■ ■ ■ ■ terest income was $5.4 billion (9.2 percent) higher, as gains on loan sales increased by $1.2 billion (45.6 percent), and trading income was up $1.1 billion (25.3 percent). This is the first time in the last five quarters that noninterest income has posted a year-over-year increase. More than half of all banks—52 percent— reported growth in noninterest income. Net interest income increased by $2.4 billion (2.3 percent), with 71 percent of institutions reporting year-over-year increases. Total interest income was $1.2 billion (1 percent) higher than a year ago, while total interest expense was $1.2 billion (9.3 percent) lower. The 3.14 percent average net interest margin in the third quarter was 12 basis points lower than in third quarter 2013, and was virtually unchanged from the 3.15 percent average in second quarter 2014. Most of the margin erosion remained concentrated among some of the largest banks. Slightly more than half of all banks—51 percent—reported year-over-year increases in their net interest margins. More Banks Are Reporting Higher Earnings Improving revenue performance across a growing proportion of institutions helped lift third quarter net income to $38.7 billion, a $2.6 billion (7.3 percent) increase over third quarter 2013 industry earnings. Almost 63 percent of institutions reported year-overyear improvement in quarterly net income, up from 50 percent a year ago. Only 6.4 percent reported net losses for the quarter, compared with 8.7 percent a year ago. The average quarterly return on assets was 1.02 percent, slightly above the 1 percent return on assets in third quarter 2013. Revenues Post Largest Increase in Five Years Net operating revenue (net interest income plus total noninterest income) totaled $171.3 billion, a year-overyear increase of $7.8 billion (4.8 percent). This is the largest year-over-year growth in revenue since fourth quarter 2009. Almost 69 percent of all banks reported higher net operating revenue versus a year ago. Nonin- 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 28.728.5 $30 $20 17.4 $10 -$20 23.8 40.4 38.2 40.1 39.8 38.7 37.3 36.1 70 Percentage of Institutions With Year-Over-Year Quarterly Income Growth 60 25.3 21.4 50 40 2.1 30 $0 -$10 20.9 37.5 34.8 34.4 34.5 Percentage of All FDIC-Insured Institutions 80 -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 2009 2010 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 2014, Volume 8, No. 4 million (45.2 percent) lower than a year ago, while charge-offs of home equity lines of credit were down $526 million (45.9 percent). Credit card charge-offs were $366 million (6.9 percent) lower, and charge-offs on real estate loans secured by nonfarm nonresidential properties declined by $360 million (61.1 percent). Net charge-offs of auto loans were $104 million (22.8 percent) higher. Litigation Expenses Decline Noninterest expenses were $2 billion (1.9 percent) higher than a year ago. Salaries and employee benefits expenses were $2 billion (4.3 percent) higher, even though there were 31,731 (1.5 percent) fewer employees than in third quarter 2013. Goodwill impairment charges totaled $1.3 billion, a year-over-year increase of $1.1 billion. Itemized charges for litigation expenses at large banks totaled $3.7 billion, which was $1.6 billion less than a year ago. Noncurrent Loan Balances Continue to Fall The amount of noncurrent loan and lease balances (90 days or more past due or in nonaccrual status) fell for the 18th quarter in a row, declining by $9.7 billion (5.3 percent) in the three months ended September 30. All major loan categories except loans to individuals (credit cards, auto loans, and other loans to individuals) had declines in noncurrent balances. The largest decline occurred in 1-to-4 family residential mortgages, where noncurrent balances fell by $7.7 billion (6.6 percent). Noncurrent real estate loans secured by nonfarm nonresidential properties declined by $1.1 billion (6.2 percent). In contrast to the overall declining trend in noncurrent loans, noncurrent balances rose during the quarter in credit cards (up $275 million, 3.8 percent), auto loans (up $99 million, 10.8 percent), and other loans to individuals (up $113 million, 2.7 percent). The percentage of loans and leases that were noncurrent at the end of the third quarter was 2.11 percent, the lowest average since midyear 2008. Almost 29 percent of all noncurrent loans consisted of residential mortgage loans with GNMA guarantees. Provisions Increase for First Time in Five Years Loan-loss provisions totaled $7.2 billion, which was $1.4 billion (23.9 percent) more than banks set aside for loan losses in third quarter 2013. This is the first year-over-year increase in quarterly loss provisions in five years. A year ago, 400 banks reported negative quarterly loss provisions totaling $1.7 billion; in the third quarter, 402 institutions reported negative quarterly provisions totaling $331 million. Charge-Off Rate Falls to Seven-Year Low Insured institutions charged off $9.2 billion (net) in uncollectible loan balances in the third quarter, down $2.4 billion (21 percent) from a year ago. This is the 17th consecutive quarter that charge-offs have been below year-earlier levels. The quarterly net charge-off rate of 0.45 percent was the lowest average since first quarter 2007. All major loan categories except auto loans registered lower levels of charge-offs. Charge-offs of 1-to-4 family residential mortgage loans were $695 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 Percent 90 $160 80 $140 Quarterly Noninterest Income $120 70 60 $100 50 $80 40 $60 Quarterly Net Interest Income 30 $40 20 $20 $0 All FDIC-Insured Institutions 10 0 123 41234 12341 23412 34123 41234 123 2007 2008 2009 2010 2011 2012 2013 2014 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Source: FDIC. Source: FDIC. FDIC Quarterly 2 2014, Volume 8, No. 4 Quarterly Banking Profile Reserve Coverage of Noncurrent Loans Improves for Ninth Consecutive Quarter Investments in Treasury Securities Post Sizable Increase Loan-loss reserves fell for the 18th consecutive quarter. Net charge-offs of $9.2 billon exceeded loss provisions of $7.2 billion, as total reserves fell by $2.9 billion (2.3 percent) during the three months ended September 30. The $125.3 billion in reserves at the end of September was less than half the peak level of $263.2 billion reached at the end of first quarter 2010. Despite the decline in reserves, the average coverage ratio of reserves to noncurrent loans improved for a ninth consecutive quarter, from 70.6 percent to 72.9 percent, owing to the larger decline in noncurrent loan balances during the quarter. Total assets of insured institutions increased by $176.7 billion (1.2 percent) during the quarter. Banks increased their investment securities holdings by $53.1 billion (1.7 percent), as balances of U.S. Treasury securities rose by $72 billion (26.3 percent). Total loan and lease balances increased by $50.9 billion (0.6 percent), as most major loan categories posted quarterly increases. Loans to commercial and industrial borrowers increased by $10.1 billion (0.6 percent), auto loans rose by $9 billion (2.4 percent), real estate loans secured by multifamily residential properties were up by $7.8 billion (2.8 percent), real estate loans secured by nonfarm nonresidential properties increased by $7.7 billion (0.7 percent), and real estate construction and development loans grew by $7.4 billion (3.3 percent). Loans to foreign banks fell by $15.6 billion (13 percent), and balances of residential mortgage loans declined by $6.7 billion (0.4 percent), as the amount of mortgage balances sold during the quarter exceeded the balances of new mortgages originated for sale by $20.7 billion. Unfunded loan commitments increased by $107.4 billion (1.7 percent). Loans to small businesses and farms increased by $2.2 billion (0.3 percent), as 54 percent of all banks reported growth in their small business/farm portfolios. Assets in trading accounts rose by $36.8 billion (6.1 percent). Capital Growth Trails Growth in Assets Equity capital increased by $12.1 billion (0.7 percent), as retained earnings contributed $13.2 billion to capital growth. Declared dividends in the third quarter totaled $25.5 billion, an increase of $2.6 billion (11.6 percent) from a year ago. Other comprehensive income declined by $6.1 billion, while goodwill fell by $627 million (0.2 percent) during the three months ended September 30. The average equity-to-assets ratio fell from 11.25 percent to 11.20 percent during the quarter. At the end of the quarter, 98.5 percent of all insured institutions, representing 99.8 percent of total industry assets, met or exceeded the requirements for the highest regulatory capital category as defined for Prompt Corrective Action purposes. Chart 5 Chart 6 Year-Over-Year Change in Quarterly Loan-Loss Provisions Noncurrent Loan Rate and Quarterly Net Charge-Off Rate Billions of Dollars $5 Percent 6 All FDIC-Insured Institutions 1.4 $0 5 All FDIC-Insured Institutions Noncurrent Loan Rate -$5 4 -$10 -$15 3 -$20 2 -$25 -$30 -$35 1 -30.7 1 2 3 2011 Source: FDIC. FDIC Quarterly 4 1 2 3 2012 4 1 2 3 2013 4 1 2 3 2014 0 2006 Quarterly Net Charge-Off Rate 2007 2008 2009 2010 2011 2012 2013 2014 Source: FDIC. 3 2014, Volume 8, No. 4 Large Deposits Account for Bulk of Funding Growth “Problem List” Continues to Improve For a second consecutive quarter, large denomination (> $250,000) deposits accounted for much of the growth in industry funding. Balances in these accounts increased by $124.9 billion (2.5 percent), representing three-quarters of the $164.9 billion growth in total liabilities. Balances in smaller-denomination accounts declined by $11.3 billion (0.2 percent). Nondeposit liabilities rose by $58.6 billion (3 percent), as liabilities in trading accounts increased by $44.8 billion (20.3 percent). The number of insured institutions reporting financial results fell to 6,589, from 6,656 in the second quarter. Two insured institutions failed during the third quarter, compared with six failures a year ago. Mergers absorbed 64 institutions, and one institution in the process of voluntary liquidation did not file a report. For a third consecutive quarter, no new reporters were added. There has been only one de novo bank charter since fourth quarter 2010. The number of institutions on the FDIC’s “Problem List” fell from 354 to 329 during the quarter, and assets of “problem” banks declined from $110.2 billion to $102.3 billion. This is the 14th consecutive quarter that the number and assets of “problem” institutions have declined, and the fewest “problem” institutions since March 31, 2009. The number of full-time equivalent employees at insured institutions declined for the sixth time in the past seven quarters, falling by 11,364 (0.6 percent) from second-quarter levels. Author: Chart 7 Ross Waldrop, Senior Banking Analyst Division of Insurance and Research (202) 898-3951 Chart 8 Quarterly Changes in the Number of Troubled Institutions Quarterly Change in Loan Balances All FDIC-Insured Institutions Billions of Dollars $300 237 $250 221* 189 203 178 $200 134 $150 118 102 91 $100 73 70 67 65 61 51 38 28 $50 43 24 $0 -6 -7 -14 -$50 -37 -63 -$100 -107 -116 -109 -126 -$150 -133 -140 -$200 -210 -$250 200 175 45 Quarterly Failures 24 125 100 41 12 Net Quarterly Change in Number of Problem Banks 150 45 136 111 41 50 30 81 2 73 54 25 2 54 53 26 22 26 31 18 16 15 12 8 4 12 6 2 5 7 2 27 24 14 0 4 -25 -23 -21-31 -38 -39 -38 -40 -25 -48 -43 -41 -56 -59 -57 -50 75 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 2007 2008 2009 2010 2011 2012 2013 2014 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. FDIC Quarterly 50 150 -75 9 21 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 2008 2010 2009 2011 2012 2014 2013 Source: FDIC. 4 2014, Volume 8, No. 4 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** 1.03 9.19 9.52 1.29 0.49 5.11 3.15 2.36 6,589 5,705 884 6.57 329 $102 14 0 2013** 1.06 9.47 9.40 1.75 0.72 2.68 3.26 10.86 6,891 5,937 954 7.91 515 $174 22 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 4.02 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 43.57 7,357 6,291 1,066 16.22 813 $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 * Excludes insured branches of foreign banks (IBAs). ** Through September 30, ratios annualized where appropriate. Asset growth rates are for 12 months ending September 30. TABLE II-A. Aggregate Condition and Income Data, All FDIC-Insured Institutions 3rd Quarter 2014 6,589 2,048,639 2nd Quarter 2014 6,656 2,060,003 3rd Quarter 2013 6,891 2,080,370 %Change 13Q3-14Q3 -4.4 -1.5 $15,349,171 4,136,065 1,838,209 1,133,226 230,614 496,171 1,674,122 1,382,426 683,022 72,966 896,442 1,906 8,160,114 125,255 8,034,859 3,166,150 24,890 363,944 3,759,328 $15,172,440 4,123,446 1,844,874 1,125,525 223,186 499,172 1,664,072 1,366,721 678,337 69,635 887,148 1,854 8,109,169 128,190 7,980,978 3,113,091 27,892 365,590 3,684,889 $14,603,589 4,053,179 1,842,582 1,092,515 206,052 516,674 1,541,635 1,331,679 677,074 67,994 809,401 1,857 7,802,031 142,582 7,659,449 2,957,632 31,819 367,118 3,587,570 5.1 2.0 -0.2 3.7 11.9 -4.0 8.6 3.8 0.9 7.3 10.8 2.6 4.6 -12.2 4.9 7.1 -21.8 -0.9 4.8 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������������������������������������������������������������������������������������������� 15,349,171 11,596,581 10,172,703 1,423,878 1,393,682 97,389 533,711 1,727,807 1,719,382 15,172,440 11,490,263 10,058,721 1,431,542 1,382,342 97,802 486,019 1,716,014 1,707,268 14,603,589 11,028,278 9,599,748 1,428,531 1,315,650 108,673 513,739 1,637,248 1,622,431 5.1 5.2 6.0 -0.3 5.9 -10.4 3.9 5.5 6.0 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��������������������������������������������������������������������������������������� First Three INCOME DATA Quarters 2014 Total interest income������������������������������������������������������������������� $351,532 Total interest expense����������������������������������������������������������������� 35,661 Net interest income�������������������������������������������������������������� 315,871 Provision for loan and lease losses�������������������������������������������� 21,540 Total noninterest income������������������������������������������������������������� 187,268 Total noninterest expense����������������������������������������������������������� 314,950 Securities gains (losses)������������������������������������������������������������� 2,347 Applicable income taxes������������������������������������������������������������� 52,444 Extraordinary gains, net�������������������������������������������������������������� -116 Total net income (includes minority interests)��������������������� 116,436 Bank net income������������������������������������������������������������ 115,955 Net charge-offs���������������������������������������������������������������������������� 29,658 Cash dividends���������������������������������������������������������������������������� 67,150 Retained earnings����������������������������������������������������������������������� 48,805 Net operating income����������������������������������������������������������� 114,875 66,250 171,921 89,211 1,718,418 13,695,240 443,175 6,434,391 18,175,602 967,830 242,940,302 First Three Quarters 2013 $352,202 40,855 311,347 25,150 192,559 314,635 3,980 53,029 167 115,239 114,674 41,565 58,150 56,524 112,230 (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 65,700 181,577 94,110 1,716,668 13,524,176 437,480 6,326,985 18,342,151 965,737 239,190,963 3rd Quarter %Change 2014 -0.2 $118,781 -12.7 11,846 1.5 106,935 -14.4 7,194 -2.8 64,338 0.1 108,511 -41.0 755 -1.1 17,400 N/M -112 1.0 38,811 1.1 38,700 -28.7 9,234 15.5 25,505 -13.7 13,195 2.4 38,367 73,090 221,201 100,512 1,668,572 12,936,612 373,052 6,126,180 19,034,601 761,133 241,599,691 3rd Quarter 2013 $117,579 13,060 104,519 5,805 58,913 106,486 543 15,731 259 36,212 36,074 11,683 22,863 13,212 35,593 -9.4 -22.3 -11.2 3.0 5.9 18.8 5.0 -4.5 27.2 0.6 %Change 13Q3-14Q3 1.0 -9.3 2.3 23.9 9.2 1.9 39.0 10.6 N/M 7.2 7.3 -21.0 11.6 -0.1 7.8 N/M - Not Meaningful 5 2014, Volume 8, No. 4 TABLE III-A. Third Quarter 2014, All FDIC-Insured Institutions Asset Concentration Groups* THIRD QUARTER All Insured (The way it is...) Institutions Number of institutions reporting����������������������� 6,589 Commercial banks������������������������������������� 5,705 Savings institutions����������������������������������� 884 Total assets (in billions)������������������������������������ $15,349.2 Commercial banks������������������������������������� 14,290.1 Savings institutions����������������������������������� 1,059.1 Total deposits (in billions)��������������������������������� 11,596.6 Commercial banks������������������������������������� 10,789.0 Savings institutions����������������������������������� 807.6 Bank net income (in millions)��������������������������� 38,700 Commercial banks������������������������������������� 35,618 Savings institutions����������������������������������� 3,082 Credit Card International Agricultural Commercial Banks Banks Banks Lenders 16 3 1,501 3,285 13 3 1,482 2,967 3 0 19 318 $605.5 $3,691.3 $254.1 $5,186.5 516.1 3,691.3 248.6 4,794.2 89.4 0.0 5.5 392.3 339.5 2,583.6 209.4 4,019.7 277.0 2,583.6 206.2 3,732.9 62.6 0.0 3.2 286.8 4,674 7,273 811 12,217 3,612 7,273 781 11,410 1,062 0 30 807 Mortgage Consumer Lenders Lenders 570 50 170 40 400 10 $435.5 $167.5 143.0 82.6 292.4 84.9 320.8 140.5 107.5 69.6 213.3 70.8 921 494 455 282 466 212 Other Specialized All Other <$1 Billion <$1 Billion 371 728 334 640 37 88 $60.5 $128.5 55.6 108.4 4.8 20.1 49.2 107.7 45.7 91.4 3.5 16.2 321 295 189 266 132 29 All Other >$1 Billion 65 56 9 $4,819.8 4,650.2 169.6 3,826.2 3,675.1 151.1 11,695 11,350 345 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���������������� 3.49 0.35 3.14 1.69 2.85 0.19 1.01 1.47 1.02 9.04 0.45 10.27 0.69 9.58 4.11 5.82 2.27 3.09 4.88 3.10 21.01 2.62 2.77 0.36 2.42 1.85 2.66 0.11 0.79 1.17 0.79 8.29 0.68 4.21 0.49 3.72 0.66 2.51 0.12 1.27 1.50 1.28 11.32 0.09 3.82 0.40 3.42 1.27 2.89 0.12 0.95 1.34 0.95 7.91 0.25 3.40 0.68 2.72 0.97 2.31 0.03 0.80 1.23 0.83 6.92 0.15 4.06 0.47 3.59 1.51 2.68 0.42 1.18 1.85 1.18 11.98 0.57 3.11 0.37 2.74 5.32 4.85 0.08 2.10 2.92 2.13 14.98 0.30 3.98 0.46 3.52 0.92 2.97 0.12 0.89 1.12 0.92 7.77 0.24 2.73 0.19 2.54 1.81 2.61 0.08 0.96 1.41 0.98 8.78 0.26 77.91 61.72 6.43 62.89 110.76 43.67 0.00 68.75 46.50 66.71 0.00 66.67 206.52 60.67 2.60 63.56 68.92 63.84 7.06 66.73 34.17 65.05 9.47 54.56 105.57 53.40 0.00 66.00 97.59 61.78 12.67 52.29 89.32 71.02 6.73 55.49 64.50 62.69 4.62 66.15 Structural Changes New reporters�������������������������������������������� Institutions absorbed by mergers������������� Failed institutions�������������������������������������� 0 64 2 0 0 0 0 0 0 0 13 0 0 46 2 0 1 0 0 0 0 0 0 0 0 2 0 0 2 0 PRIOR THIRD QUARTERS (The way it was...) Return on assets (%)��������������������������������2013 ��������������������������������������2011 ������������������������������������� 2009 1.00 1.03 0.06 3.38 3.04 0.35 0.52 1.07 -0.04 1.24 1.28 0.94 0.99 0.77 -0.32 0.92 0.76 0.26 1.04 2.08 0.20 1.98 2.12 1.03 0.85 1.06 0.74 1.07 0.99 0.63 Net charge-offs to loans & leases (%)�����2013 ��������������������������������������2011 ������������������������������������� 2009 0.60 1.46 2.72 2.91 5.07 10.67 0.86 1.68 3.18 0.09 0.41 0.60 0.35 1.14 2.14 0.30 0.77 1.59 0.68 1.56 2.64 0.46 0.27 0.80 0.31 0.54 0.57 0.42 1.27 2.63 * 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 6 2014, Volume 8, No. 4 Quarterly Banking Profile TABLE III-A. Third Quarter 2014, All FDIC-Insured Institutions Asset Size Distribution THIRD QUARTER All Insured (The way it is...) Institutions Number of institutions reporting����������������������������� 6,589 Commercial banks������������������������������������������� 5,705 Savings institutions����������������������������������������� 884 Total assets (in billions)������������������������������������������ $15,349.2 Commercial banks������������������������������������������� 14,290.1 Savings institutions����������������������������������������� 1,059.1 Total deposits (in billions)��������������������������������������� 11,596.6 Commercial banks������������������������������������������� 10,789.0 Savings institutions����������������������������������������� 807.6 Bank net income (in millions)��������������������������������� 38,700 Commercial banks������������������������������������������� 35,618 Savings institutions����������������������������������������� 3,082 Geographic Regions* Less Than $100 $1 Billion Greater $100 Million to to Than Million $1 Billion $10 Billion $10 Billion New York 1,940 3,966 575 108 816 1,710 3,440 463 92 454 230 526 112 16 362 $114.2 $1,227.5 $1,531.4 $12,476.1 $3,045.0 100.9 1,040.1 1,240.1 11,909.0 2,582.0 13.3 187.4 291.3 567.1 463.0 96.1 1,021.5 1,192.4 9,286.6 2,253.1 85.7 872.6 977.0 8,853.7 1,916.8 10.4 148.9 215.4 432.9 336.3 253 3,168 4,264 31,015 6,577 223 2,739 3,675 28,982 5,808 30 430 589 2,033 769 Atlanta 823 744 79 $3,134.3 3,048.3 85.9 2,429.4 2,365.6 63.8 7,148 6,947 201 Chicago 1,427 1,190 237 $3,503.2 3,393.3 110.0 2,552.0 2,469.3 82.7 7,204 6,941 263 Kansas City 1,614 1,545 69 $3,363.9 3,302.4 61.5 2,528.2 2,480.5 47.7 9,512 9,402 110 San Dallas Francisco 1,387 522 1,295 477 92 45 $884.9 $1,417.9 778.2 1,185.9 106.6 232.0 732.2 1,101.8 644.4 912.4 87.8 189.3 2,594 5,665 2,240 4,280 354 1,385 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���������������������� 3.49 0.35 3.14 1.69 2.85 0.19 1.01 1.47 1.02 9.04 0.45 4.18 0.48 3.71 1.14 3.39 0.12 0.87 1.05 0.89 7.23 0.22 4.24 0.50 3.74 1.12 3.17 0.12 1.02 1.31 1.04 9.31 0.18 4.22 0.44 3.78 1.30 3.04 0.15 1.13 1.55 1.11 9.32 0.24 3.32 0.32 3.00 1.80 2.79 0.20 0.99 1.48 1.00 8.99 0.53 3.74 0.41 3.32 1.54 2.86 0.33 0.86 1.32 0.86 7.22 0.68 3.40 0.28 3.12 1.66 3.03 0.17 0.89 1.26 0.93 7.54 0.35 2.75 0.27 2.48 1.87 2.75 0.08 0.83 1.23 0.83 8.34 0.32 3.73 0.40 3.33 1.50 2.69 0.15 1.13 1.63 1.14 11.01 0.55 4.01 0.33 3.68 1.38 3.09 0.13 1.17 1.53 1.17 10.47 0.21 4.09 0.44 3.64 2.25 2.89 0.30 1.62 2.42 1.61 12.67 0.44 77.91 61.72 6.43 62.89 96.16 74.39 11.49 56.08 100.41 68.97 4.69 65.18 94.90 62.22 2.43 68.70 75.59 60.80 0.93 70.37 91.66 58.91 8.82 62.38 84.59 67.56 9.72 62.33 58.00 67.05 7.29 60.97 53.00 58.87 4.34 62.52 100.96 64.57 4.04 64.82 108.99 50.84 8.05 65.90 Structural Changes New reporters�������������������������������������������������� Institutions absorbed by mergers������������������� Failed institutions�������������������������������������������� 0 64 2 0 25 1 0 35 1 0 4 0 0 0 0 0 7 0 0 12 1 0 15 1 0 13 0 0 13 0 0 4 0 PRIOR THIRD QUARTERS (The way it was…) Return on assets (%)��������������������������������������2013 �������������������������������������������� 2011 ������������������������������������������� 2009 1.00 1.03 0.06 0.74 0.61 0.11 0.92 0.64 -0.10 1.17 0.91 -0.54 0.99 1.10 0.17 1.06 0.97 0.05 0.94 0.76 -0.16 0.53 0.96 0.24 1.25 1.26 0.85 1.06 1.06 0.47 1.54 1.46 -0.31 Net charge-offs to loans & leases (%)�����������2013 �������������������������������������������� 2011 ������������������������������������������� 2009 0.60 1.46 2.72 0.28 0.63 0.88 0.34 0.92 1.27 0.31 1.00 2.17 0.68 1.63 3.10 0.81 1.79 3.07 0.55 1.70 2.70 0.46 1.02 2.59 0.75 1.66 2.53 0.28 0.88 1.45 0.50 1.05 3.15 * 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 7 2014, Volume 8, No. 4 TABLE IV-A. First Three Quarters 2014, All FDIC-Insured Institutions Asset Concentration Groups* FIRST THREE QUARTERS All Insured (The way it is...) Institutions Number of institutions reporting����������������������� 6,589 Commercial banks������������������������������������� 5,705 Savings institutions����������������������������������� 884 Total assets (in billions)������������������������������������ $15,349.2 Commercial banks������������������������������������� 14,290.1 Savings institutions����������������������������������� 1,059.1 Total deposits (in billions)��������������������������������� 11,596.6 Commercial banks������������������������������������� 10,789.0 Savings institutions����������������������������������� 807.6 Bank net income (in millions)��������������������������� 115,955 Commercial banks������������������������������������� 107,048 Savings institutions����������������������������������� 8,907 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���������������� Credit Card International Agricultural Commercial Banks Banks Banks Lenders 16 3 1,501 3,285 13 3 1,482 2,967 3 0 19 318 $605.5 $3,691.3 $254.1 $5,186.5 516.1 3,691.3 248.6 4,794.2 89.4 0.0 5.5 392.3 339.5 2,583.6 209.4 4,019.7 277.0 2,583.6 206.2 3,732.9 62.6 0.0 3.2 286.8 14,332 22,304 2,258 36,650 11,375 22,304 2,177 34,335 2,957 0 82 2,315 Mortgage Consumer Lenders Lenders 570 50 170 40 400 10 $435.5 $167.5 143.0 82.6 292.4 84.9 320.8 140.5 107.5 69.6 213.3 70.8 2,886 1,362 1,458 727 1,429 635 Other Specialized All Other <$1 Billion <$1 Billion 371 728 334 640 37 88 $60.5 $128.5 55.6 108.4 4.8 20.1 49.2 107.7 45.7 91.4 3.5 16.2 932 858 537 779 395 79 All Other >$1 Billion 65 56 9 $4,819.8 4,650.2 169.6 3,826.2 3,675.1 151.1 34,373 33,357 1,015 3.51 0.36 3.15 1.66 2.80 0.19 1.02 1.50 1.03 9.19 0.49 10.10 0.67 9.43 4.28 5.79 2.13 3.20 5.07 3.20 21.69 2.86 2.79 0.38 2.41 1.75 2.55 0.12 0.82 1.18 0.81 8.62 0.73 4.13 0.49 3.63 0.61 2.48 0.10 1.18 1.41 1.20 10.76 0.09 3.84 0.40 3.44 1.26 2.86 0.13 0.97 1.37 0.97 8.11 0.26 3.40 0.67 2.73 0.95 2.25 0.04 0.83 1.27 0.86 7.27 0.19 3.95 0.47 3.47 1.36 2.53 0.45 1.10 1.72 1.10 11.31 0.62 3.11 0.37 2.74 5.10 4.74 0.06 2.05 2.84 2.08 14.97 0.24 3.96 0.47 3.49 0.89 2.96 0.10 0.87 1.08 0.90 7.71 0.23 2.77 0.20 2.57 1.80 2.60 0.08 0.96 1.44 0.98 8.71 0.29 72.63 61.34 6.57 60.07 95.39 43.20 0.00 68.75 46.68 65.50 0.00 66.67 179.24 62.05 2.80 60.96 72.66 64.12 7.25 63.29 37.42 63.41 9.47 50.53 103.26 53.00 2.00 46.00 83.66 62.06 10.51 54.45 84.00 71.71 7.69 55.08 59.55 62.30 4.62 56.92 89.22 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�������������������� 92.51 86.70 92.77 89.98 93.91 95.57 90.98 92.52 88.99 1.53 72.86 3.31 318.98 1.96 80.17 1.45 141.44 1.35 90.22 1.20 38.49 1.14 79.31 1.87 114.00 1.46 79.51 1.27 40.88 1.29 11.20 9.52 13.01 14.44 69.29 52.35 66.28 0.82 14.89 12.74 13.48 15.70 135.93 76.23 53.33 0.90 9.52 8.35 12.40 13.06 48.37 33.85 44.25 0.88 11.40 10.62 14.77 15.89 76.67 63.19 82.41 1.30 11.97 10.17 12.78 14.35 86.68 67.18 76.65 2.27 12.02 11.13 21.11 22.16 83.48 61.49 73.65 1.10 9.96 9.80 13.89 14.70 84.01 70.44 83.84 0.75 14.31 13.65 31.34 32.34 34.12 27.77 80.35 1.45 11.92 11.54 20.17 21.34 64.02 53.64 83.79 1.58 11.09 8.94 12.64 14.41 57.69 45.79 70.84 Structural Changes New reporters�������������������������������������������� Institutions absorbed by mergers������������� Failed institutions�������������������������������������� 0 199 14 0 0 0 0 0 0 0 37 1 0 139 9 0 6 2 0 0 0 0 2 0 0 7 2 0 8 0 PRIOR FIRST THREE QUARTERS (The way it was...) Number of institutions������������������������������2013 ��������������������������������������2011 ������������������������������������� 2009 6,891 7,437 8,099 17 18 24 4 5 4 1,536 1,552 1,580 3,433 3,854 4,540 597 714 795 47 71 81 400 363 284 791 801 732 66 59 59 Total assets (in billions)����������������������������2013 ��������������������������������������2011 ������������������������������������� 2009 $14,603.6 13,811.9 13,226.0 $596.3 532.0 480.2 $3,729.4 3,665.3 3,183.4 $243.9 208.5 177.7 $4,773.7 4,170.5 5,183.9 $554.0 798.3 852.0 $149.3 98.8 95.8 $63.9 54.0 37.8 $137.9 136.4 102.7 $4,355.2 4,148.1 3,112.5 Return on assets (%)��������������������������������2013 ��������������������������������������2011 ������������������������������������� 2009 1.06 0.92 -0.11 3.26 3.62 -6.25 0.83 0.81 0.00 1.19 1.14 0.91 0.91 0.71 -0.23 0.98 0.60 0.47 1.28 1.75 0.22 1.74 1.80 0.64 0.87 0.92 0.79 1.10 0.89 0.62 Net charge-offs to loans & leases (%)�����2013 ��������������������������������������2011 ������������������������������������� 2009 0.72 1.61 2.38 3.21 5.58 9.93 1.03 2.07 2.90 0.11 0.36 0.52 0.44 1.21 1.77 0.37 0.90 1.26 0.77 1.78 2.64 0.61 0.48 0.81 0.32 0.50 0.46 0.51 1.30 2.31 Noncurrent assets plus OREO to assets (%)������������������������������2013 ��������������������������������������2011 ������������������������������������� 2009 1.75 2.66 3.09 0.90 1.41 2.18 1.13 1.59 2.64 0.98 1.59 1.59 1.81 3.19 3.71 2.16 2.68 3.17 0.66 1.13 1.25 0.95 0.99 0.60 1.56 1.87 1.35 2.37 3.36 2.85 Equity capital ratio (%)�����������������������������2013 ��������������������������������������2011 ������������������������������������� 2009 11.11 11.30 10.76 14.89 15.79 22.08 8.80 8.81 8.45 11.01 11.50 11.32 11.81 11.93 10.96 11.40 10.61 9.30 9.64 9.86 10.87 13.71 15.50 17.58 11.34 11.68 11.84 11.77 12.37 11.26 * 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 2014, Volume 8, No. 4 Quarterly Banking Profile TABLE IV-A. First Three Quarters 2014, All FDIC-Insured Institutions Asset Size Distribution FIRST THREE QUARTERS All Insured (The way it is...) Institutions Number of institutions reporting����������������������������� 6,589 Commercial banks������������������������������������������� 5,705 Savings institutions����������������������������������������� 884 Total assets (in billions)������������������������������������������ $15,349.2 Commercial banks������������������������������������������� 14,290.1 Savings institutions����������������������������������������� 1,059.1 Total deposits (in billions)��������������������������������������� 11,596.6 Commercial banks������������������������������������������� 10,789.0 Savings institutions����������������������������������������� 807.6 Bank net income (in millions)��������������������������������� 115,955 Commercial banks������������������������������������������� 107,048 Savings institutions����������������������������������������� 8,907 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���������������������� Geographic Regions* Less Than $100 $1 Billion Greater $100 Million to to Than Million $1 Billion $10 Billion $10 Billion New York 1,940 3,966 575 108 816 1,710 3,440 463 92 454 230 526 112 16 362 $114.2 $1,227.5 $1,531.4 $12,476.1 $3,045.0 100.9 1,040.1 1,240.1 11,909.0 2,582.0 13.3 187.4 291.3 567.1 463.0 96.1 1,021.5 1,192.4 9,286.6 2,253.1 85.7 872.6 977.0 8,853.7 1,916.8 10.4 148.9 215.4 432.9 336.3 717 8,956 12,183 94,099 21,193 636 7,753 10,400 88,259 18,926 81 1,203 1,783 5,840 2,267 Atlanta 823 744 79 $3,134.3 3,048.3 85.9 2,429.4 2,365.6 63.8 20,745 20,199 546 Chicago 1,427 1,190 237 $3,503.2 3,393.3 110.0 2,552.0 2,469.3 82.7 23,010 22,242 768 Kansas City 1,614 1,545 69 $3,363.9 3,302.4 61.5 2,528.2 2,480.5 47.7 28,054 27,678 376 San Dallas Francisco 1,387 522 1,295 477 92 45 $884.9 $1,417.9 778.2 1,185.9 106.6 232.0 732.2 1,101.8 644.4 912.4 87.8 189.3 7,579 15,374 6,548 11,457 1,031 3,917 3.51 0.36 3.15 1.66 2.80 0.19 1.02 1.50 1.03 9.19 0.49 4.12 0.48 3.64 1.10 3.37 0.11 0.82 0.99 0.84 6.94 0.21 4.19 0.50 3.69 1.08 3.14 0.12 0.97 1.25 0.99 9.00 0.20 4.21 0.43 3.78 1.22 3.01 0.16 1.07 1.51 1.08 9.05 0.28 3.34 0.33 3.01 1.78 2.73 0.20 1.02 1.52 1.03 9.25 0.57 3.77 0.41 3.36 1.53 2.79 0.33 0.94 1.43 0.94 7.87 0.73 3.43 0.29 3.14 1.65 3.00 0.17 0.87 1.29 0.91 7.40 0.40 2.78 0.29 2.49 1.86 2.69 0.10 0.89 1.27 0.89 9.10 0.35 3.73 0.41 3.32 1.50 2.63 0.15 1.14 1.66 1.14 10.95 0.60 3.96 0.34 3.62 1.35 3.04 0.12 1.14 1.51 1.15 10.43 0.21 4.09 0.44 3.65 2.07 2.86 0.30 1.50 2.29 1.50 11.84 0.48 72.63 61.34 6.57 60.07 92.30 75.60 12.06 55.41 95.62 69.72 4.66 61.47 85.45 63.11 2.26 65.57 70.52 60.14 0.93 62.96 85.60 58.78 7.97 57.35 72.18 67.30 10.33 62.09 64.53 65.77 7.92 54.94 48.35 57.83 3.90 62.64 92.33 64.72 4.40 63.45 103.93 52.05 8.81 58.24 89.22 91.83 92.43 91.64 88.59 89.40 88.25 88.53 88.67 91.39 92.68 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��������������������������� 1.53 72.86 1.59 95.48 1.50 98.65 1.42 82.63 1.56 69.25 1.56 103.15 1.44 53.80 1.65 71.45 1.65 61.50 1.38 92.22 1.35 141.12 1.29 11.20 9.52 13.01 14.44 69.29 52.35 66.28 1.57 12.35 12.05 19.65 20.74 67.23 56.59 84.17 1.54 11.19 10.81 15.83 16.98 76.72 63.84 83.15 1.50 11.98 10.60 14.60 15.73 84.62 65.89 77.49 1.24 11.10 9.23 12.49 13.99 66.52 49.52 63.08 0.92 12.02 9.85 13.74 15.46 71.96 53.25 65.47 1.71 12.11 9.46 12.74 14.41 71.48 55.40 74.69 1.19 9.93 8.78 12.06 13.10 61.00 44.44 61.25 1.61 10.31 9.07 12.35 13.88 67.92 51.05 55.81 1.28 11.15 10.00 14.00 15.20 74.63 61.75 82.40 0.69 12.72 11.48 15.26 16.44 77.76 60.42 76.60 Structural Changes New reporters�������������������������������������������������� Institutions absorbed by mergers������������������� Failed institutions�������������������������������������������� 0 199 14 0 69 8 0 110 6 0 18 0 0 2 0 0 18 2 0 38 4 0 40 5 0 43 0 0 40 2 0 20 1 PRIOR FIRST THREE QUARTERS (The way it was…) Number of institutions������������������������������������2013 �������������������������������������������� 2011 ������������������������������������������� 2009 6,891 7,437 8,099 2,116 2,491 2,915 4,107 4,279 4,493 561 561 579 107 106 112 854 924 989 875 974 1,140 1,480 1,563 1,666 1,675 1,792 1,895 1,454 1,555 1,672 553 629 737 Total assets (in billions)����������������������������������2013 �������������������������������������������� 2011 ������������������������������������������� 2009 $14,603.6 13,811.9 13,226.0 $123.5 142.9 160.5 $1,245.5 1,273.4 1,345.7 $1,453.1 1,425.0 1,497.5 $11,781.5 10,970.6 10,222.3 $2,876.9 2,842.2 2,481.0 $2,981.8 2,954.3 3,449.9 $3,398.6 3,169.9 3,106.2 $3,166.6 2,901.9 1,077.7 $864.0 801.8 755.4 $1,315.8 1,141.7 2,355.8 Return on assets (%)��������������������������������������2013 �������������������������������������������� 2011 ������������������������������������������� 2009 1.06 0.92 -0.11 0.76 0.54 0.19 0.92 0.59 0.05 1.18 0.85 -0.37 1.06 0.97 -0.10 0.82 1.07 -1.23 1.03 0.61 0.10 0.91 0.81 0.22 1.26 0.98 0.73 1.12 0.97 0.35 1.54 1.47 -0.23 Net charge-offs to loans & leases (%)�����������2013 �������������������������������������������� 2011 ������������������������������������������� 2009 0.72 1.61 2.38 0.30 0.58 0.78 0.35 0.85 1.01 0.38 1.17 1.83 0.82 1.81 2.74 0.97 1.97 2.73 0.69 1.73 2.18 0.50 1.19 2.15 0.91 1.94 2.40 0.33 0.87 1.20 0.58 1.18 3.10 Noncurrent assets plus OREO to assets (%)������������������������������������2013 �������������������������������������������� 2011 ������������������������������������������� 2009 1.75 2.66 3.09 1.83 2.39 2.13 1.98 3.18 3.14 1.96 3.26 3.52 1.69 2.52 3.03 1.20 1.79 1.92 2.48 3.81 3.52 1.54 2.40 3.19 2.08 2.77 3.45 1.72 2.75 2.65 1.03 2.17 3.51 Equity capital ratio (%)�����������������������������������2013 �������������������������������������������� 2011 ������������������������������������������� 2009 11.11 11.30 10.76 11.82 11.98 12.41 10.83 10.80 10.11 11.76 11.85 10.75 11.05 11.27 10.82 12.00 12.55 12.27 12.30 12.18 11.57 9.13 8.62 8.68 10.64 11.18 10.85 10.87 11.15 10.41 12.85 13.71 10.78 * 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 2014, Volume 8, No. 4 TABLE V-A. Loan Performance, All FDIC-Insured Institutions Asset Concentration Groups* September 30, 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 0.50 0.36 0.21 0.68 1.74 0.26 1.33 1.19 1.46 0.19 0.81 0.03 0.00 0.00 0.00 0.67 0.02 0.84 1.18 1.18 1.23 0.32 1.14 1.54 0.54 0.19 0.08 0.99 2.54 0.33 1.35 1.22 1.58 0.22 0.95 0.65 0.82 0.61 0.18 0.36 1.21 0.90 1.44 1.15 1.47 0.33 0.63 0.63 0.46 0.36 0.24 0.56 1.13 0.25 1.12 1.20 1.11 0.23 0.55 1.00 0.51 0.50 0.28 0.65 1.11 0.56 1.06 1.57 1.01 0.10 0.94 0.77 0.44 2.20 0.90 0.49 0.72 0.10 0.78 0.69 0.80 0.24 0.73 1.34 0.92 0.96 1.34 0.48 1.86 0.98 1.55 1.43 1.56 0.62 1.27 1.27 1.10 0.83 0.62 0.72 1.61 0.89 1.84 1.30 1.85 0.40 1.23 1.55 0.53 0.27 0.17 0.70 2.44 0.15 1.86 1.47 1.94 0.11 1.06 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������������������������������������������������������ 3.57 2.55 1.48 0.50 2.62 5.93 0.55 0.93 1.10 0.76 0.23 2.11 0.55 0.00 3.30 0.00 0.00 0.47 0.74 1.07 1.09 0.73 0.27 1.04 5.65 1.30 0.96 0.35 3.71 9.53 0.52 1.07 1.08 1.05 0.26 2.44 1.24 2.04 1.79 0.63 1.07 1.24 1.34 0.55 0.26 0.57 0.41 1.02 2.07 2.56 1.41 0.54 1.43 3.31 0.63 0.80 1.16 0.75 0.29 1.50 3.44 2.02 1.72 0.83 2.02 3.83 1.11 0.57 1.20 0.50 0.14 3.12 3.78 28.15 11.17 2.07 2.72 2.98 0.60 0.77 1.16 0.65 0.09 1.44 1.91 3.45 1.79 1.40 0.78 1.89 1.50 0.63 0.68 0.63 0.37 1.64 2.07 3.87 2.32 1.41 0.68 1.97 1.70 0.98 0.57 0.99 0.45 1.84 6.01 2.47 1.66 0.44 3.62 8.92 0.36 0.78 1.23 0.69 0.14 3.11 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������������������������������������������������������ 0.21 0.03 0.10 0.02 0.60 0.21 0.23 1.96 3.18 0.75 0.09 0.49 0.04 0.00 0.00 0.00 0.00 0.04 2.40 2.92 2.98 1.39 0.00 2.86 0.33 -0.23 -0.03 -0.01 0.67 0.32 0.16 2.84 3.73 1.30 0.09 0.73 0.06 0.00 0.08 0.08 0.26 0.10 0.21 0.37 0.77 0.34 0.00 0.09 0.20 0.16 0.14 0.04 0.41 0.28 0.21 0.93 3.56 0.54 0.16 0.26 0.18 0.23 0.16 0.10 0.58 0.15 0.29 0.93 3.70 0.62 0.07 0.19 0.34 0.15 -0.04 -0.04 0.96 0.16 0.09 0.77 2.08 0.36 0.10 0.62 0.12 0.30 0.12 -0.85 0.05 0.15 0.44 0.47 1.76 0.35 0.82 0.24 0.18 0.35 0.21 0.06 0.18 0.17 0.45 0.41 1.43 0.39 0.00 0.23 0.18 -0.55 -0.02 -0.03 0.79 0.12 0.11 1.25 3.29 0.82 0.04 0.29 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)�������������� $4,136.1 230.6 1,133.2 289.0 496.2 1,838.2 1,674.1 1,382.4 683.0 699.4 969.4 8,162.0 $0.3 0.0 0.0 0.0 0.0 0.3 37.5 435.8 419.2 16.7 3.7 477.3 $465.7 6.2 34.5 51.2 80.6 234.5 270.9 248.1 155.1 93.0 290.4 1,275.1 $97.0 5.2 26.3 2.8 1.8 25.0 19.9 6.5 0.5 6.0 39.6 163.0 $2,159.9 171.7 822.8 192.2 210.4 727.4 826.8 287.8 37.0 250.8 258.8 3,533.3 $242.4 4.7 20.0 5.5 14.0 197.4 6.6 6.4 0.6 5.8 15.7 271.1 $27.5 0.4 1.8 0.3 6.4 18.5 6.5 83.0 19.2 63.8 2.4 119.4 $12.2 0.9 4.3 0.3 0.4 5.6 2.2 1.7 0.1 1.6 1.0 17.1 $53.0 3.0 12.9 1.3 2.1 29.7 6.1 6.2 0.1 6.1 4.6 70.0 $1,078.1 38.6 210.5 35.4 180.4 599.9 497.7 306.9 51.3 255.6 353.0 2,235.7 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������������������������������������������������������ 24,890.5 6,891.5 5,653.2 506.6 6,098.7 280.5 5,410.8 0.2 0.0 0.0 0.0 0.2 0.0 0.0 1,278.0 3.0 62.0 1.0 571.0 0.0 594.0 542.3 195.6 189.0 21.9 93.0 42.6 0.3 14,204.1 5,450.9 4,327.8 402.7 3,315.1 209.6 497.7 1,358.6 162.9 101.0 10.0 400.7 1.6 682.2 124.8 16.0 34.6 0.1 66.1 0.0 8.1 171.6 69.6 56.3 7.3 35.5 2.9 0.0 552.6 168.2 174.8 9.3 185.6 14.8 0.1 6,658.2 825.4 707.6 54.2 1,431.6 9.0 3,628.5 * 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 2014, Volume 8, No. 4 Quarterly Banking Profile TABLE V-A. Loan Performance, All FDIC-Insured Institutions Asset Size Distribution September 30, 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 0.50 0.36 0.21 0.68 1.74 0.26 1.33 1.19 1.46 0.19 0.81 1.29 1.12 1.08 0.70 0.61 1.77 1.23 1.85 2.94 1.84 0.40 1.20 0.71 0.60 0.54 0.43 0.54 1.05 0.67 1.68 1.60 1.68 0.31 0.73 0.67 0.53 0.35 0.18 0.51 1.24 0.36 1.45 1.91 1.25 0.26 0.65 1.16 0.42 0.27 0.17 0.71 1.95 0.21 1.31 1.17 1.47 0.18 0.84 0.67 0.56 0.39 0.22 0.50 1.08 0.24 1.09 0.96 1.44 0.10 0.65 1.19 0.49 0.34 0.21 0.75 1.94 0.15 2.02 1.84 2.11 0.12 0.95 1.06 0.44 0.42 0.18 0.82 1.76 0.36 1.20 0.98 1.27 0.38 0.82 1.45 0.58 0.32 0.19 0.71 2.49 0.22 1.41 1.27 1.57 0.09 0.98 0.87 0.54 0.41 0.22 0.46 1.70 0.44 0.90 0.67 1.02 0.26 0.74 0.45 0.23 0.23 0.23 0.41 0.75 0.27 1.06 1.46 0.73 0.31 0.53 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��������������������������������������������� 3.57 2.55 1.48 0.50 2.62 5.93 0.55 0.93 1.10 0.76 0.23 2.11 1.87 3.23 2.25 1.79 1.00 1.86 1.92 0.87 0.96 0.86 0.65 1.66 1.66 3.08 1.72 1.12 0.83 1.58 1.34 1.10 1.01 1.11 0.46 1.52 2.06 2.76 1.38 0.57 1.06 3.30 0.98 0.80 1.67 0.40 0.37 1.72 4.43 2.19 1.42 0.37 2.92 7.19 0.43 0.93 1.08 0.77 0.20 2.25 2.26 3.17 1.75 0.32 1.90 3.20 0.70 0.91 0.94 0.83 0.33 1.51 4.69 3.46 1.47 0.58 3.41 7.27 0.42 1.03 1.46 0.82 0.20 2.67 4.06 2.50 1.75 0.68 2.72 6.79 0.57 0.82 0.98 0.77 0.13 2.31 4.97 1.99 1.49 0.60 2.77 8.43 0.55 1.06 1.13 0.98 0.26 2.68 2.03 1.64 1.16 0.84 1.77 3.45 0.72 0.70 1.15 0.47 0.28 1.50 1.35 2.06 1.02 0.41 1.00 1.80 0.47 0.80 1.30 0.38 0.26 0.96 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��������������������������������������������� 0.21 0.03 0.10 0.02 0.60 0.21 0.23 1.96 3.18 0.75 0.09 0.49 0.17 0.30 0.21 0.11 0.18 0.19 0.36 0.50 3.22 0.47 0.00 0.21 0.15 0.19 0.15 0.15 0.22 0.15 0.34 0.69 3.70 0.48 0.15 0.20 0.16 0.03 0.13 0.06 0.27 0.24 0.26 1.58 3.46 0.72 0.17 0.28 0.23 -0.05 0.07 -0.02 0.67 0.21 0.21 2.03 3.17 0.77 0.08 0.57 0.22 0.40 0.14 0.00 0.36 0.29 0.36 2.28 2.81 0.81 0.11 0.73 0.25 0.20 0.15 0.04 0.82 0.16 0.15 1.64 3.44 0.76 0.05 0.40 0.24 0.08 0.16 0.04 0.59 0.23 0.23 1.25 3.08 0.65 0.12 0.35 0.24 -0.52 0.00 -0.02 0.71 0.29 0.14 2.64 3.81 1.13 0.06 0.60 0.10 0.01 0.07 0.08 0.51 0.11 0.15 1.06 1.97 0.59 0.18 0.21 0.03 -0.35 0.04 0.01 0.14 0.05 0.37 1.70 3.27 0.39 0.09 0.48 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)����� $4,136.1 230.6 1,133.2 289.0 496.2 1,838.2 1,674.1 1,382.4 683.0 699.4 969.4 8,162.0 $45.3 2.7 12.2 1.4 1.2 20.5 7.8 4.1 0.0 4.1 8.4 65.7 $609.1 51.7 239.4 31.8 27.5 216.7 104.1 35.7 2.3 33.4 47.1 796.0 $737.7 59.7 294.0 65.1 47.2 254.1 161.8 72.8 23.0 49.8 51.6 1,024.0 $2,743.9 116.5 587.6 190.7 420.3 1,346.9 1,400.4 1,269.8 657.7 612.1 862.3 6,276.4 $838.0 43.4 259.2 101.6 91.0 338.7 256.6 392.1 285.7 106.4 160.8 1,647.5 $901.7 49.7 232.8 35.0 129.7 444.9 401.8 248.8 81.3 167.5 209.5 1,761.9 $804.1 36.7 185.6 77.6 124.8 358.9 345.3 202.3 49.5 152.8 231.3 1,583.0 $826.5 34.5 165.5 25.4 102.7 407.6 354.3 296.9 162.8 134.1 268.8 1,746.5 $341.5 45.3 133.9 12.3 19.3 117.0 118.3 55.3 18.4 36.9 39.2 554.2 $424.3 20.9 156.3 37.1 28.7 171.2 197.8 187.0 85.3 101.7 59.8 868.9 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��������������������������������������������� 24,890.5 6,891.5 5,653.2 506.6 6,098.7 280.5 5,410.8 697.1 233.8 233.1 25.7 187.2 17.3 0.1 6,620.9 3,007.8 2,167.4 167.7 1,137.3 139.1 1.6 5,328.3 2,038.8 1,633.2 112.5 1,084.5 100.7 358.6 12,244.2 1,611.1 1,619.4 200.8 3,689.6 23.4 5,050.5 3,131.5 685.1 826.2 179.1 1,167.9 19.4 253.8 6,369.4 1,990.1 1,220.2 61.6 1,601.7 67.8 1,428.0 4,588.0 945.5 1,195.5 98.6 1,405.2 56.1 887.2 6,381.5 1,453.7 1,021.7 84.9 978.0 42.2 2,751.9 2,962.0 1,275.0 940.0 56.1 548.8 74.0 68.1 1,458.1 542.1 449.6 26.2 397.1 20.9 21.8 * 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 2014, Volume 8, No. 4 Table VI-A. Derivatives, All FDIC-Insured Call Report Filers Asset Size Distribution 3rd Quarter 2014 2nd Quarter 2014 1st Quarter 2014 4th Quarter 2013 3rd Quarter 2013 (dollar figures in millions; notional amounts unless otherwise indicated) ALL DERIVATIVE HOLDERS Number of institutions reporting derivatives����������������� 1,391 1,407 1,399 1,389 1,424 Total assets of institutions reporting derivatives���������� $13,713,227 $13,523,258 $13,250,724 $13,073,466 $12,913,916 Total deposits of institutions reporting derivatives������� 10,291,118 10,169,544 9,980,762 9,855,694 9,682,692 Total derivatives������������������������������������������������������������� 242,940,302 239,190,963 231,800,037 237,047,901 241,599,691 % Change Less $100 $1 Billion 13Q3Than $100 Million to to $10 14Q3 Million $1 Billion Billion Greater Than $10 Billion -2.3 6.2 6.3 0.6 71 $5,108 4,306 248 833 386 101 $344,375 $1,121,559 $12,242,185 283,395 888,637 9,114,781 19,685 94,423 242,825,947 Derivative Contracts by Underlying Risk Exposure Interest rate�������������������������������������������������������������������� 190,894,367 191,551,667 184,416,428 193,079,712 194,272,564 Foreign exchange*�������������������������������������������������������� 37,993,284 33,394,789 32,803,419 29,508,040 31,016,109 Equity����������������������������������������������������������������������������� 2,317,269 2,198,432 2,152,493 2,060,642 2,178,167 Commodity & other (excluding credit derivatives)�������� 1,327,011 1,214,397 1,263,060 1,208,874 1,339,676 Credit������������������������������������������������������������������������������ 10,408,372 10,831,679 11,164,636 11,190,633 12,793,174 Total�������������������������������������������������������������������������������� 242,940,302 239,190,963 231,800,037 237,047,901 241,599,691 -1.7 22.5 6.4 -0.9 -18.6 0.6 247 0 0 1 0 248 17,382 2,139 73 1 91 19,685 87,062 190,789,676 6,303 37,984,842 381 2,316,815 156 1,326,853 520 10,407,762 94,423 242,825,947 Derivative Contracts by Transaction Type Swaps���������������������������������������������������������������������������� 148,328,645 146,510,078 141,280,789 152,465,179 151,915,064 Futures & forwards�������������������������������������������������������� 45,058,646 45,263,675 42,478,719 40,026,988 40,136,119 Purchased options��������������������������������������������������������� 17,991,014 17,296,921 17,199,263 16,122,514 16,902,690 Written options��������������������������������������������������������������� 17,560,650 16,877,396 16,931,243 16,215,033 17,098,677 Total�������������������������������������������������������������������������������� 228,938,955 225,948,070 217,890,014 224,829,713 226,052,549 -2.4 12.3 6.4 2.7 1.3 44 68 20 115 248 7,223 6,900 761 4,700 19,584 50,254 148,271,124 22,592 45,029,086 5,515 17,984,719 15,364 17,540,470 93,725 228,825,398 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����������������������������������� 65,126 13,334 -657 219 67,082 -62,731 72,249 4,729 412 965 92,998 -88,369 72,732 5,563 1,548 -893 80,869 -77,438 71,270 5,991 32 1,350 74,838 -71,220 64,832 -10,390 -1,928 1,181 27,220 -22,646 0.5 N/M N/M -81.5 146.4 N/M 1 0 0 0 0 0 36 0 3 0 0 0 118 14 4 -5 0 -25 64,970 13,320 -664 224 67,083 -62,706 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 79,984,475 40,334,367 22,393,347 22,803,490 2,446,736 1,021,146 763,470 323,010 77,484 391,671 217,997 19,107 81,212,198 38,531,976 24,201,834 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 24,024,347 20,017,155 2,297,506 974,365 673,720 305,141 89,804 379,469 140,984 18,960 77,758,364 44,157,011 24,628,239 18,289,804 2,324,853 1,029,287 645,046 291,190 135,907 338,091 163,812 5,903 91,687,405 32,673,865 21,497,254 18,911,771 2,869,454 1,503,977 694,983 309,578 88,294 375,292 175,069 16,142 -12.8 23.4 4.2 20.6 -14.7 -32.1 9.9 4.3 -12.2 4.4 24.5 18.4 67 36 28 0 0 0 0 0 0 0 0 0 4,602 3,493 3,959 1,632 0 0 4 11 21 0 0 0 16,664 25,535 22,973 2,966 77 0 54 114 26 65 4 0 79,963,143 40,305,303 22,366,387 22,798,892 2,446,659 1,021,146 763,412 322,886 77,436 391,606 217,993 19,107 26.0 53.2 23.5 55.1 23.5 56.2 26.1 58.1 27.1 61.9 0.1 0.1 0.4 0.3 0.5 0.5 29.5 60.4 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 (%)����������������������������������������������������� 79.2 78.6 79.7 84.3 88.9 0.2 0.7 1.0 89.9 Credit losses on derivatives***���������������������������������� 83.0 69.0 13.0 264.0 181.0 -54.1 0.0 0.0 0.0 83.0 HELD FOR TRADING Number of institutions reporting derivatives����������������� Total assets of institutions reporting derivatives���������� Total deposits of institutions reporting derivatives������� 245 11,015,566 8,262,986 247 10,889,657 8,185,857 243 10,638,660 7,997,380 252 10,559,491 7,964,587 241 10,400,363 7,786,249 1.7 5.9 6.1 9 633 535 88 40,473 33,721 85 297,413 233,992 63 10,677,047 7,994,738 Derivative Contracts by Underlying Risk Exposure Interest rate�������������������������������������������������������������������� 187,909,413 188,491,623 181,280,483 189,137,001 190,492,372 Foreign exchange���������������������������������������������������������� 33,675,874 30,164,255 29,208,497 27,636,697 27,457,246 Equity����������������������������������������������������������������������������� 2,300,741 2,182,209 2,136,529 2,043,918 2,162,663 Commodity & other�������������������������������������������������������� 1,320,794 1,206,811 1,256,235 1,200,547 1,330,681 Total�������������������������������������������������������������������������������� 225,206,822 222,044,898 213,881,742 220,018,163 221,442,962 -1.4 22.6 6.4 -0.7 1.7 80 0 0 1 80 1,951 0 0 0 1,951 22,032 4,902 45 44 27,024 187,885,351 33,670,971 2,300,695 1,320,749 225,177,767 N/M 732.0 181.0 36.7 25.7 0 0 0 0 0 0 0 0 0 0 19 3 -8 -1 14 -846 4,889 659 958 5,662 0.0 0.0 0.1 0.3 0.4 2.6 4.9 24.2 Trading Revenues: Cash & Derivative Instruments Interest rate�������������������������������������������������������������������� Foreign exchange���������������������������������������������������������� Equity����������������������������������������������������������������������������� Commodity & other (including credit derivatives)�������� Total trading revenues��������������������������������������������������� -826 4,892 652 958 5,676 2,878 2,026 722 783 6,409 2,010 2,137 608 1,427 6,183 357 1,550 490 509 2,906 2,995 588 232 701 4,517 Share of Revenue Trading revenues to gross revenues (%)���������������������� Trading revenues to net operating revenues (%)���������� 4.8 23.7 5.4 24.5 5.4 26.9 2.5 11.3 4.0 20.9 HELD FOR PURPOSES OTHER THAN TRADING Number of institutions reporting derivatives����������������� Total assets of institutions reporting derivatives���������� Total deposits of institutions reporting derivatives������� 1,269 13,420,481 10,060,899 1,288 13,229,907 9,938,964 1,282 12,945,001 9,738,920 1,253 12,763,131 9,611,265 1,287 12,619,286 9,449,509 -1.4 6.3 6.5 63 4,554 3,841 759 313,564 257,738 352 1,017,375 807,840 95 12,084,988 8,991,480 Derivative Contracts by Underlying Risk Exposure Interest rate�������������������������������������������������������������������� Foreign exchange���������������������������������������������������������� Equity����������������������������������������������������������������������������� Commodity & other�������������������������������������������������������� Total notional amount���������������������������������������������������� 2,984,954 724,435 16,528 6,216 3,732,133 3,060,044 819,319 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 3,780,192 804,895 15,504 8,995 4,609,587 -21 -10 6.6 -30.9 -19.0 168 0 0 0 168 15,431 2,129 73 1 17,633 65,031 1,223 336 112 66,701 2,904,325 721,083 16,119 6,104 3,647,632 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 2014, Volume 8, No. 4 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 3rd Quarter 2014 Number of institutions reporting securitization activities����������������������������������������� 75 Outstanding Principal Balance by Asset Type 1-4 family residential loans�������������������������������������������������������������������������������� $845,272 Home equity loans��������������������������������������������������������������������������������������������� 38 Credit card receivables������������������������������������������������������������������������������������� 16,782 Auto loans���������������������������������������������������������������������������������������������������������� 4,198 Other consumer loans��������������������������������������������������������������������������������������� 6,425 Commercial and industrial loans����������������������������������������������������������������������� 13 All other loans, leases, and other assets���������������������������������������������������������� 95,102 Total securitized and sold������������������������������������������������������������������������������������������ 967,830 Maximum Credit Exposure by Asset Type 1-4 family residential loans�������������������������������������������������������������������������������� Home equity loans��������������������������������������������������������������������������������������������� Credit card receivables������������������������������������������������������������������������������������� Auto loans���������������������������������������������������������������������������������������������������������� Other consumer loans��������������������������������������������������������������������������������������� Commercial and industrial loans����������������������������������������������������������������������� All other loans, leases, and other assets���������������������������������������������������������� Total credit exposure������������������������������������������������������������������������������������������������� Total unused liquidity commitments provided to institution's own securitizations��� Securitized Loans, Leases, and Other Assets 30-89 Days Past Due (%) 1-4 family residential loans�������������������������������������������������������������������������������� Home equity loans��������������������������������������������������������������������������������������������� Credit card receivables������������������������������������������������������������������������������������� Auto loans���������������������������������������������������������������������������������������������������������� Other consumer loans��������������������������������������������������������������������������������������� Commercial and industrial loans����������������������������������������������������������������������� All other loans, leases, and other assets���������������������������������������������������������� Total loans, leases, and other assets����������������������������������������������������������������������� Securitized Loans, Leases, and Other Assets 90 Days or More Past Due (%) 1-4 family residential loans�������������������������������������������������������������������������������� Home equity loans��������������������������������������������������������������������������������������������� Credit card receivables������������������������������������������������������������������������������������� Auto loans���������������������������������������������������������������������������������������������������������� Other consumer loans��������������������������������������������������������������������������������������� Commercial and industrial loans����������������������������������������������������������������������� All other loans, leases, and other assets���������������������������������������������������������� Total loans, leases, and other assets����������������������������������������������������������������������� Securitized Loans, Leases, and Other Assets Charged-off (net, YTD, annualized, %) 1-4 family residential loans�������������������������������������������������������������������������������� Home equity loans��������������������������������������������������������������������������������������������� Credit card receivables������������������������������������������������������������������������������������� Auto loans���������������������������������������������������������������������������������������������������������� Other consumer loans��������������������������������������������������������������������������������������� Commercial and industrial loans����������������������������������������������������������������������� All other loans, leases, and other assets���������������������������������������������������������� Total loans, leases, and other assets����������������������������������������������������������������������� Seller's Interests in Institution's Own Securitizations - Carried as Loans Home equity loans��������������������������������������������������������������������������������������������� Credit card receivables������������������������������������������������������������������������������������� Commercial and industrial loans����������������������������������������������������������������������� Seller's Interests in Institution's Own Securitizations - Carried as Securities Home equity loans��������������������������������������������������������������������������������������������� Credit card receivables������������������������������������������������������������������������������������� Commercial and industrial loans����������������������������������������������������������������������� Assets Sold with Recourse and Not Securitized 2nd Quarter 2014 1st Quarter 2014 4th Quarter 2013 3rd % Change Less Than $100 $1 Billion Greater Quarter 13Q3$100 Million to to $10 Than $10 2013 14Q3 Million $1 Billion Billion Billion 73 76 83 82 -8.5 1 24 $843,776 39 16,692 4,312 4,945 1,217 94,757 965,737 $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 $625,642 44 17,115 4,708 4,790 3,945 104,890 761,133 35.1 -13.6 -1.9 -10.8 34.1 -99.7 -9.3 27.2 $17.0 0 0 0 0 0 0 17 $2,172.0 0 89 1,052 2 8 3,561 6,884 17 33 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 2,927 0 554 0 168 20 1,729 5,397 121 -4.1 0.0 156.0 0.0 11.9 -100.0 -34.7 2.7 -86.0 0 0 0 0 0 0 0 0 0 5 0 30 0 0 0 1 37 0 52 0 0 0 0 0 0 52 0 2,749 0 1,388 0 188 0 1,128 5,452 17 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 4.1 10.7 1.0 0.6 5.4 0.0 1.1 3.6 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1.4 0.0 1.6 0.0 0.0 0.0 0.9 0.9 5.1 0.0 0.0 0.0 0.0 0.0 0.0 3.9 3.9 8.0 0.8 1.0 4.8 0.0 0.4 3.5 2.2 42.0 0.5 0.1 5.2 2.4 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 3.7 34.4 0.6 0.0 7.1 0.0 8.9 4.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1.7 0.0 1.5 0.0 0.0 3.8 0.9 1.0 6.0 0.0 0.0 0.0 0.0 0.0 1.2 4.8 2.2 42.0 0.5 0.1 5.2 0.0 7.0 2.6 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 0.7 0.3 1.9 0.1 0.7 0.0 0.6 0.7 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.2 0.0 5.7 0.0 0.0 0.0 0.0 0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.3 0.1 1.5 0.1 0.6 0.0 0.7 0.3 0 12,198 3 0 12,905 2 0 13,116 2 0 12,850 3 0 13,451 3 0.0 -9.3 0.0 0 0 0 0 313 0 0 0 3 0 11,886 0 0 0 0 0 0 0 0 0 48 0 0 52 0 0 0 0.0 0.0 0.0 0 0 0 0 0 0 0 0 0 0 0 0 $15,174.0 $827,909.0 0 38 0 16,693 0 3,146 0 6,423 3 2 4,939 86,602 20,116 940,813 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 1,101 1,088 1,084 1,066 3.6 141 739 175 49 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 48,349 802 64 62,143 111,358 -15.1 -11.6 -18.8 6.6 -2.9 1,632 0 0 1 1,633 13,915 2 13 96 14,027 9,054 5 38 184 9,281 16,462 702 0 65,989 83,154 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������������������������������������������������������������������������������������������������� 9,853 140 23 17,233 27,249 9,646 141 24 16,849 26,660 9,573 155 33 16,970 26,732 10,756 160 27 17,058 28,002 11,607 156 29 15,316 27,109 -15.1 -10.3 -20.7 12.5 0.5 108 0 0 1 109 2,193 2 13 16 2,224 3,204 3 9 55 3,271 4,348 136 0 17,161 21,645 Support for Securitization Facilities Sponsored by Other Institutions Number of institutions reporting securitization facilities sponsored by others������� Total credit exposure������������������������������������������������������������������������������������������������� 132 41,590 134 42,375 138 42,058 148 44,707 154 44,848 -14.3 -7.3 12 10 72 181 29 299 19 41,100 Total unused liquidity commitments������������������������������������������������������������������������� 918 1,122 1,017 981 923 -0.5 0 0 0 917 3,976,480 Other Assets serviced for others*��������������������������������������������������������������������������������������� 4,412,810 4,459,026 4,556,249 4,712,533 4,773,337 Asset-backed commercial paper conduits Credit exposure to conduits sponsored by institutions and others������������������ 10,189 12,129 12,110 12,317 13,049 Unused liquidity commitments to conduits sponsored by institutions 27,948 28,274 30,515 31,113 40,363 and others������������������������������������������������������������������������������������������������������� Net servicing income (for the quarter)���������������������������������������������������������������������� 2,885 2,771 2,142 4,627 3,182 Net securitization income (for the quarter)��������������������������������������������������������������� 384 318 285 377 352 Total credit exposure to Tier 1 capital (%)**������������������������������������������������������������� 5.3 5.4 5.4 5.8 5.9 -7.6 5,627 135,185 295,517 -21.9 5 0 4 10,181 -30.8 -9.3 9.1 0 8 0 0.9 0 189 15 1.9 708 184 5 2.3 27,240 2,504 364 6.2 * 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 2014, Volume 8, No. 4 Quarterly Banking Profile COMMUNITY BANK PERFORMANCE Net Income of $4.9 Billion Improved 11 Percent From Third Quarter 2013 Net Interest Income and Noninterest Income Increased Loan Balances Increased, Outpacing Industry Growth Noncurrent Loan Rate Improved to Pre-Crisis Level ■ ■ ■ ■ Earnings Improved From a Year Ago, Outpacing Industry Growth More Than 70 Percent of Community Banks Increased Net Interest Income Improved net operating revenue (the sum of net interest income and total noninterest income), coupled with lower provision expenses, increased community banks net income of $4.9 billion, up $470.7 million (10.7 percent) from third quarter 2013.1 The percentage increase in earnings at community banks was higher than the 7.6 percent increase for the industry. Almost two out of every three community banks (63 percent) reported a year-over-year increase, while 6.6 percent of community banks were unprofitable during third quarter 2014, the lowest number of banks with a quarterly loss since second quarter 2006. The pretax return on assets (ROA) was 1.25 percent, up 2 basis points from the previous quarter and 11 basis points from the year before—the highest level since third quarter 2007.2 Community banks reported net interest income of $17 billion during the quarter, up $1 billion (6.5 percent) from third quarter 2013—outperforming the industry (3.1 percent). Close to 33 percent of the industry’s annual growth in net interest income (up $3.2 billion) came from community banks. The net interest margin (NIM) was 3.65 percent at community banks, up 2 basis points from third quarter 2013, as average funding costs declined more rapidly than average asset yields. For the past five out of six quarters, NIM at community banks increased, while it declined or remained flat for the industry. Community banks posted a NIM 51 basis points above the industry average. Higher Gains on Loan Sales Increased Noninterest Income Prior-period dollar amounts used for comparisons are mergeradjusted, meaning the same institutions identified as community banks in the current quarter are used to determine dollar amounts in previous quarters, 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. Noninterest income totaled $4.5 billion in third quarter 2014, up $63 million (1.4 percent) from third quarter 2013 as revenue from loan sales—including mortgage sales—increased by $58.4 million (7 percent) from the year-ago quarter. All other noninterest income—which accounts for almost 40 percent of total noninterest income at community banks—was $1.7 billion during the quarter, up $26.6 million (1.6 percent) from third Chart 1 Chart 2 1 Net Interest Margin Contributors to the Year-Over-Year Change in Income FDIC-Insured Community Banks Percent Positive Factor Negative Factor Billions of Dollars $2.0 4.0 1.04 $1.0 Community Banks All Insured Institutions 0.55 0.47 0.07 0.06 $0.0 0.33 3.63 -0.18 3.65 3.5 -$1.0 -$2.0 Net Income Net Interest Income +11% +7% Loan Loss Noninterest Noninterest Provisions Income Expense -24% +1% +4% Realized Gains on Securities Income Taxes +183% +30% 3.26 3.0 2006 Source: FDIC. FDIC Quarterly 3.14 2007 2008 2009 2010 2011 2012 2013 2014 Source: FDIC. 15 2014, Volume 8, No. 4 quarter 2013.3 More than half of community banks (51.7 percent) increased noninterest income from third quarter 2013. However, the industry experienced a higher rate increase (9.6 percent). than the industry, which grew less than 1 percent. All major loan categories increased from the previous quarter, led by nonfarm nonresidential loans (up $6.1 billion, or 1.6 percent), 1-to-4 family (up $4 billion, or 1.1 percent), construction and development (up $3.3 billion, or 4.2 percent), and commercial and industrial loans (up $2.4 billion, or 1.3 percent). Year-over-year loan growth at community banks (8 percent) outpaced the industry (4.6 percent). Almost 43 percent of the yearly increase at community banks was led by nonfarm nonresidential (up $24.1 billion, or 6.5 percent) and commercial and industrial loans (up $18.1 billion, or 10.8 percent). Despite declines in 1-to-4 family loans and home equity lines of credit for the industry, community banks experienced a growth of $18 billion (5.3 percent) and $2.9 billion (6.3 percent), respectively. Total unused commercial real estate (CRE) loans—including construction and development— increased by $4.1 billion (6.7 percent) during the quarter to $64.7 billion, indicating continued credit extension, as off-balance and on-balance CRE loans increased from the previous quarter. Noninterest Expense Increased From a Year Ago Noninterest expense at community banks was $553.5 million (3.9 percent) higher than in third quarter 2013. The year-over-year increase in noninterest expense was led by higher salary and employee benefits (up $381.5 million, or 5 percent). Close to 65 percent of community banks reported higher noninterest expense from the year-ago quarter. However, full-time employees at community banks only increased by 4,757 (1.1 percent) over the year to 445,090. The average asset per employee totaled $4.6 million for the current quarter, up from $4.4 million in third quarter 2013. Loan Growth Increased From the Second Quarter and a Year Ago Loan balances increased by $25.3 billion (1.9 percent) from the second quarter 2014, totaling $1.3 trillion. Almost three out of four community banks (71 percent) reported higher loan growth from the previous quarter. Community banks reported higher loan growth Community Banks Expanded Small Loans to Businesses Small loans to businesses totaled $299 billion in the third quarter, up $2.7 billion (0.9 percent) from the previous quarter, outperforming the industry (up $2.2 billion, or 0.3 percent).4 Close to 56 percent of community banks increased small loans to businesses from the previous quarter, led by agricultural production loans Items that are greater than $25,000 and exceed 3 percent of all other noninterest income are 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. 3 Small loans to businesses consist of loans to commercial borrowers up to $1 million and farm loans up to $500,000. 4 Chart 3 Chart 4 Change in Loan Balances and Unused Commitments Noncurrent Loan Rates for FDIC-Insured Community Banks Billions of Dollars Percent of Loan Portfolio Noncurrent 16 FDIC-Insured Community Banks 24.1 Change 3Q 2014 vs. 3Q 2013 Change 3Q 2014 vs. 2Q 2014 18.1 C&D Loans Nonfarm Nonresidential RE 1-to-4 Family RE C&I Loans Home Equity Credit Cards 14 12 18.0 10 11.7 8 9.8 8.2 6.1 2.4 Nonfarm Nonresidential RE C&I Loans Source: FDIC. FDIC Quarterly 4.0 1-to-4 Family Residential RE 3.3 C&D Loans 4.6 2.6 3.7 1.7 Agricultural Loans to Production Individuals Loans Loan Balances 4.1 2.9 6 3.8 4 1.3 Home Equity 2 Real Estate C&I (CRE & C&D) Loans 0 Unused Commitments 2006 2007 2008 2009 2010 2011 2012 2013 2014 Source: FDIC. 16 2014, Volume 8, No. 4 Quarterly Banking Profile (up $1.7 billion, or 6.6 percent) and nonfarm nonresidential loans ($0.7 billion, or 0.5 percent). All major loan categories rose from third quarter 2013, with small loans to businesses increasing by $10.3 billion (3.6 percent). Most of the year-over-year increase in small loans to businesses at community banks was driven by increases in commercial and industrial loans (up $4.6 billion, or 5.3 percent). Community banks continued to hold 45 percent of small loans to businesses. Like community banks, the industry increased small loans to businesses from the year-ago quarter, but at a slower rate (2 percent). (up 17 basis points). Construction and development loans continued to have the highest noncurrent rate (3.03 percent); however, that rate has declined for 16 consecutive quarters. The quarterly net charge-off rate was 0.16 percent, down 13 basis points from third quarter 2013, and remained down 29 basis points from the industry rate of 0.45 percent. The coverage ratio (loan loss reserves relative to noncurrent loans) for community banks improved from 96.3 percent to 97.14 percent during the quarter, and was well above the industry average of 72.86 percent. Despite a small decline in reserves during the quarter (down $74 million, or 0.4 percent), the coverage ratio has increased for 12 consecutive quarters. Asset Quality Continued to Improve Noncurrent loan balances totaled $20 billion for the current quarter, down $5.1 billion (20.3 percent) from third quarter 2013. Close to 61 percent of community banks lowered their noncurrent loan balances versus the year-ago quarter. The noncurrent rate was 1.5 percent for community banks in third quarter 2014, the lowest level since fourth quarter 2007. The noncurrent rate fell 4 basis points from the second quarter and 48 basis points from the previous year, and remained down 61 basis points from the industry rate of 2.11 percent. The noncurrent rate declined for most major loan categories from the year before, except for credit card loans FDIC Quarterly Two Community Banks Failed in the Third Quarter The number of FDIC-insured community banks totaled 6,107 in third quarter 2014, down 56 banks from the previous quarter. Two community banks failed during the quarter. Community banks continued to represent 93 percent of insured institutions, with $2 trillion in assets, $1.7 trillion in deposits, and $226 billion in equity capital. Author: 17 Benjamin Tikvina, Economic Analyst Division of Insurance and Research (202) 898-6578 2014, Volume 8, No. 4 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* 0.92 8.44 10.60 1.46 0.20 1.13 3.61 1.03 6,107 6.76 2013* 0.93 8.54 10.48 1.89 0.31 1.12 3.57 18.52 6,380 8.13 2013 0.90 8.28 10.44 1.72 0.32 0.25 3.59 14.65 6,307 8.40 2012 0.83 7.67 10.18 2.27 0.59 2.24 3.67 56.54 6,543 11.16 2011 0.55 5.17 9.98 2.84 0.87 1.47 3.74 204.98 6,800 16.35 2010 0.21 2.08 9.56 3.25 1.11 -2.13 3.71 209.82 7,017 22.15 2009 -0.14 -1.42 9.30 3.26 1.25 3.35 3.56 -159.37 7,251 29.71 * Through September 30, ratios annualized where appropriate. Asset growth rates are for 12 months ending September 30. TABLE II-B. Aggregate Condition and Income Data, FDIC-Insured Community Banks 3rd Quarter 2014 6,107 445,090 2nd Quarter 2014 6,163 448,005 3rd Quarter 2013 6,380 457,163 %Change 13Q3-14Q3 -4.3 -2.6 $2,031,705 1,017,241 355,440 396,550 82,894 49,203 186,291 58,289 1,790 46,093 29,444 556 1,336,801 19,450 1,317,351 452,656 9,450 12,571 239,678 $2,022,238 1,004,794 354,196 392,691 79,646 47,989 184,907 56,999 1,817 43,645 28,576 555 1,318,366 19,550 1,298,816 458,191 10,004 12,507 242,720 $2,008,965 982,395 347,563 388,606 75,913 48,158 174,975 55,066 1,787 41,861 27,364 546 1,281,115 20,917 1,260,197 468,161 12,389 12,407 255,811 1.1 3.5 2.3 2.0 9.2 2.2 6.5 5.9 0.2 10.1 7.6 1.9 4.3 -7.0 4.5 -3.3 -23.7 1.3 -6.3 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������������������������������������������������������������������������������������������� 2,031,705 1,672,413 1,672,195 217 59,384 1,300,091 117,192 400 15,632 226,068 225,915 2,022,238 1,664,163 1,663,940 222 56,163 1,303,836 118,990 420 14,823 223,843 223,696 2,008,965 1,660,300 1,660,081 220 52,312 1,320,002 115,563 490 15,911 216,702 216,557 1.1 0.7 0.7 -1.1 13.5 -1.5 1.4 -18.2 -1.8 4.3 4.3 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��������������������������������������������������������������������������������������� First Three INCOME DATA Quarters 2014 Total interest income������������������������������������������������������������������� $56,665 Total interest expense����������������������������������������������������������������� 6,826 Net interest income�������������������������������������������������������������� 49,839 Provision for loan and lease losses�������������������������������������������� 1,867 Total noninterest income������������������������������������������������������������� 13,229 Total noninterest expense����������������������������������������������������������� 43,776 Securities gains (losses)������������������������������������������������������������� 389 Applicable income taxes������������������������������������������������������������� 3,993 Extraordinary gains, net�������������������������������������������������������������� 2 Total net income (includes minority interests)��������������������� 13,823 Bank net income������������������������������������������������������������ 13,807 Net charge-offs���������������������������������������������������������������������������� 1,895 Cash dividends���������������������������������������������������������������������������� 6,134 Retained earnings����������������������������������������������������������������������� 7,672 Net operating income����������������������������������������������������������� 13,515 9,034 20,022 11,363 197,924 1,879,822 85,873 248,575 238,569 18,906 43,410 First Three Quarters 2013 $57,104 7,984 49,120 2,408 14,511 44,330 541 3,634 45 13,845 13,825 2,874 6,080 7,744 13,378 8,943 20,300 11,113 201,690 1,865,993 87,084 242,784 243,767 15,340 48,984 3rd Quarter 2014 $19,312 2,280 17,032 555 4,535 14,820 110 1,411 -6 4,885 4,878 544 1,926 2,952 4,803 9,880 25,385 12,807 207,599 1,847,837 80,134 233,841 223,856 15,656 44,339 3rd Quarter 2013 $19,241 2,563 16,678 736 4,606 14,842 15 1,186 0 4,536 4,527 928 2,251 2,276 4,529 (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 -0.8 -14.5 1.5 -22.5 -8.8 -1.2 -28.1 9.9 -96.1 -0.2 -0.1 -34.1 0.9 -0.9 1.0 -8.6 -21.1 -11.3 -4.7 1.7 7.2 6.3 6.6 20.8 -2.1 %Change 13Q3-14Q3 0.4 -11.0 2.1 -24.7 -1.6 -0.2 623.6 19.0 N/M 7.7 7.8 -41.3 -14.4 29.7 6.1 N/M - Not Meaningful 18 2014, Volume 8, No. 4 Quarterly Banking Profile TABLE III-B. Aggregate Condition and Income Data by Geographic Region, FDIC-Insured Community Banks Geographic Regions* Third Quarter 2014 (dollar figures in millions) All Community Banks Number of institutions reporting����������������������������������� 6,107 Total employees (full-time equivalent)������������������������� 445,090 New York 718 87,432 Atlanta 757 58,827 Chicago 1,362 96,199 Kansas City 1,550 71,619 Dallas San Francisco 1,309 411 96,123 34,890 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������������������������������������������������������ $2,031,705 1,017,241 355,440 396,550 82,894 49,203 186,291 58,289 1,790 46,093 29,444 556 1,336,801 19,450 1,317,351 452,656 9,450 12,571 239,678 $513,171 293,927 122,058 103,432 15,739 16,140 43,412 11,391 202 494 7,474 147 356,550 4,347 352,204 104,848 1,180 4,081 50,859 $250,259 133,835 42,442 59,002 14,781 7,749 19,637 7,549 139 1,236 2,081 95 164,242 2,572 161,670 51,039 2,486 1,294 33,770 $392,934 196,870 72,176 72,703 11,864 11,994 35,218 12,238 456 7,196 5,499 65 256,957 4,121 252,837 90,649 1,981 2,299 45,168 $311,690 134,151 40,261 47,111 10,597 4,314 30,668 9,672 446 25,333 5,245 26 205,042 3,100 201,942 72,739 1,453 1,695 33,860 $394,524 174,276 58,185 71,607 23,333 4,389 40,298 13,718 323 9,240 6,334 117 243,749 3,496 240,254 99,147 1,765 2,290 51,068 $169,128 84,183 20,320 42,695 6,579 4,616 17,059 3,721 224 2,594 2,810 106 110,260 1,816 108,444 34,233 585 912 24,953 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����������������������������������������� 2,031,705 1,672,413 1,672,195 217 59,384 1,300,091 117,192 400 15,632 226,068 225,915 513,171 406,471 406,344 126 17,627 307,803 44,165 207 5,169 57,160 57,112 250,259 208,484 208,440 45 6,551 163,531 12,141 56 1,663 27,915 27,898 392,934 325,897 325,871 26 12,453 267,686 20,532 88 2,806 43,611 43,556 311,690 257,556 257,556 0 9,052 208,295 17,949 4 1,910 34,271 34,269 394,524 332,654 332,654 0 8,581 249,713 16,305 7 2,531 43,026 42,996 169,128 141,351 141,331 20 5,120 103,063 6,100 38 1,554 20,085 20,083 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������������������������������������� 9,034 20,022 11,363 197,924 1,879,822 85,873 248,575 238,569 18,906 43,410 2,521 6,020 2,820 58,518 477,363 35,160 60,684 52,746 5,628 15,035 1,346 3,326 1,975 22,365 228,947 9,212 29,419 9,261 514 5,885 1,882 4,671 2,993 36,914 363,013 14,069 48,165 68,120 6,127 6,768 1,091 2,055 1,303 24,358 289,393 11,757 41,938 62,314 4,511 5,472 1,828 2,779 1,310 38,532 364,127 12,168 44,344 39,255 620 7,370 366 1,172 963 17,236 156,978 3,507 24,025 6,874 1,505 2,880 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�������������������������������������������� $19,312 2,280 17,032 555 4,535 14,820 110 1,411 -6 4,885 4,878 544 1,926 2,952 4,803 $4,681 711 3,970 158 805 3,391 32 400 -2 855 852 145 247 605 831 $2,469 297 2,172 65 547 1,995 21 170 -3 507 506 98 172 334 494 $3,656 426 3,230 108 1,172 3,008 20 311 0 996 994 123 492 502 980 $2,992 343 2,649 79 716 2,196 17 171 0 935 935 79 374 561 921 $3,896 376 3,520 131 915 2,956 12 198 -1 1,161 1,160 99 488 671 1,152 $1,619 127 1,492 13 380 1,273 7 161 0 431 431 0 153 278 426 * See Table V-A (page 11) for explanations. FDIC Quarterly 19 2014, Volume 8, No. 4 Table IV-B. Third Quarter 2014, FDIC-Insured Community Banks All Community Banks 3rd 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������������������������������ 4.14 0.49 3.65 0.90 2.94 0.11 0.95 1.25 0.97 8.72 0.16 101.85 68.38 78.97 6.60 63.01 2nd Quarter 2014 Third Quarter 2014, Geographic Regions* New York 4.10 0.49 3.61 0.91 2.91 0.12 0.94 1.23 0.96 8.76 0.20 93.16 68.42 78.63 7.06 57.54 3.95 0.60 3.35 0.63 2.66 0.12 0.65 0.98 0.67 6.04 0.16 108.59 70.66 83.14 9.33 62.53 Atlanta 4.34 0.52 3.82 0.88 3.20 0.10 0.79 1.09 0.81 7.34 0.24 66.17 72.94 79.87 10.04 63.14 Chicago 4.05 0.47 3.58 1.20 3.07 0.11 1.00 1.33 1.02 9.20 0.19 87.59 68.02 73.38 7.42 61.01 Kansas City Dallas 4.16 0.48 3.68 0.92 2.83 0.10 1.19 1.43 1.21 11.02 0.15 101.10 64.92 78.72 4.39 62.84 4.32 0.42 3.90 0.93 3.02 0.13 1.18 1.39 1.18 10.89 0.17 132.38 66.36 79.38 4.05 64.48 San Francisco 4.18 0.33 3.85 0.91 3.04 0.03 1.02 1.42 1.03 8.67 0.00 N/M 67.83 79.70 9.25 66.18 Table V-B. First Three Quarters 2014, FDIC-Insured Community Banks All Community Banks First Three First Three Quarters 2014 Quarters 2013 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������������������������������ 4.11 0.49 3.61 0.88 2.93 0.12 0.90 1.19 0.92 8.44 0.20 98.50 69.08 79.02 6.76 60.32 First Three Quarters 2014, Geographic Regions* New York 4.16 0.58 3.57 0.97 2.97 0.16 0.90 1.17 0.93 8.54 0.31 83.80 69.34 77.20 8.13 51.71 3.94 0.60 3.34 0.63 2.66 0.17 0.59 0.94 0.63 5.71 0.23 111.63 70.84 83.05 8.36 56.96 Atlanta 4.33 0.53 3.79 0.85 3.19 0.11 0.76 1.04 0.78 7.16 0.26 66.91 73.59 80.22 10.83 62.88 Chicago 4.02 0.48 3.54 1.18 3.06 0.13 0.96 1.27 0.97 8.97 0.25 81.33 68.45 73.40 8.08 54.70 Kansas City Dallas 4.12 0.48 3.63 0.92 2.83 0.09 1.16 1.38 1.18 10.93 0.14 105.44 65.68 78.44 3.94 63.16 4.26 0.42 3.83 0.91 3.00 0.12 1.12 1.33 1.13 10.52 0.16 127.76 67.38 79.58 4.51 63.71 San Francisco 4.14 0.33 3.80 0.88 3.08 0.04 0.95 1.31 0.97 8.15 0.06 109.17 69.63 80.00 9.98 58.64 * See Table V-A (page 11) for explanations. FDIC Quarterly 20 2014, Volume 8, No. 4 Quarterly Banking Profile Table VI-B. Loan Performance, FDIC-Insured Community Banks Geographic Regions* September 30, 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���������������������������������������������������������� 0.67 0.55 0.49 0.29 0.51 1.05 0.53 1.70 1.90 1.69 0.32 0.68 0.69 0.65 0.50 0.25 0.63 1.00 0.34 2.66 3.76 2.64 0.42 0.71 0.79 0.60 0.58 0.37 0.59 1.26 0.65 1.94 1.16 1.95 0.23 0.82 0.77 0.57 0.61 0.54 0.51 1.12 0.52 1.22 1.33 1.22 0.28 0.73 0.52 0.50 0.41 0.11 0.36 0.89 0.66 1.06 2.81 0.98 0.28 0.53 0.72 0.55 0.46 0.27 0.43 1.20 0.62 1.94 1.17 1.96 0.43 0.75 0.31 0.21 0.25 0.15 0.21 0.57 0.39 0.59 1.06 0.56 0.29 0.33 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���������������������������������������������������������� 1.67 3.03 1.58 0.76 0.90 1.86 1.20 0.85 0.99 0.84 0.43 1.50 1.82 3.58 1.65 0.36 1.01 2.25 1.25 0.91 1.82 0.89 0.29 1.69 2.16 4.73 1.88 1.70 0.88 1.94 1.27 2.09 0.55 2.12 0.86 2.02 2.06 3.82 2.19 1.56 1.07 2.11 1.36 0.48 0.79 0.46 0.57 1.82 1.15 2.38 1.27 0.68 0.51 1.26 1.15 0.54 1.39 0.50 0.37 1.00 1.26 1.70 1.12 1.02 0.68 1.34 1.03 0.80 0.61 0.81 0.41 1.14 1.12 2.30 1.09 0.27 0.73 1.13 1.14 0.36 0.67 0.34 0.45 1.06 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���������������������������������������������������������� 0.16 0.17 0.14 0.10 0.21 0.21 0.26 0.68 4.14 0.56 0.13 0.20 0.20 0.35 0.12 0.03 0.16 0.31 0.28 0.73 5.60 0.64 0.09 0.23 0.22 0.45 0.22 0.18 0.26 0.16 0.34 0.71 1.51 0.70 0.21 0.26 0.24 0.17 0.26 0.24 0.32 0.25 0.28 0.54 3.23 0.43 0.10 0.25 0.09 0.04 0.12 0.09 0.18 0.12 0.24 0.65 8.11 0.29 0.05 0.14 0.08 0.07 0.06 0.23 0.18 0.09 0.23 0.79 1.80 0.77 0.28 0.16 0.01 -0.32 0.04 0.01 0.04 0.02 0.16 0.50 2.03 0.40 0.21 0.06 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���������������������������������������������������������� $1,017.2 82.9 396.6 75.2 49.2 355.4 186.3 58.3 1.8 56.5 75.5 1,337.4 $293.9 15.7 103.4 35.1 16.1 122.1 43.4 11.4 0.2 11.2 8.0 356.7 $133.8 14.8 59.0 5.8 7.7 42.4 19.6 7.5 0.1 7.4 3.3 164.3 $196.9 11.9 72.7 14.1 12.0 72.2 35.2 12.2 0.5 11.8 12.7 257.0 $134.2 10.6 47.1 7.0 4.3 40.3 30.7 9.7 0.4 9.2 30.6 205.1 $174.3 23.3 71.6 6.0 4.4 58.2 40.3 13.7 0.3 13.4 15.6 243.9 $84.2 6.6 42.7 7.2 4.6 20.3 17.1 3.7 0.2 3.5 5.4 110.4 Memo: Unfunded Commitments (in millions) Total Unfunded Commitments��������������������������������������������� Construction and development: 1-4 family residential�� Construction and development: CRE and other����������� Commercial and industrial�������������������������������������������� 248,575 19,186 44,205 86,150 60,684 3,981 13,295 19,682 29,419 3,434 5,971 9,002 48,165 2,276 6,681 18,041 41,938 2,388 5,330 14,340 44,344 5,428 9,547 15,942 24,025 1,679 3,380 9,143 * 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 2014, Volume 8, No. 4 INSURANCE FUND INDICATORS ■ ■ ■ DIF Reserve Ratio Rises 5 Basis Points to 0.89 Percent Insured Deposits Increase by 0.4 Percent Two Institutions Fail During Third Quarter Total assets of the 6,589 FDIC-insured institutions increased by 1.2 percent ($176.7 billion) during the third quarter of 2014. Total deposits increased by 0.9 percent ($106.3 billion), domestic office deposits increased by 1.1 percent ($114.0 billion), and foreign office deposits decreased by 0.5 percent ($7.7 billion). Domestic noninterest-bearing deposits increased by 1.3 percent ($35.5 billion) and savings deposits and interest-bearing checking accounts increased by 2 percent ($113.4 billion), while domestic time deposits decreased by 2.1 percent ($34.9 billion). For the twelve months ending September 30, total domestic deposits grew by 6 percent ($573.0 billion), with interest-bearing deposits increasing by 4.6 percent ($323.2 billion) and noninterest-bearing deposits rising by 9.8 percent ($249.7 billion).1 Other borrowed money increased by 17 percent (a little more than half of the increase was from increases in FHLB advances), securities sold under agreements to repurchase declined by 16.7 percent, and foreign deposit growth was nearly flat (a decrease of 0.3 percent) over the same twelve-month period.2 negative provision for insurance losses of $1.7 billion were the main forces behind the fund balance increase. The negative provision for insurance losses reflected unanticipated recoveries from litigation settlements and receivership asset recoveries that exceeded estimates. These recoveries were partially offset by an increase in the contingent loss reserve. Investment income and all other miscellaneous income net of expenses added another $86 million to the fund. Third quarter operating expenses and unrealized losses on available-for-sale securities reduced the fund balance by $497 million. For the first nine months of 2014, 14 insured institutions failed, with combined assets of $1.8 billion, at a current estimated cost to the DIF of $289 million. The DIF’s reserve ratio was 0.89 percent on September 30, up from 0.84 percent at June 30, 2014, and 0.68 percent four quarters ago. The reserve ratio at the time of the prior DIF balance record—March 31, 2008—was 1.19 percent. Although the third quarter DIF balance was at a new record level, this did not equate to a reserve ratio higher than at the March 2008 level due to the increase in the insurance coverage limit and regular deposit growth. The first quarter 2008 DIF balance covered estimated insured deposits of $4.4 trillion, compared to $6.1 trillion in deposits as of the third quarter. Total estimated insured deposits increased by 0.4 percent in the third quarter of 2014.3 For institutions existing at the start and the end of the most recent quarter, insured deposits increased during the quarter at 2,809 institutions (43 percent), decreased at 3,754 institutions (57 percent), and remained unchanged at 35 institutions. Estimated insured deposits increased by 2.8 percent over the 12 months ending September 30, 2014. 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 as of September 30, by institution asset size category. The DIF increased by $3.3 billion during the third quarter of 2014 to a record $54.3 billion (unaudited). The prior high for the DIF was $52.8 billion in the first quarter of 2008. Assessment income of $2 billion and a Dodd-Frank requires that, for at least five years, the FDIC must make available to the public the reserve ratio and the DRR using both estimated insured deposits and the new assessment base. As of September 30, 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 2014, Volume 8, No. 4 Quarterly Banking Profile Table 1 Distribution of the Assessment Base for FDIC-Insured Institutions* by Asset Size Data as of September 30, 2014 Asset Size Less Than $1 Billion $1 - $10 Billion $10 - $50 Billion $50 - $100 Billion Over $100 Billion Total Number of Institutions 5,906 575 72 12 24 6,589 Percent of Assessment Base** Total Institutions ($ Bil.) 89.6 $1,187.1 8.7 1,371.7 1.1 1,412.1 0.2 801.1 0.4 8,290.9 100.0 13,062.8 Percent of Base 9.1 10.5 10.8 6.1 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. 2014, the FDIC reserve ratio would have been 0.41 percent using the new assessment base (compared to 0.89 percent using estimated insured deposits), and the 2 percent DRR using estimated insured deposits would have been 0.94 percent using the new assessment base. FDIC Quarterly Author: Kevin Brown, Senior Financial Analyst Division of Insurance and Research (202) 898-6817 23 2014, Volume 8, No. 4 Table I-C. Insurance Fund Balances and Selected Indicators 3rd Quarter 2014 $51,059 2nd Quarter 2014 $48,893 1st Quarter 2014 $47,191 4th Quarter 2013 $40,758 2,009 2,224 2,393 2,224 80 87 45 0 406 0 428 0 422 -1,663 -204 348 6 6 9 -91 3,261 73 2,166 Ending Fund Balance������� Percent change from four quarters earlier������� 54,320 33.27 Reserve Ratio (%)������������� (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* 3rd 2nd 1st 4th Quarter Quarter Quarter Quarter 2013 2013 2013 2012 $37,871 $35,742 $32,958 $25,224 3rd Quarter 2012 $22,693 2nd Quarter 2012 $15,292 1st Quarter 2012 $11,827 4th Quarter 2011 $7,813 3rd Quarter 2011 $3,916 2,339 2,526 2,645 2,937 2,833 2,933 3,694 3,209 3,642 23 34 54 -9 66 -8 81 20 33 30 302 436 156 298 0 439 0 436 0 469 0 442 0 407 0 460 0 334 0 433 -4,588 -539 -33 -499 -3,344 -84 -807 12 1,533 -763 9 46 51 55 1,878 57 4,095 63 2,599 83 25 1,702 -277 6,433 71 2,887 -96 2,129 30 2,784 -22 7,734 7 2,531 -108 7,401 160 3,465 40 4,014 -188 3,897 51,059 48,893 47,191 40,758 37,871 35,742 32,958 25,224 22,693 15,292 11,827 7,813 34.82 36.79 43.19 61.58 66.88 133.73 178.67 222.85 479.49 NM NM NM 0.89 0.84 0.80 0.79 0.68 0.64 0.60 0.45 0.35 0.32 0.22 0.17 0.12 6,131,924 6,110,124 6,120,679 6,010,853 5,967,558 5,951,124 5,999,614 7,405,042 7,248,466 7,081,206 7,031,331 6,973,468 6,754,060 2.75 2.67 2.02 -18.83 -17.67 -15.96 -14.67 6.19 7.32 8.55 10.22 10.66 24.58 Domestic Deposits����������� 10,213,077 10,099,340 Percent change from four quarters earlier������� 6.05 7.16 9,962,453 9,825,398 9,630,462 9,424,504 9,454,659 9,474,585 9,084,803 8,937,725 8,848,706 8,782,134 8,526,713 5.37 3.70 6.01 5.45 6.85 7.88 6.55 8.40 10.51 11.34 9.97 6,739 6,821 6,900 6,949 7,028 7,092 7,190 7,254 7,317 7,366 7,446 Estimated Insured Deposits**�������������������������� Percent change from four quarters earlier������� Number of Institutions Reporting����������������������� 6,598 6,665 Deposit Insurance Fund Balance and Insured Deposits ($ Millions) DIF Reserve Ratios Percent of Insured Deposits 0.79 0.60 0.64 0.80 0.84 0.89 DIF Balance 0.68 0.45 0.32 0.12 0.17 9/11 0.35 0.22 3/12 9/12 3/13 9/13 3/14 9/14 DIF-Insured Deposits 9/11 $7,813 $6,754,060 12/11 11,827 6,973,468 3/12 15,292 7,031,331 6/12 22,693 7,081,206 7,248,466 9/12 25,224 12/12 32,958 7,405,042 3/13 35,742 5,999,614 6/13 37,871 5,951,124 9/13 40,758 5,967,558 12/13 47,191 6,010,853 3/14 48,893 6,120,679 6/14 51,059 6,110,124 9/14 54,320 6,131,924 Table II-C. Problem Institutions and Failed/Assisted Institutions (dollar figures in millions) Problem Institutions Number of institutions�������������������������������������������������� Total assets������������������������������������������������������������������� 2014*** 329 $102,257 2013*** 2013 515 $174,188 467 $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�������������������������������������������������� 14 22 24 51 140 $34,923 $92,085 Total assets****������������������������������������������������������������� $1,816 $5,860 $6,044 $11,617 $169,709 Assisted Institutions***** 0 0 Number of institutions�������������������������������������������������� 0 0 0 0 8 $0 $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. *** Through September 30. **** 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 2014, Volume 8, No. 4 Quarterly Banking Profile Table III-C. Estimated FDIC-Insured Deposits by Type of Institution (dollar figures in millions) September 30, 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������������������������������������������������� 5,705 3,755 1,092 858 $14,290,077 2,251,894 9,846,015 2,192,167 $9,365,169 1,751,746 6,163,473 1,449,951 $5,430,307 1,299,218 3,401,370 729,718 FDIC-Insured Savings Institutions���������������������������������������������� OCC-Supervised Savings Institutions����������������������������������� FDIC-Supervised Savings Institutions����������������������������������� 884 462 422 1,059,094 701,252 357,843 807,534 539,670 267,865 672,153 454,218 217,936 Total Commercial Banks and Savings Institutions���������������������� 6,589 15,349,171 10,172,703 6,102,460 Other FDIC-Insured Institutions U.S. Branches of Foreign Banks������������������������������������������������� 9 109,964 40,373 29,464 Total FDIC-Insured Institutions���������������������������������������������������� .. 6,598 15,459,135 10,213,077 6,131,924 * 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 June 30, 2014 (dollar figures in billions) Number of Annual Rate in Basis Points Institutions 2.50-5.00 1,423 5.01-7.50 2,996 7.51-10.00 1,288 10.01-15.00 572 15.01-20.00 33 20.01-25.00 286 25.01-30.00 8 30.01-35.00 56 greater than 35.00 3 Percent of Total Institutions 21.35 44.95 19.32 8.58 0.50 4.29 0.12 0.84 0.05 Amount of Assessment Base* $2,871 7,955 1,438 410 118 73 10 22 9 Percent of Total Assessment Base 22.25 61.64 11.15 3.18 0.91 0.56 0.07 0.17 0.07 * 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 2014, Volume 8, No. 4 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 2014, Volume 8, No. 4 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 2014, Volume 8, No. 4 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 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 2014-14 is permitted if the institution has already adopted the amendments in ASU No. 2014-04, “Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans Upon Foreclosure.” 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 2014, Volume 8, No. 4 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 2014, Volume 8, No. 4 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 identification requirement. For additional information, refer to ASU 201102, 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 2014, Volume 8, No. 4 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 2014, Volume 8, No. 4 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 2014, Volume 8, No. 4 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 2014, Volume 8, No. 4 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 2014, Volume 8, No. 4 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 2014, Volume 8, No. 4