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Quarterly Quarterly Banking Profile: Third Quarter 2020 The Importance of Community Banks in Paycheck Protection Program Lending 2020 Volume 14, Number 4 Federal Deposit Insurance Corporation FDIC QUARTERLY A The FDIC Quarterly is published by the Division of Insurance and Research of the Federal Deposit Insurance Corporation and contains a comprehensive summary of the most current financial results for the banking industry. Feature articles appearing in the FDIC Quarterly range from timely analysis of economic and banking trends at the national and regional level that may affect the risk exposure of FDIC-insured institutions to research on issues affecting the banking system and the development of regulatory policy. Single copy subscriptions of the FDIC Quarterly can be obtained through the FDIC Public Information Center, 3501 Fairfax Drive, Room E-1002, Arlington, VA 22226. E-mail requests should be sent to publicinfo@fdic.gov. Change of address information also should be submitted to the Public Information Center. The FDIC Quarterly is available online by visiting the FDIC website at www.fdic.gov. To receive e-mail notification of the electronic release of the FDIC Quarterly and the individual feature articles, subscribe at www.fdic.gov/about/subscriptions/index.html. Chairman Jelena McWilliams Director, Division of Insurance and Research Diane Ellis Executive Editor George French Managing Editors Rosalind Bennett Alan Deaton Patrick Mitchell Shayna M. Olesiuk Philip A. Shively Editors Clayton Boyce Kathy Zeidler Publication Manager Lynne Montgomery Media Inquiries (202) 898-6993 FDIC QUARTERLY 2020 FDICQUARTERLY Volume 14 • Number 4 Quarterly Banking Profile: Third Quarter 2020 FDIC-insured institutions reported aggregate net income of $51.2 billion in third quarter 2020, up $32.4 billion from second quarter 2020 but down $6.2 billion from the year-ago quarter. The quarterly increase in net income was attributable to a $47.5 billion decline in provision expenses between second and third quarter 2020. Lower net interest income drove the annual decline in net income. Slightly more than half (51.3 percent) of all institutions reported lower net income compared to a year ago. The return on assets ratio was 0.97 percent for the quarter, down from 1.25 percent in third quarter 2019 but up from 0.36 percent in second quarter 2020. See page 1. Community Bank Performance Community banks—which represent 91 percent of insured institutions—reported annual growth in quarterly net income of $659.7 million despite a 116.6 percent increase in provision expense and continued net interest margin (NIM) compression. Nearly half of all community banks (48 percent) reported higher quarterly net income in third quarter 2020 compared with third quarter 2019. Higher revenue from loan sales drove the improvement in quarterly net income. See page 15. Insurance Fund Indicators The Deposit Insurance Fund (DIF) balance totaled $116.4 billion at the end of third quarter, an increase of $1.8 billion from the previous quarter. Assessment income, interest earned on investments, and negative provisions for insurance losses were the largest sources of the increase, offset partially by operating expenses and losses on available-for-sale securities. The DIF reserve ratio was 1.30 percent on September 30, 2020, unchanged from June 30, 2020, and 11 basis points lower than September 30, 2019. See page 23. Featured Article: The Importance of Community Banks in Paycheck Protection Program Lending During the current public health emergency, community banks are playing a vital role in supporting small businesses through the Small Business Administration’s Paycheck Protection Program (PPP). Community banks throughout the country participated in the program, with community bank PPP loan portfolios representing over 30 percent of total bank PPP loans. See page 31. The views expressed are those of the authors and do not necessarily reflect official positions of the Federal Deposit Insurance Corporation. Some of the information used in the preparation of this publication was obtained from publicly available sources that are considered reliable. However, the use of this information does not constitute an endorsement of its accuracy by the Federal Deposit Insurance Corporation. Articles may be reprinted or abstracted if the publication and author(s) are credited. Please provide the FDIC’s Division of Insurance and Research with a copy of any publications containing reprinted material. FDIC QUARTERLY i QUARTERLY BANKING PROFILE Third Quarter 2020 INSURED INSTITUTION PERFORMANCE Net Income Improves From the Previous Quarter Due to Lower Provision Expense but Declines From a Year Ago Because of Lower Net Interest Income Net Interest Margin Falls to Historic Low Deposit Growth Stabilizes Asset Quality Metrics Show Modest Deterioration Industry Reports Strong Capital and Liquidity in Third Quarter 2020 Quarterly Net Income Increases From Second Quarter 2020 but Declines 10.7 Percent From Third Quarter 2019 During the three months ending September 30, quarterly net income for the 5,033 FDIC-insured commercial banks and savings institutions that filed Call Reports totaled $51.2 billion, up $32.4 billion (173 percent) from second quarter 2020 but down $6.2 billion (10.7 percent) from the year-ago quarter. The quarterly increase in net income was attributable to a $47.5 billion (76.8 percent) decline in provision expenses between second and third quarter 2020. Lower net interest income drove the annual decline in net income. Slightly more than half (51.3 percent) of all banks reported lower net income compared to a year ago, and the share of unprofitable institutions increased to 4.7 percent.1 The return on assets decreased to 0.97 percent from 1.25 percent in third quarter 2019, but was up from 0.36 percent in second quarter 2020. Net Interest Margin Declines 68 Basis Points to 2.68 Percent From 12 Months Ago Quarterly net interest income totaled $128.7 billion, a decline of $10 billion (7.2 percent) from 12 months earlier. This is the largest percentage decrease in net interest income reported by the industry in the Quarterly Banking Profile (QBP). Approximately half (49.9 percent) of all banks reported lower net interest income from a year ago. The average net interest margin (NIM) declined to 2.68 percent, down 68 basis points from third quarter 2019. This is the lowest NIM and the largest year-over-year basis point decline reported in the QBP. The year-over-year compression of the NIM was broad-based, as it declined for all five asset size groups featured in the QBP. The decline in NIM was caused by a decline in asset yields (down 139 basis points) that exceeded the decline in funding costs (down 72 basis points). At 0.30 percent, the average cost of funds reached the lowest level on record in the history of the QBP. 1 Industry participation counts consist of institutions existing in both reporting periods. Chart 1 Chart 2 Quarterly Net Income Quarterly Net Operating Revenue All FDIC-Insured Institutions $ Billions 80 All FDIC-Insured Institutions Securities and Other Gains/Losses, Net Net Operating Income $ Billions 220 60 200 40 160 20 0 -20 -40 -60 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Source: FDIC. Quarterly Noninterest Income Quarterly Net Interest Income 180 140 120 100 80 60 40 20 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Source: FDIC. FDIC QUARTERLY 1 2020 • Volume 14 • Number 4 Noninterest Income Increases 4.5 Percent Due to Net Gains on Loan Sales Noninterest income increased by $3.2 billion (4.5 percent) to $72.6 billion from 12 months ago. Over half of all banks (56 percent) reported an increase. The year-over-year movement in noninterest income was largely attributable to growth in net gains on loan sales of $4.1 billion (95.5 percent). An increase in trading revenue of $1.7 billion (22.6 percent) also contributed to the annual growth in noninterest income. Declines in “all other noninterest income” (which includes miscellaneous items such as merchant credit card fees, annual credit card fees, and credit card interchange fees) of $2.4 billion (7.1 percent) and service charge on deposit accounts of $1.3 billion (13.6 percent) partially offset the increase. Noninterest Expense Climbs 3 Percent From a Year Ago Noninterest expense totaled $123.6 billion in third quarter 2020, an increase of $3.6 billion (3.0 percent) from the previous year. The increase in noninterest expense was broad-based, with two-thirds (66.7 percent) of banks reporting growth. The increase was attributable to a $3.7 billion (6.6 percent) increase in salary and employee benefits expense. However, average assets per employee also rose by $1.3 million from a year ago to $10.2 million. Quarterly Provisions for Credit Losses Decline From One Quarter Ago Quarterly provisions for credit losses totaled $14.4 billion, down $47.5 billion (76.8 percent) from second quarter 2020 but up $492 million (3.5 percent) from third quarter 2019.2 During the third quarter, 254 banks used the current expected credit loss (CECL) accounting standard. CECL adopters reported $10.8 billion in provisions for credit losses in third quarter, down 8.2 percent from one year ago and down 80.7 percent from one quarter ago. NonCECL adopters reported $3.5 billion in provisions for credit losses, up 83.4 percent from the year-ago quarter but down 36.4 percent from the prior quarter. Just over half of banks (52.9 percent) reported higher provisions for credit losses than a year ago. Net Charge-Off Rate Decreases by 5 Basis Points From a Year Ago The net charge-off rate declined by 5 basis points from a year ago to 0.46 percent. Net charge-offs decreased by $418.2 million (3.2 percent) year over year. The annual decrease in total net charge-offs was attributable to a $1.3 billion (15.9 percent) decline in credit card net charge-offs. This decline offset increases in charge-offs for the commercial and industrial (C&I) loan portfolio, which increased by $898.5 million (39.3 percent). The C&I net charge-off rate rose by 8 basis points from a year ago to 0.49 percent, but remains well below the post-crisis high of 2.72 percent reported in fourth quarter 2009. 2 For institutions that have not adopted the CECL accounting methodology, provisions for credit losses include only provisions for loan and lease losses. The comparison of CECL and non-CECL adopters holds constant the adopters from the most recent quarter. Chart 3 Chart 4 Noncurrent Loan Rate and Quarterly Net Charge-Off Rate All FDIC-Insured Institutions Percent 6 Reserve Coverage Ratio All FDIC-Insured Institutions Noncurrent Rate Quarterly Net Charge-Off Rate $ Billions 450 5 Loan-Loss Reserves ($) Coverage Ratio (%) Noncurrent Loans ($) Coverage Adjusted for GNMA Guaranteed Loans (%) Noncurrents Adjusted for GNMA Guaranteed Loans ($) Coverage Ratio (Percent) 400 350 4 300 3 250 2 150 200 100 1 0 50 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Source: FDIC. 2 FDIC QUARTERLY 300 250 200 150 100 50 0 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Source: FDIC. Note: Loan-loss reserves to noncurrent loans and leases. QUARTERLY BANKING PROFILE Noncurrent Loan Rate Increases to 1.17 Percent The average noncurrent rate increased by 9 basis points from the previous quarter to 1.17 percent. Noncurrent loan balances (90 days or more past due or in nonaccrual status) rose $9.3 billion (7.9 percent) to $127.5 billion in the third quarter. Just under half of all institutions (47.7 percent) reported increases in noncurrent balances from second quarter 2020. The increase in noncurrent loan balances was driven by a $10.2 billion (22 percent) increase in the 1–4 family residential mortgage loan portfolio. Contributing to this increase were $4.2 billion of loans previously in Ginnie Mae securities, which are partially or wholly guaranteed by the U.S. government, that have been brought back on banks’ books. The noncurrent rate for 1–4 family residential mortgage loans increased by 44 basis points to 2.53 percent. Nonfarm nonresidential (NFNR) noncurrent balances rose $1.5 billion (12 percent), resulting in a 9 basis point increase in the NFNR noncurrent rate to 0.87 percent. Total Assets Increase Slightly From the Previous Quarter The banking industry reported total assets of $21.2 trillion in the third quarter, a modest increase of $81.6 billion (0.4 percent) from second quarter 2020. Cash and balances due from depository institutions decreased by $54.2 billion (1.9 percent), while banks increased their securities holdings by $275.3 billion (6.1 percent). Most of this growth was attributable to mortgage-backed securities, which rose by $147.0 billion (5.5 percent), and U.S. Treasury securities, which increased by $110.3 billion (13.3 percent). Loan Balances Fall Slightly From the Previous Quarter Total loan and lease balances decreased by $84.5 billion (0.8 percent) from the previous quarter. A $150.3 billion (5.6 percent) decline in the C&I loan portfolio drove the overall decline. Increases in 1–4 family mortgage balances of $24.1 billion (1.1 percent) and loans to nondepository financial institutions of $20.6 billion (3.9 percent) partially offset the decline in C&I loan balances. Small Business Administration-guaranteed Paycheck Protection Program (PPP) loans grew by $4.9 billion (1 percent) from the previous quarter to $489.7 billion. Total loan and lease balances increased $510.3 billion (4.9 percent) from the previous year, largely driven by strong C&I loan growth in the first half of 2020. Chart 5 Chart 6 Change in Quarterly Loan-Loss Provisions Quarterly Change in Loan Balances All FDIC-Insured Institutions All FDIC-Insured Institutions Quarter-Over-Quarter Change ($ Billions) $ Billions 50 500 40 400 30 300 20 200 10 100 0 -10 0 -100 -20 -200 -30 Quarterly Change (Left Axis) 12-Month Growth Rate (Right Axis) Percent 12 8 4 0 -4 -300 -8 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 -40 -50 -60 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Source: FDIC. Source: FDIC. Note: 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 3 2020 • Volume 14 • Number 4 Deposit Growth Stabilizes Total deposit balances increased by $156.0 billion (0.9 percent) from the previous q uarter. This growth is down from the second quarter increase of $1.18 trillion (7.5 percent). Noninterest-bearing account balances rose by $141.2 billion (3.3 percent), and interestbearing account balances increased by $10.7 billion (0.1 percent). Nondeposit liabilities declined by $88.1 billion (7.3 percent) from the previous quarter. 3 The decline in nondeposit liabilities was attributable to lower Federal Home Loan Bank advances, which fell by $74.0 billion (19.5 percent). Over the past 12 months, total deposits rose by $2.8 trillion (19.9 percent), led by large increases in the first and second quarter of this year. Equity Capital Rises From the Previous Quarter Equity capital totaled $2.2 trillion in the third quarter, an increase of $36.3 billion (1.7 percent) from the previous quarter. Retained earnings contributed $35.4 billion to equity formation in the third quarter, as net income of $51.2 billion exceeded declared dividends of $15.8 billion. Eight insured institutions with $668 million in total assets were below the requirements for the well-capitalized category as defined for Prompt Corrective Action. One New Bank Opens in Third Quarter 2020 The number of FDIC-insured commercial banks and savings institutions reporting declined from 5,066 to 5,033 during third quarter 2020. One new bank was added, 33 institutions were absorbed by mergers, and no banks failed. One institution did not file a Call Report this quarter because it sold most of its assets and is ceasing operations. The number of institutions on the FDIC’s “Problem Bank List” increased to 56 from 52 last quarter. Total assets of problem banks increased from $48.1 billion to $53.9 billion. Authors: Angela Hinton Senior Financial Analyst Division of Insurance and Research James K. Presley-Nelson Senior Financial Analyst Division of Insurance and Research 3 Nondeposit liabilities include federal funds purchased, repurchase agreements, Federal Home Loan Bank advances, and secured and unsecured borrowings. Chart 7 Quarterly Change in Deposits All FDIC-Insured Institutions Quarterly Change ($ Billions) Chart 8 Number and Assets of Banks on the “Problem Bank List” Number 1,000 Assets of Problem Banks Number of Problem Banks Assets ($ Billions) 500 1,400 900 450 1,200 800 400 1,000 700 350 600 300 500 250 400 200 300 150 200 100 100 50 800 600 400 200 0 -200 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Source: FDIC. 4 FDIC QUARTERLY 0 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Source: FDIC. QUARTERLY BANKING PROFILE TABLE I-A. Selected Indicators, All FDIC-Insured Institutions* Return on assets (%) Return on equity (%) Core capital (leverage) ratio (%) Noncurrent assets plus other real estate owned to assets (%) Net charge-offs to loans (%) Asset growth rate (%) Net interest margin (%) Net operating income growth (%) Number of institutions reporting Commercial banks Savings institutions Percentage of unprofitable institutions (%) Number of problem institutions Assets of problem institutions (in billions) Number of failed institutions 2020** 2019** 2019 2018 2017 2016 2015 0.58 5.53 8.80 0.63 0.53 14.81 2.88 -53.70 5,033 4,401 632 4.79 56 $54 2 1.33 11.67 9.68 0.56 0.50 4.58 3.38 1.02 5,258 4,588 670 3.59 55 $49 1 1.29 11.38 9.66 0.55 0.52 3.91 3.36 -3.14 5,177 4,518 659 3.75 51 $46 4 1.35 11.98 9.70 0.60 0.48 3.03 3.40 45.45 5,406 4,715 691 3.44 60 $48 0 0.97 8.60 9.63 0.73 0.50 3.79 3.25 -3.27 5,670 4,918 752 5.61 95 $14 8 1.04 9.27 9.48 0.86 0.47 5.09 3.13 4.43 5,913 5,112 801 4.48 123 $28 5 1.04 9.29 9.59 0.97 0.44 2.66 3.08 7.11 6,182 5,338 844 4.82 183 $47 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 (dollar figures in millions) Number of institutions reporting Total employees (full-time equivalent) CONDITION DATA Total assets Loans secured by real estate 1-4 Family residential mortgages Nonfarm nonresidential Construction and development Home equity lines Commercial & industrial loans Loans to individuals Credit cards Farm loans Other loans & leases Less: Unearned income Total loans & leases Less: Reserve for losses* Net loans and leases Securities** Other real estate owned Goodwill and other intangibles All other assets Total liabilities and capital Deposits Domestic office deposits Foreign office deposits Other borrowed funds Subordinated debt All other liabilities Total equity capital (includes minority interests) Bank equity capital Loans and leases 30-89 days past due Noncurrent loans and leases Restructured loans and leases Mortgage-backed securities Earning assets FHLB Advances Unused loan commitments Trust assets Assets securitized and sold Notional amount of derivatives INCOME DATA Total interest income Total interest expense Net interest income Provision for credit 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 3rd Quarter 2020 2nd Quarter 2020 3rd Quarter 2019 %Change 19Q3-20Q3 5,033 2,071,910 5,066 2,077,846 5,258 2,065,840 -4.3 0.3 $21,219,742 5,144,479 2,240,674 1,556,388 386,056 312,896 2,538,844 1,709,844 796,450 76,779 1,444,278 3,621 10,910,604 244,266 10,666,338 4,790,986 4,548 385,497 5,372,373 $21,138,118 5,110,724 2,216,584 1,545,706 380,560 324,469 2,689,163 1,704,152 808,171 78,088 1,416,798 3,804 10,995,121 242,787 10,752,334 4,515,734 5,021 386,552 5,478,478 $18,481,915 5,002,907 2,182,663 1,491,643 360,045 349,858 2,216,885 1,779,248 892,881 80,291 1,323,239 2,275 10,400,294 125,171 10,275,123 3,936,180 6,190 394,036 3,870,387 14.8 2.8 2.7 4.3 7.2 -10.6 14.5 -3.9 -10.8 -4.4 9.2 59.1 4.9 95.2 3.8 21.7 -26.5 -2.2 38.8 21,219,742 17,116,653 15,670,039 1,446,614 1,207,194 68,489 641,647 2,185,759 2,183,201 21,138,118 16,960,605 15,518,214 1,442,391 1,301,411 69,595 657,045 2,149,462 2,146,898 18,481,915 14,276,906 12,981,056 1,295,850 1,460,195 69,335 574,098 2,101,382 2,098,263 14.8 19.9 20.7 11.6 -17.3 -1.2 11.8 4.0 4.1 58,408 127,550 49,658 2,798,767 19,319,934 304,506 8,411,393 17,787,796 505,520 181,124,835 55,684 118,258 48,299 2,651,813 19,230,964 378,489 8,366,938 17,007,737 550,282 181,706,554 63,972 95,544 51,016 2,369,462 16,686,809 498,766 8,133,442 20,762,219 539,466 203,562,352 -8.7 33.5 -2.7 18.1 15.8 -39.0 3.4 -14.3 -6.3 -11.0 First Three Quarters 2020 First Three Quarters 2019 %Change 3rd Quarter 2020 3rd Quarter 2019 %Change 19Q3-20Q3 $461,563 65,182 396,380 128,741 210,049 373,850 6,731 21,934 -110 88,526 88,352 42,869 62,242 26,110 83,068 $539,450 123,514 415,936 40,623 200,864 349,534 1,046 47,396 167 180,459 180,268 38,563 134,900 45,368 179,431 -14.4 -47.2 -4.7 216.9 4.6 7.0 543.3 -53.7 N/M -50.9 -51.0 11.2 -53.9 -42.5 -53.7 143,211 14,468 128,743 14,385 72,605 123,649 2,480 14,516 -5 51,274 51,187 12,686 15,818 35,369 49,341 180,840 42,080 138,760 13,893 69,452 120,088 -956 15,874 -2 57,399 57,337 13,104 47,765 9,572 58,156 -20.8 -65.6 -7.2 3.5 4.5 3.0 N/M -8.6 -150.0 -10.7 -10.7 -3.2 -66.9 269.5 -15.2 * For institutions that have adopted ASU 2016-13, this item represents the allowance for credit losses on loans and leases held for investment and allocated transfer risk. ** For institutions that have adopted ASU 2016-13, securities are reported net of allowances for credit losses. *** For institutions that have adopted ASU 2016-13, this item represents provisions for credit losses on a consolidated basis; for institutions that have not adopted ASU 2016-13, this item represents the provision for loan and lease losses. **** See Notes to Users for explanation. N/M - Not Meaningful FDIC QUARTERLY 5 2020 • Volume 14 • Number 4 TABLE III-A. Third Quarter 2020, All FDIC-Insured Institutions Asset Concentration Groups* THIRD QUARTER (The way it is...) Number of institutions reporting Commercial banks Savings institutions Total assets (in billions) Commercial banks Savings institutions Total deposits (in billions) Commercial banks Savings institutions Bank net income (in millions) Commercial banks Savings institutions Performance Ratios (annualized, %) Yield on earning assets Cost of funding earning assets Net interest margin Noninterest income to assets Noninterest expense to assets Credit 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 Structural Changes New reporters Institutions absorbed by mergers Failed institutions All Insured Institutions 5,033 4,401 632 $21,219.7 19,897.4 1,322.4 17,116.7 16,033.4 1,083.3 51,187 48,049 3,137 Credit Card Banks 11 10 1 $508.6 423.5 85.1 356.2 289.7 66.5 3,806 3,491 315 International Banks 5 5 0 $5,288.0 5,288.0 0.0 4,007.9 4,007.9 0.0 12,656 12,656 0 Agricultural Banks 1,182 1,172 10 $281.0 275.3 5.7 233.0 230.2 2.7 918 865 53 Commercial Lenders 2,768 2,493 275 $7,505.5 7,050.0 455.5 6,119.4 5,771.0 348.4 19,661 18,519 1,142 Mortgage Lenders 303 77 226 $635.9 93.8 542.1 558.4 80.1 478.3 1,645 377 1,268 Consumer Lenders 36 25 11 $132.0 129.4 2.6 110.8 108.6 2.2 482 476 6 Other Specialized <$1 Billion 230 208 22 $40.1 36.6 3.4 31.8 29.6 2.2 262 94 167 All Other <$1 Billion 430 357 73 $86.8 68.4 18.3 73.1 58.3 14.9 250 211 39 All Other >$1 Billion 68 54 14 $6,742.0 6,532.3 209.7 5,626.1 5,457.9 168.1 11,507 11,361 146 2.98 0.30 2.68 1.37 2.34 0.27 0.93 1.24 0.97 9.47 0.46 10.57 1.30 9.28 4.38 6.20 2.85 3.00 4.16 3.00 26.13 3.63 2.22 0.17 2.05 1.64 2.20 0.10 0.91 1.23 0.96 10.62 0.67 4.05 0.61 3.44 0.71 2.33 0.17 1.27 1.49 1.31 11.43 0.12 3.41 0.37 3.05 1.13 2.36 0.30 1.02 1.29 1.05 9.42 0.23 2.12 0.24 1.89 1.13 1.60 0.04 1.03 1.36 1.06 12.18 0.01 3.85 0.75 3.10 0.33 1.17 0.24 1.44 1.98 1.48 15.65 0.85 2.68 0.34 2.34 5.04 4.12 0.06 2.43 3.29 2.64 15.69 0.12 3.69 0.47 3.21 1.24 2.84 0.12 1.12 1.34 1.16 9.53 0.08 2.49 0.24 2.25 1.25 2.21 0.21 0.65 0.93 0.68 6.81 0.39 112.73 60.58 4.73 48.72 105.87 46.47 0.00 54.55 44.07 62.98 0.00 20.00 201.75 58.68 3.98 40.44 188.91 58.56 3.79 54.95 1,925.64 53.83 9.90 45.21 38.13 34.90 8.33 52.78 177.13 56.93 13.04 33.04 252.01 66.71 4.42 41.40 111.89 66.59 5.88 52.94 1 33 0 0 1 0 0 0 0 0 7 0 0 24 0 0 0 0 0 0 0 1 0 0 0 0 0 0 1 0 PRIOR THIRD QUARTERS (The way it was...) Return on assets (%) 2019 2017 2015 1.25 1.12 1.03 3.43 2.21 2.83 1.23 1.01 0.84 1.45 1.34 0.37 1.15 1.13 1.00 1.30 0.96 0.57 1.53 1.23 1.08 3.43 3.06 2.56 1.23 0.98 0.76 1.15 1.07 1.08 Net charge-offs to loans & leases (%) 2019 2017 2015 0.51 0.46 0.40 3.94 3.75 2.61 0.71 0.54 0.49 0.15 0.10 0.08 0.24 0.20 0.20 0.03 0.03 0.12 0.78 0.56 0.58 0.16 0.25 0.19 0.12 0.15 0.18 0.37 0.40 0.37 * See Table V-A (page 10) for explanations. ** For institutions that have adopted ASU 2016-13, the numerator represents provisions for credit losses on a consolidated basis; for institutions that have not adopted ASU 2016-13, the numerator represents the provision for loan and lease losses. 6 FDIC QUARTERLY QUARTERLY BANKING PROFILE TABLE III-A. Third Quarter 2020, All FDIC-Insured Institutions Asset Size Distribution THIRD QUARTER (The way it is...) Number of institutions reporting Commercial banks Savings institutions Total assets (in billions) Commercial banks Savings institutions Total deposits (in billions) Commercial banks Savings institutions Bank net income (in millions) Commercial banks Savings institutions Performance Ratios (annualized, %) Yield on earning assets Cost of funding earning assets Net interest margin Noninterest income to assets Noninterest expense to assets Credit 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 Structural Changes New reporters Institutions absorbed by mergers Failed institutions $100 Million to $1 Billion to $1 Billion $10 Billion 3,135 766 2,771 634 364 132 $1,089.7 $2,019.0 949.8 1,682.7 139.9 336.4 907.0 1,648.0 795.1 1,383.5 111.9 264.5 3,410 5,989 2,904 5,011 506 978 Geographic Regions* All Insured Institutions 5,033 4,401 632 $21,219.7 19,897.4 1,322.4 17,116.7 16,033.4 1,083.3 51,187 48,049 3,137 Less Than $100 Million 981 862 119 $59.0 52.1 6.9 48.6 43.4 5.2 131 120 10 $10 Billion to $250 Billion 138 122 16 $6,198.1 5,666.8 531.3 5,027.4 4,610.0 417.4 17,847 16,807 1,039 Greater Than $250 Billion New York 13 598 12 312 1 286 $11,854.0 $3,887.6 11,546.1 3,475.2 308.0 412.4 9,485.6 3,137.1 9,201.3 2,818.3 284.3 318.8 23,810 8,652 23,206 7,734 604 918 2.98 0.30 2.68 1.37 2.34 0.27 0.93 1.24 0.97 9.47 0.46 3.87 0.56 3.31 1.44 3.42 0.11 0.85 1.01 0.89 6.56 0.09 3.95 0.56 3.38 1.41 2.94 0.21 1.22 1.48 1.26 11.19 0.11 3.75 0.48 3.27 1.41 2.64 0.35 1.16 1.50 1.19 10.96 0.18 3.68 0.44 3.24 1.35 2.42 0.47 1.14 1.48 1.16 10.66 0.61 2.37 0.17 2.20 1.37 2.18 0.16 0.76 1.05 0.80 8.33 0.49 112.73 60.58 4.73 48.72 201.87 75.73 12.03 35.07 287.37 63.97 3.32 51.39 277.95 57.83 1.70 55.61 123.69 54.60 2.17 47.83 1 33 0 0 9 0 1 19 0 0 4 0 Atlanta 572 519 53 $4,349.6 4,237.1 112.5 3,586.3 3,495.5 90.9 9,405 9,269 136 Chicago 1,079 930 149 $5,003.2 4,895.5 107.7 3,837.2 3,758.0 79.2 14,309 13,650 659 Kansas City 1,300 1,260 40 $4,093.2 4,056.5 36.7 3,318.3 3,289.3 29.0 6,639 6,506 132 Dallas 1,112 1,042 70 $1,719.4 1,211.8 507.6 1,455.6 1,007.9 447.7 4,895 4,102 794 San Francisco 372 338 34 $2,166.6 2,021.3 145.4 1,782.1 1,664.5 117.7 7,286 6,788 498 2.91 0.37 2.53 1.19 2.09 0.31 0.87 1.13 0.89 8.38 0.43 2.98 0.26 2.72 1.17 2.29 0.25 0.84 1.11 0.86 8.03 0.49 2.52 0.20 2.33 1.76 2.32 0.13 1.10 1.45 1.15 11.85 0.39 2.92 0.27 2.65 1.20 2.45 0.30 0.59 0.91 0.65 6.69 0.51 3.24 0.31 2.94 1.25 2.38 0.25 1.16 1.39 1.16 11.26 0.22 3.98 0.53 3.45 1.66 2.67 0.53 1.32 1.73 1.35 12.87 0.68 78.78 64.70 0.00 38.46 136.03 59.06 5.69 50.67 99.15 62.23 7.17 45.80 66.41 60.04 4.45 54.31 120.56 67.17 3.38 48.62 220.91 59.31 4.41 43.44 120.79 52.62 5.91 50.00 0 1 0 0 0 0 0 9 0 0 3 0 0 6 0 0 6 0 0 9 0 1 0 0 PRIOR THIRD QUARTERS (The way it was…) Return on assets (%) 2019 2017 2015 1.25 1.12 1.03 1.03 1.02 0.95 1.35 1.16 1.05 1.39 1.15 1.10 1.28 1.21 1.00 1.20 1.05 1.03 1.10 0.96 0.89 1.18 1.11 1.02 1.36 1.13 0.92 1.15 1.04 1.16 1.44 1.20 1.15 1.47 1.49 1.18 Net charge-offs to loans & leases (%) 2019 2017 2015 0.51 0.46 0.40 0.24 0.16 0.16 0.13 0.13 0.15 0.22 0.22 0.22 0.67 0.64 0.52 0.51 0.46 0.42 0.47 0.53 0.43 0.53 0.58 0.44 0.43 0.25 0.27 0.51 0.49 0.46 0.26 0.26 0.24 0.79 0.59 0.51 * See Table V-A (page 11) for explanations. ** For institutions that have adopted ASU 2016-13, the numerator represents provisions for credit losses on a consolidated basis; for institutions that have not adopted ASU 2016-13, the numerator represents the provision for loan and lease losses. FDIC QUARTERLY 7 2020 • Volume 14 • Number 4 TABLE IV-A. First Three Quarters 2020, All FDIC-Insured Institutions Asset Concentration Groups* FIRST THREE QUARTERS (The way it is...) Number of institutions reporting Commercial banks Savings institutions Total assets (in billions) Commercial banks Savings institutions Total deposits (in billions) Commercial banks Savings institutions Bank net income (in millions) Commercial banks Savings institutions Performance Ratios (annualized, %) Yield on earning assets Cost of funding earning assets Net interest margin Noninterest income to assets Noninterest expense to assets Credit loss provision to assets** Net operating income to assets Pretax return on assets Return on assets Return on equity Net charge-offs to loans and leases Loan and lease loss provision to net charge-offs Efficiency ratio % of unprofitable institutions % of institutions with earnings gains Condition Ratios (%) Earning assets to total assets Loss allowance to: Loans and leases Noncurrent loans and leases Noncurrent assets plus other real estate owned to assets Equity capital ratio Core capital (leverage) ratio Common equity tier 1 capital ratio*** Tier 1 risk-based capital ratio*** Total risk-based capital ratio*** Net loans and leases to deposits Net loans to total assets Domestic deposits to total assets Structural Changes New reporters Institutions absorbed by mergers Failed institutions All Insured Institutions 5,033 4,401 632 $21,219.7 19,897.4 1,322.4 17,116.7 16,033.4 1,083.3 88,352 80,943 7,409 Credit Card Banks 11 10 1 $508.6 423.5 85.1 356.2 289.7 66.5 4,085 3,355 730 International Banks 5 5 0 $5,288.0 5,288.0 0.0 4,007.9 4,007.9 0.0 21,972 21,972 0 Agricultural Banks 1,182 1,172 10 $281.0 275.3 5.7 233.0 230.2 2.7 2,678 2,571 107 Commercial Lenders 2,768 2,493 275 $7,505.5 7,050.0 455.5 6,119.4 5,771.0 348.4 31,672 29,168 2,504 Mortgage Lenders 303 77 226 $635.9 93.8 542.1 558.4 80.1 478.3 4,656 1,121 3,535 Consumer Lenders 36 25 11 $132.0 129.4 2.6 110.8 108.6 2.2 1,307 1,295 11 Other Specialized <$1 Billion 230 208 22 $40.1 36.6 3.4 31.8 29.6 2.2 762 309 453 All Other <$1 Billion 430 357 73 $86.8 68.4 18.3 73.1 58.3 14.9 679 586 93 All Other >$1 Billion 68 54 14 $6,742.0 6,532.3 209.7 5,626.1 5,457.9 168.1 20,540 20,564 -24 3.35 0.47 2.88 1.38 2.46 0.85 0.55 0.73 0.58 5.53 0.53 11.31 1.62 9.69 4.23 6.28 5.81 1.07 1.39 1.07 9.09 4.06 2.64 0.35 2.29 1.76 2.25 0.85 0.54 0.73 0.58 6.27 0.74 4.34 0.73 3.61 0.67 2.40 0.20 1.29 1.51 1.34 11.45 0.13 3.71 0.53 3.18 1.06 2.59 0.64 0.56 0.76 0.60 5.15 0.25 2.40 0.31 2.10 1.06 1.65 0.09 1.06 1.38 1.07 12.34 0.02 4.09 0.93 3.16 0.54 1.05 0.75 1.35 1.84 1.36 13.99 0.56 2.99 0.44 2.55 4.98 4.13 0.08 2.56 3.28 2.67 15.82 0.24 3.96 0.56 3.40 1.09 2.92 0.13 1.07 1.26 1.11 8.86 0.07 2.87 0.41 2.47 1.27 2.27 0.79 0.39 0.50 0.42 4.08 0.46 298.91 59.24 4.79 49.27 182.37 46.17 36.36 27.27 330.27 59.18 0.00 20.00 221.77 58.76 2.54 49.41 367.71 59.91 4.62 51.84 1,882.33 52.85 10.89 40.26 184.56 28.92 13.89 52.78 121.60 55.94 9.57 36.96 324.69 68.09 3.72 47.21 344.00 63.42 4.41 41.18 91.05 95.06 88.71 93.61 91.33 97.67 97.29 93.15 93.55 91.37 2.24 191.51 10.29 904.17 3.18 270.74 1.44 126.81 1.52 149.51 0.69 79.13 2.26 525.00 1.48 131.80 1.21 128.56 2.09 142.82 0.63 10.29 8.80 13.75 13.84 15.36 62.32 50.27 73.85 0.84 11.51 12.67 16.86 17.02 18.94 94.45 66.15 66.95 0.40 9.11 7.99 14.99 15.06 16.45 41.56 31.50 52.44 0.83 11.55 10.86 14.44 14.44 15.59 78.03 64.70 82.91 0.73 11.25 9.34 12.28 12.38 13.89 82.17 66.99 81.11 0.24 8.63 7.85 20.97 20.97 21.41 30.21 26.53 87.64 0.33 9.31 9.77 19.93 20.04 20.91 87.06 73.09 83.93 0.42 17.08 15.91 38.18 38.18 38.96 33.08 26.23 79.29 0.62 12.22 11.71 19.84 19.84 20.91 66.35 55.93 84.30 0.70 10.10 8.46 13.88 13.96 15.64 55.64 46.43 81.02 3 137 2 0 1 0 0 0 0 0 23 1 0 106 1 0 3 0 0 0 0 3 0 0 0 2 0 0 2 0 PRIOR FIRST THREE QUARTERS (The way it was...) Number of institutions 2019 2017 2015 5,258 5,738 6,270 12 11 14 5 5 4 1,324 1,422 1,494 2,756 2,943 3,125 393 445 515 68 62 56 217 271 337 433 520 663 50 59 62 Total assets (in billions) 2019 2017 2015 $18,481.9 17,242.5 15,800.1 $521.8 518.3 519.5 $4,509.3 4,205.0 3,836.6 $285.2 285.0 274.8 $6,674.3 5,867.7 5,508.8 $386.1 366.0 416.3 $225.9 260.4 184.3 $38.2 46.0 54.9 $76.3 90.6 118.3 $5,764.9 5,603.4 4,886.7 Return on assets (%) 2019 2017 2015 1.33 1.10 1.05 3.30 2.09 2.91 1.24 0.97 0.88 1.36 1.24 0.91 1.21 1.06 0.99 1.19 1.01 0.74 1.43 1.15 1.12 3.32 2.99 2.60 1.19 0.96 0.50 1.34 1.12 1.08 Net charge-offs to loans & leases (%) 2019 2017 2015 0.50 0.48 0.42 4.19 3.90 2.72 0.71 0.56 0.56 0.15 0.14 0.08 0.20 0.21 0.19 0.02 0.09 0.13 0.79 0.60 0.58 0.12 0.19 0.18 0.11 0.14 0.17 0.38 0.39 0.38 Noncurrent assets plus OREO to assets (%) 2019 2017 2015 0.56 0.73 0.99 1.33 1.19 0.83 0.36 0.48 0.72 0.86 0.86 0.75 0.60 0.74 0.96 1.15 1.56 1.95 0.48 0.37 1.00 0.41 0.54 0.70 0.68 0.86 1.16 0.54 0.80 1.19 Equity capital ratio (%) 2019 2017 2015 11.35 11.31 11.33 12.72 15.69 14.83 10.14 9.97 9.98 11.94 11.56 11.49 12.18 12.07 11.81 11.03 11.27 11.63 11.05 10.10 10.22 18.10 15.88 15.52 13.22 11.91 12.10 11.16 11.12 11.42 * See Table V-A (page 10) for explanations. ** For institutions that have adopted ASU 2016-13, the numerator represents provisions for credit losses on a consolidated basis; for institutions that have not adopted ASU 2016-13, the numerator represents the provision for loan and lease losses. *** Beginning March 2020, does not include institutions that have a Community Bank Leverage Ratio election in effect at the report date. 8 FDIC QUARTERLY QUARTERLY BANKING PROFILE TABLE IV-A. First Three Quarters 2020, All FDIC-Insured Institutions Asset Size Distribution FIRST THREE QUARTERS (The way it is...) Number of institutions reporting Commercial banks Savings institutions Total assets (in billions) Commercial banks Savings institutions Total deposits (in billions) Commercial banks Savings institutions Bank net income (in millions) Commercial banks Savings institutions Performance Ratios (annualized, %) Yield on earning assets Cost of funding earning assets Net interest margin Noninterest income to assets Noninterest expense to assets Credit loss provision to assets** Net operating income to assets Pretax return on assets Return on assets Return on equity Net charge-offs to loans and leases Loan and lease loss provision to net charge-offs Efficiency ratio % of unprofitable institutions % of institutions with earnings gains Condition Ratios (%) Earning assets to total assets Loss allowance to: Loans and leases Noncurrent loans and leases Noncurrent assets plus other real estate owned to assets Equity capital ratio Core capital (leverage) ratio Common equity tier 1 capital ratio*** Tier 1 risk-based capital ratio*** Total risk-based capital ratio*** Net loans and leases to deposits Net loans to total assets Domestic deposits to total assets Structural Changes New reporters Institutions absorbed by mergers Failed institutions $100 Million to $1 Billion to $1 Billion $10 Billion 3,135 766 2,771 634 364 132 $1,089.7 $2,019.0 949.8 1,682.7 139.9 336.4 907.0 1,648.0 795.1 1,383.5 111.9 264.5 9,296 14,706 8,060 12,664 1,236 2,043 Geographic Regions* All Insured Institutions 5,033 4,401 632 $21,219.7 19,897.4 1,322.4 17,116.7 16,033.4 1,083.3 88,352 80,943 7,409 Less Than $100 Million 981 862 119 $59.0 52.1 6.9 48.6 43.4 5.2 386 360 26 $10 Billion to $250 Billion 138 122 16 $6,198.1 5,666.8 531.3 5,027.4 4,610.0 417.4 21,464 19,293 2,171 Greater Than $250 Billion New York 13 598 12 312 1 286 $11,854.0 $3,887.6 11,546.1 3,475.2 308.0 412.4 9,485.6 3,137.1 9,201.3 2,818.3 284.3 318.8 42,499 14,796 40,566 12,856 1,933 1,940 3.35 0.47 2.88 1.38 2.46 0.85 0.55 0.73 0.58 5.53 0.53 4.15 0.65 3.50 1.41 3.52 0.13 0.88 1.04 0.91 6.60 0.13 4.26 0.68 3.57 1.30 3.03 0.25 1.18 1.41 1.22 10.46 0.11 4.06 0.63 3.42 1.27 2.71 0.49 1.01 1.29 1.04 9.20 0.20 4.04 0.62 3.42 1.32 2.71 1.12 0.45 0.67 0.49 4.32 0.70 2.78 0.35 2.43 1.44 2.24 0.83 0.46 0.60 0.50 5.02 0.54 298.91 59.24 4.79 49.27 165.47 75.61 10.09 40.47 326.86 64.89 3.44 54.67 336.88 59.80 2.35 44.52 246.04 54.49 11.59 18.84 91.05 92.42 93.78 93.07 2.24 191.51 1.38 111.54 1.29 157.81 0.63 10.29 8.80 13.75 13.84 15.36 62.32 50.27 73.85 0.85 13.59 13.16 22.07 22.07 23.13 67.83 55.95 82.49 3 137 2 Atlanta 572 519 53 $4,349.6 4,237.1 112.5 3,586.3 3,495.5 90.9 13,120 13,150 -30 Chicago 1,079 930 149 $5,003.2 4,895.5 107.7 3,837.2 3,758.0 79.2 25,953 24,521 1,432 Kansas City 1,300 1,260 40 $4,093.2 4,056.5 36.7 3,318.3 3,289.3 29.0 10,845 10,537 308 Dallas 1,112 1,042 70 $1,719.4 1,211.8 507.6 1,455.6 1,007.9 447.7 11,216 8,699 2,517 San Francisco 372 338 34 $2,166.6 2,021.3 145.4 1,782.1 1,664.5 117.7 12,421 11,179 1,242 3.25 0.57 2.68 1.22 2.26 0.75 0.52 0.66 0.53 4.84 0.49 3.39 0.42 2.97 1.23 2.49 0.91 0.39 0.54 0.42 3.75 0.58 2.90 0.35 2.55 1.79 2.43 0.76 0.70 0.91 0.73 7.32 0.43 3.33 0.48 2.85 1.18 2.44 0.98 0.31 0.40 0.36 3.68 0.57 3.53 0.42 3.11 1.13 2.42 0.52 0.91 1.13 0.95 8.94 0.32 4.37 0.71 3.65 1.63 2.92 1.07 0.76 1.11 0.80 7.41 0.74 346.46 61.40 0.00 15.38 282.02 58.70 8.36 35.28 288.20 59.71 8.57 42.31 370.22 59.34 4.45 56.07 337.73 63.77 1.92 57.69 301.66 59.64 3.87 46.40 216.37 52.26 6.99 41.94 92.20 89.84 90.87 90.50 89.99 90.63 93.37 93.85 1.36 154.77 2.42 193.13 2.50 201.57 2.01 189.38 2.32 243.58 2.30 201.17 2.44 161.63 1.45 77.26 2.56 334.43 0.65 11.32 10.94 15.81 15.83 16.95 79.06 65.81 83.23 0.67 10.97 10.17 14.12 14.14 15.28 84.27 68.79 81.52 0.81 10.91 9.44 13.46 13.65 15.15 75.23 61.02 79.24 0.52 9.74 8.03 13.71 13.75 15.37 50.03 40.03 68.81 0.58 10.71 9.14 13.76 13.81 15.34 63.87 51.54 75.15 0.52 10.87 8.50 13.25 13.35 14.85 61.31 50.55 80.21 0.56 9.78 8.42 13.97 14.03 15.47 58.37 44.77 67.60 0.77 9.76 8.73 13.63 13.71 15.54 59.42 48.17 65.19 1.04 10.32 8.75 13.76 13.87 15.07 61.11 51.74 84.62 0.51 10.52 9.90 14.47 14.64 16.00 76.46 62.89 80.95 2 32 0 1 89 2 0 14 0 0 2 0 0 0 0 0 30 0 2 12 1 0 29 0 0 25 1 0 34 0 1 7 0 PRIOR FIRST THREE QUARTERS (The way it was…) Number of institutions 2019 2017 2015 5,258 5,738 6,270 1,207 1,444 1,752 3,247 3,538 3,812 661 631 596 134 116 102 9 9 8 636 705 780 603 683 778 1,133 1,221 1,351 1,343 1,449 1,559 1,157 1,246 1,319 386 434 483 Total assets (in billions) 2019 2017 2015 $18,481.9 17,242.5 15,800.1 $71.7 85.7 102.7 $1,083.1 1,154.8 1,194.8 $1,723.5 1,729.8 1,642.8 $6,435.6 5,574.9 5,053.2 $9,168.1 8,697.3 7,806.6 $3,358.9 3,186.2 3,018.8 $3,784.3 3,584.3 3,324.0 $4,240.1 3,902.6 3,531.9 $3,797.9 3,687.5 3,436.7 $1,193.3 1,067.3 940.8 $2,107.4 1,814.6 1,548.0 Return on assets (%) 2019 2017 2015 1.33 1.10 1.05 1.00 0.97 0.89 1.31 1.11 1.01 1.31 1.16 1.15 1.37 1.13 1.01 1.30 1.06 1.06 1.12 0.94 0.90 1.34 1.10 1.03 1.35 1.05 0.94 1.26 1.06 1.18 1.39 1.21 1.11 1.65 1.45 1.28 Net charge-offs to loans & leases (%) 2019 2017 2015 0.50 0.48 0.42 0.18 0.17 0.15 0.11 0.12 0.13 0.20 0.21 0.21 0.66 0.68 0.53 0.51 0.46 0.46 0.46 0.55 0.46 0.55 0.58 0.48 0.41 0.28 0.26 0.52 0.49 0.50 0.23 0.26 0.20 0.78 0.64 0.49 Noncurrent assets plus OREO to assets (%) 2019 2017 2015 0.56 0.73 0.99 0.98 1.09 1.30 0.73 0.88 1.20 0.61 0.71 0.99 0.60 0.70 0.74 0.49 0.72 1.12 0.54 0.64 0.76 0.57 0.86 1.19 0.52 0.64 0.96 0.61 0.85 1.22 0.76 0.83 1.07 0.42 0.48 0.53 Equity capital ratio (%) 2019 2017 2015 11.35 11.31 11.33 14.46 13.31 12.83 12.03 11.42 11.35 12.12 11.89 11.92 12.04 12.23 12.19 10.63 10.57 10.63 12.01 12.48 11.99 12.21 12.15 12.44 10.88 10.45 10.35 10.22 10.08 10.28 12.11 11.47 11.26 11.34 11.86 12.28 * See Table V-A (page 11) for explanations. ** For institutions that have adopted ASU 2016-13, the numerator represents provisions for credit losses on a consolidated basis; for institutions that have not adopted ASU 2016-13, the numerator represents the provision for loan and lease losses. *** Beginning March 2020, does not include institutions that have a Community Bank Leverage Ratio election in effect at the report date. FDIC QUARTERLY 9 2020 • Volume 14 • Number 4 TABLE V-A. Loan Performance, All FDIC-Insured Institutions Asset Concentration Groups* All Insured Institutions Credit Card Banks International Banks Agricultural Banks Commercial Lenders Mortgage Lenders Consumer Lenders Other Specialized <$1 Billion All Other <$1 Billion All Other >$1 Billion Percent of Loans 30-89 Days Past Due All loans secured by real estate Construction and development Nonfarm nonresidential Multifamily residential real estate Home equity loans Other 1-4 family residential Commercial and industrial loans Loans to individuals Credit card loans Other loans to individuals All other loans and leases (including farm) Total loans and leases 0.57 0.37 0.31 0.16 0.50 0.90 0.27 1.09 1.03 1.14 0.24 0.54 0.37 0.00 3.19 0.00 0.00 0.37 0.51 1.15 1.16 0.98 0.37 1.09 0.39 0.19 0.40 0.26 0.60 0.45 0.30 0.83 0.90 0.64 0.33 0.45 0.49 0.60 0.45 0.18 0.45 0.77 0.51 0.84 0.76 0.85 0.47 0.50 0.39 0.31 0.28 0.14 0.45 0.64 0.27 0.95 1.15 0.93 0.23 0.38 0.38 1.37 0.27 0.12 0.45 0.35 0.18 0.31 0.75 0.29 0.11 0.36 0.44 0.56 0.45 0.12 0.29 0.45 0.06 0.97 0.95 0.97 0.00 0.75 1.00 0.80 0.95 0.47 0.92 1.10 0.59 1.71 3.36 1.63 0.31 0.98 0.74 0.98 0.52 0.35 0.65 0.83 0.49 1.10 0.95 1.10 0.43 0.72 1.08 0.59 0.41 0.16 0.56 1.48 0.25 1.32 0.98 1.49 0.16 0.76 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 1.60 0.62 0.87 0.22 1.98 2.53 1.03 0.74 1.03 0.49 0.41 1.17 0.65 2.36 0.00 0.00 0.00 0.61 0.61 1.20 1.25 0.40 0.00 1.14 1.92 2.25 1.25 0.12 4.85 2.46 1.43 0.70 0.85 0.28 0.40 1.17 1.18 0.54 0.92 0.47 0.26 0.81 0.97 0.45 0.26 0.47 1.23 1.13 1.19 0.48 0.80 0.22 1.23 2.19 0.90 0.62 1.05 0.58 0.49 1.01 0.96 1.10 0.76 0.40 1.33 0.95 0.47 0.11 0.43 0.10 0.21 0.88 0.37 4.17 1.16 0.04 0.26 0.33 1.71 0.33 0.43 0.33 0.06 0.43 1.44 1.82 1.33 0.57 0.48 1.51 0.44 0.56 1.43 0.52 0.71 1.12 1.04 0.73 1.24 0.53 0.60 1.01 0.75 0.53 0.23 0.53 0.66 0.94 2.56 0.83 1.08 0.40 2.46 3.35 1.12 0.64 0.90 0.52 0.31 1.46 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 0.03 0.02 0.10 0.00 -0.03 0.00 0.54 2.25 3.80 0.78 0.16 0.53 0.07 -0.09 0.00 0.00 0.00 0.07 2.54 4.24 4.38 2.14 0.00 4.06 -0.02 -0.01 0.14 0.00 -0.01 -0.05 0.61 2.81 3.53 0.54 0.07 0.74 0.06 0.09 0.09 0.00 0.00 0.04 0.24 0.35 1.13 0.27 0.24 0.13 0.04 0.02 0.09 0.00 0.01 0.01 0.52 1.08 4.29 0.77 0.21 0.25 -0.01 -0.01 0.06 -0.04 -0.17 -0.01 0.14 0.46 2.81 0.34 0.11 0.02 0.02 -0.06 0.02 -0.01 0.29 0.02 0.30 0.79 2.06 0.79 0.02 0.56 0.15 0.23 0.31 0.00 -0.04 0.07 0.10 0.83 2.00 0.76 0.42 0.24 0.03 0.08 0.02 0.00 0.02 0.02 0.14 0.39 0.85 0.38 0.05 0.07 0.04 -0.04 0.16 0.01 -0.08 -0.01 0.47 1.60 3.18 0.78 0.19 0.46 $5,144.5 386.1 1,556.4 478.4 312.9 2,240.7 2,538.8 1,709.8 796.5 913.4 1,521.1 10,914.2 $1.8 0.0 0.0 0.0 0.0 1.7 34.3 338.7 316.9 21.8 0.3 375.0 $560.1 17.5 58.1 85.3 33.1 313.6 361.8 354.7 261.8 92.9 444.5 1,721.1 $108.6 6.9 28.4 3.8 1.8 25.2 29.5 6.0 0.6 5.4 40.4 184.5 $2,976.4 298.1 1,184.0 330.8 174.0 937.1 1,358.4 341.8 28.0 313.7 431.8 5,108.3 $149.6 4.5 11.6 3.2 7.2 122.3 7.9 8.7 0.3 8.4 3.8 170.0 $21.3 0.1 0.8 0.3 0.1 20.0 7.2 66.1 0.3 65.8 4.1 98.8 $7.0 0.6 2.2 0.2 0.1 3.4 1.9 1.3 0.1 1.2 0.5 10.7 $37.0 2.1 7.8 1.0 1.3 22.0 5.5 4.0 0.0 4.0 2.6 49.1 $1,282.7 56.4 263.5 53.8 95.3 795.4 732.4 588.6 188.3 400.2 593.1 3,196.8 4,547.9 1,086.7 1,805.6 68.8 1,373.7 175.2 0.7 0.6 0.0 0.0 0.1 0.0 326.9 1.0 85.0 0.0 202.9 0.0 235.2 31.4 80.8 4.6 37.4 81.2 3,121.9 947.8 1,387.2 63.0 634.4 89.5 62.3 13.2 12.5 0.9 35.6 0.0 5.6 1.3 2.3 0.0 2.0 0.0 45.5 28.7 10.8 0.0 5.7 0.3 76.3 14.6 29.4 0.3 27.9 4.1 673.5 48.3 197.6 0.0 427.7 0.0 September 30, 2020 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) 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 * Asset Concentration Group Definitions (Groups are hierarchical and mutually exclusive): Credit-card Lenders - Institutions whose credit-card loans plus securitized receivables exceed 50 percent of total assets plus securitized receivables. International Banks - Banks with assets greater than $10 billion and more than 25 percent of total assets in foreign offices. Agricultural Banks - Banks whose agricultural production loans plus real estate loans secured by farmland exceed 25 percent of the total loans and leases. Commercial Lenders - Institutions whose commercial and industrial loans, plus real estate construction and development loans, plus loans secured by commercial real estate properties exceed 25 percent of total assets. Mortgage Lenders - Institutions whose residential mortgage loans, plus mortgage-backed securities, exceed 50 percent of total assets. Consumer Lenders - Institutions whose residential mortgage loans, plus credit-card loans, plus other loans to individuals, exceed 50 percent of total assets. Other Specialized < $1 Billion - Institutions with assets less than $1 billion, whose loans and leases are less than 40 percent of total assets. All Other < $1 billion - Institutions with assets less than $1 billion that do not meet any of the definitions above, they have significant lending activity with no identified asset concentrations. All Other > $1 billion - Institutions with assets greater than $1 billion that do not meet any of the definitions above, they have significant lending activity with no identified asset concentrations. ** Noncurrent loan rates represent the percentage of loans in each category that are past due 90 days or more or that are in nonaccrual status. 10 FDIC QUARTERLY QUARTERLY BANKING PROFILE TABLE V-A. Loan Performance, All FDIC-Insured Institutions Asset Size Distribution Geographic Regions* All Insured Institutions Less Than $100 Million $100 Million to $1 Billion $1 Billion to $10 Billion $10 Billion to $250 Billion Percent of Loans 30-89 Days Past Due All loans secured by real estate Construction and development Nonfarm nonresidential Multifamily residential real estate Home equity loans Other 1-4 family residential Commercial and industrial loans Loans to individuals Credit card loans Other loans to individuals All other loans and leases (including farm) Total loans and leases 0.57 0.37 0.31 0.16 0.50 0.90 0.27 1.09 1.03 1.14 0.24 0.54 0.86 0.94 0.55 0.90 0.39 1.13 0.68 1.30 1.07 1.30 0.52 0.81 0.45 0.45 0.35 0.23 0.43 0.60 0.33 1.31 1.57 1.29 0.44 0.46 0.29 0.36 0.23 0.12 0.33 0.41 0.28 1.18 2.40 0.94 0.29 0.33 0.46 0.32 0.32 0.14 0.50 0.70 0.28 1.01 1.09 0.93 0.21 0.49 0.85 0.41 0.36 0.22 0.55 1.21 0.26 1.14 0.94 1.34 0.24 0.64 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 1.60 0.62 0.87 0.22 1.98 2.53 1.03 0.74 1.03 0.49 0.41 1.17 1.28 0.68 1.29 0.63 0.64 1.14 1.18 0.71 0.71 0.71 1.33 1.24 0.86 0.69 0.82 0.35 0.60 0.87 0.59 0.64 1.42 0.59 1.12 0.82 0.88 0.69 0.88 0.23 0.62 1.09 1.00 0.69 2.31 0.36 0.54 0.88 1.70 0.35 0.82 0.17 1.27 3.29 1.02 0.85 1.20 0.53 0.48 1.25 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 0.03 0.02 0.10 0.00 -0.03 0.00 0.54 2.25 3.80 0.78 0.16 0.53 0.04 -0.01 0.05 -0.07 0.07 0.02 0.41 0.40 3.66 0.37 0.21 0.13 0.04 0.04 0.06 0.00 0.03 0.02 0.22 0.94 4.96 0.67 0.21 0.11 0.04 0.04 0.07 0.01 0.01 0.02 0.34 1.88 7.44 0.69 0.27 0.20 $5,144.5 386.1 1,556.4 478.4 312.9 2,240.7 2,538.8 1,709.8 796.5 913.4 1,521.1 $21.7 1.3 4.5 0.5 0.5 10.5 5.1 2.0 0.0 2.0 4.5 $515.8 47.3 192.6 28.8 16.5 181.1 139.7 26.8 1.6 25.2 44.7 10,914.2 33.5 4,547.9 1,086.7 1,805.6 68.8 1,373.7 175.2 88.6 15.2 30.3 5.0 28.4 9.7 September 30, 2020 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) 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 Greater Than $250 Billion New York Atlanta Chicago Kansas City Dallas San Francisco 0.38 0.30 0.35 0.17 0.43 0.50 0.32 0.99 1.16 0.87 0.11 0.43 0.57 0.24 0.29 0.14 0.50 0.88 0.22 1.49 1.15 1.79 0.15 0.59 0.47 0.29 0.24 0.05 0.44 0.70 0.25 0.73 0.88 0.60 0.32 0.43 1.09 0.63 0.44 0.63 0.82 1.68 0.27 0.99 0.95 1.05 0.32 0.75 0.56 0.36 0.28 0.19 0.41 1.08 0.36 0.79 0.47 0.89 0.25 0.50 0.30 0.45 0.25 0.08 0.26 0.38 0.32 1.22 1.10 1.31 0.17 0.50 2.08 1.03 0.98 0.28 3.02 2.70 1.11 0.66 0.85 0.48 0.34 1.24 1.32 1.07 0.92 0.27 1.99 2.03 0.93 0.86 1.29 0.57 0.39 1.06 1.30 0.45 0.72 0.39 1.42 1.89 0.92 0.76 1.06 0.50 0.17 0.95 1.68 1.03 1.03 0.15 2.37 2.29 1.04 0.45 0.74 0.21 0.50 1.14 2.25 0.31 1.04 0.31 3.17 3.33 1.32 0.77 0.98 0.44 0.51 1.51 2.60 0.32 0.68 0.22 1.02 6.74 0.97 0.58 0.95 0.45 0.37 1.88 0.62 0.48 0.87 0.10 0.76 0.53 1.04 0.93 1.15 0.75 0.48 0.76 0.04 0.01 0.10 0.00 0.00 0.00 0.71 2.56 4.22 0.90 0.14 0.70 0.03 -0.01 0.18 0.00 -0.06 -0.02 0.50 2.07 3.37 0.69 0.16 0.54 0.04 0.01 0.09 0.01 0.01 0.01 0.38 2.40 4.14 1.07 0.25 0.49 0.05 0.03 0.13 0.03 -0.07 0.00 0.50 2.15 3.70 0.68 0.23 0.58 0.02 0.03 0.16 0.00 0.03 -0.04 0.54 1.77 3.24 0.37 0.11 0.43 0.03 -0.04 0.12 0.01 -0.08 0.00 0.53 2.71 3.83 0.85 0.14 0.57 0.03 0.02 0.06 0.00 -0.05 0.01 0.90 1.26 2.77 0.71 0.10 0.32 0.02 0.05 0.06 -0.01 -0.03 -0.01 0.70 2.53 4.37 0.98 0.09 0.74 $944.8 94.8 397.6 102.1 36.3 284.2 315.9 70.7 11.8 58.9 77.5 $1,818.5 159.2 620.4 208.1 112.3 702.5 909.9 731.1 350.5 380.6 417.7 $1,843.6 83.6 341.3 139.0 147.3 1,062.4 1,168.3 879.2 432.5 446.7 976.5 $1,064.5 75.4 356.9 165.6 66.4 395.2 445.9 298.9 123.5 175.4 236.4 $956.2 64.0 306.1 47.7 75.3 449.5 591.8 402.1 185.0 217.1 301.3 $1,009.3 64.5 229.8 119.0 76.1 495.6 564.9 330.2 152.6 177.6 388.6 $915.9 54.7 206.7 42.8 51.1 462.9 436.4 295.3 179.7 115.7 374.6 $549.2 83.0 225.6 25.6 19.5 176.6 210.3 67.9 17.1 50.8 75.7 $649.4 44.4 231.4 77.7 24.6 260.9 289.7 315.4 138.6 176.8 144.3 727.0 1,408.9 3,877.2 4,867.7 2,045.7 2,251.5 2,293.0 2,022.1 903.2 1,398.8 1,179.6 471.7 396.5 35.4 194.1 81.9 1,103.2 322.5 532.4 18.2 163.9 66.2 1,286.3 231.5 580.1 9.2 448.2 17.4 890.3 45.8 266.3 1.0 539.1 0.0 740.6 126.4 242.3 9.7 359.4 2.8 939.5 308.8 324.1 22.4 273.9 10.3 976.0 131.5 453.1 5.9 339.8 20.7 710.7 174.0 258.6 9.3 187.1 68.8 917.4 277.7 411.3 13.9 156.2 58.3 263.7 68.3 116.2 7.6 57.4 14.2 * 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 2020 • Volume 14 • Number 4 Table VI-A. Derivatives, All FDIC-Insured Call Report Filers Asset Size Distribution (dollar figures in millions; notional amounts unless otherwise indicated) ALL DERIVATIVE HOLDERS Number of institutions reporting derivatives Total assets of institutions reporting derivatives Total deposits of institutions reporting derivatives Total derivatives 3rd Quarter 2020 2nd Quarter 2020 1st Quarter 2020 4th Quarter 2019 3rd Quarter 2019 % Change 19Q320 Q3 1,373 $19,490,492 15,707,310 181,124,835 1,381 $19,422,604 15,567,209 181,706,554 1,361 $18,647,356 14,473,395 199,743,579 1,328 $17,062,953 13,260,629 173,052,331 1,340 $16,899,831 13,006,277 203,562,352 2.5 15.3 20.8 -11.0 33 $2,356 1,890 633 688 $314,813 259,946 55,747 513 $1,501,755 1,223,231 247,427 126 $5,817,542 4,736,618 5,484,487 13 $11,854,025 9,485,624 175,336,541 Derivative Contracts by Underlying Risk Exposure Interest rate Foreign exchange* Equity Commodity & other (excluding credit derivatives) Credit Total 129,835,624 42,148,550 4,022,629 1,536,154 3,580,623 181,123,580 132,102,567 41,266,832 3,574,339 1,506,889 3,254,590 181,705,217 146,069,414 44,381,157 3,661,579 1,643,731 3,986,479 199,742,360 125,078,757 38,736,894 3,796,106 1,495,227 3,944,681 173,051,665 147,186,848 46,694,639 3,835,456 1,662,059 4,182,691 203,561,693 -11.8 -9.7 4.9 -7.6 -14.4 -11.0 630 0 0 0 0 630 55,281 0 18 0 31 55,330 239,189 4,341 137 116 2,808 246,591 3,490,338 1,691,986 94,615 81,124 126,424 5,484,487 126,050,185 40,452,223 3,927,859 1,454,914 3,451,360 175,336,541 Derivative Contracts by Transaction Type Swaps Futures & forwards Purchased options Written options Total 99,580,271 39,822,440 17,889,179 17,706,959 174,998,849 101,734,113 41,018,437 16,881,937 16,682,545 176,317,032 110,598,852 46,803,966 18,151,997 17,959,266 193,514,081 96,614,183 34,786,564 18,118,533 17,998,526 167,517,806 108,935,550 47,061,050 20,733,104 20,343,921 197,073,626 -8.6 -15.4 -13.7 -13.0 -11.2 4 0 1 5 10 2,091 5,990 317 4,874 13,271 126,548 37,999 14,171 30,053 208,770 3,269,989 1,541,060 240,941 237,915 5,289,905 96,181,640 38,237,391 17,633,750 17,434,112 169,486,893 73,199 -7,256 -700 -1,087 3,830 -7,167 60,217 -19,636 -1,171 -3,800 -3,347 553 48,270 -16,009 9,837 9,802 -24,127 26,454 49,831 -7,869 -1,203 -1,310 25,920 -26,965 53,929 2,817 1,597 -4,100 20,454 -22,966 35.7 N/M N/M 73.5 -81.3 68.8 0 0 0 0 0 0 138 0 0 0 0 0 -337 7 9 0 23 -25 19,267 1,515 -52 171 -421 105 54,130 -8,778 -656 -1,258 4,228 -7,246 76,385,615 39,964,097 20,500,352 29,396,423 4,299,182 2,299,468 3,210,066 882,054 133,921 80,158,815 41,098,879 19,986,413 29,049,559 4,238,687 2,179,498 2,850,740 825,667 128,679 92,838,175 43,088,736 20,987,249 31,570,063 4,127,647 2,152,437 2,959,453 779,791 124,492 79,135,461 35,856,425 24,264,486 28,241,089 4,052,351 2,146,242 3,083,994 844,052 136,149 88,724,450 37,506,842 24,491,078 33,602,158 4,279,836 2,148,934 2,687,265 994,632 147,521 -13.9 6.6 -16.3 -12.5 0.5 7.0 19.5 -11.3 -9.2 0 2 3 0 0 0 0 0 0 4,401 596 1,173 0 0 0 6 13 0 29,937 42,735 81,692 3,438 452 35 106 4 5 1,348,364 1,172,261 674,211 1,484,474 135,380 37,744 49,708 34,499 8,959 75,002,914 38,748,503 19,743,273 27,908,511 4,163,351 2,261,689 3,160,247 847,538 124,957 1,926,264 2,249,588 433,136 1,860,285 2,163,848 227,777 2,040,847 2,612,164 449,878 2,094,288 2,785,983 260,844 1,960,750 2,819,249 430,569 -1.8 -20.2 0.6 0 0 0 0 1 28 36 711 1,155 36,732 64,975 8,664 1,889,497 2,183,900 423,289 29.9 32.3 31.9 29.6 37.9 29.6 23.7 34.5 27.4 35.0 0.1 0.0 0.2 0.1 3.1 1.1 7.7 5.9 47.5 53 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** Derivative Contracts by Maturity*** Interest rate contracts < 1 year 1-5 years > 5 years Foreign exchange and gold contracts < 1 year 1-5 years > 5 years Equity contracts < 1 year 1-5 years > 5 years Commodity & other contracts (including credit derivatives, excluding gold contracts) < 1 year 1-5 years > 5 years Risk-Based Capital: Credit Equivalent Amount Total current exposure to tier 1 capital (%) Total potential future exposure to tier 1 capital (%) Total exposure (credit equivalent amount) to tier 1 capital (%) Less Than $100 Million $100 Million to $1 Billion $1 Billion to $10 Billion $10 Billion to $250 Billion Greater Than $250 Billion 62.2 61.5 67.6 58.2 62.4 0.1 0.3 4.2 13.6 100.5 131.0 125.0 83.0 20.0 22.0 495.5 0.0 0.0 1.0 17.0 113 186 15,384,583 12,340,493 186 15,394,405 12,274,431 182 14,841,535 11,424,297 174 13,426,816 10,356,388 175 13,313,319 10,147,948 6.3 15.6 21.6 0 0 0 19 8,271 6,925 89 338,646 275,387 67 3,879,923 3,195,832 11 11,157,743 8,862,348 Derivative Contracts by Underlying Risk Exposure Interest rate Foreign exchange Equity Commodity & other Total 126,595,124 39,147,645 3,997,150 1,501,890 171,241,810 129,035,575 38,663,882 3,549,571 1,473,915 172,722,943 143,093,184 41,651,419 3,639,261 1,611,455 189,995,319 122,492,314 36,707,246 3,777,097 1,464,169 164,440,827 144,532,347 43,930,653 3,817,653 1,631,150 193,911,802 -12.4 -10.9 4.7 -7.9 -11.7 0 0 0 0 0 304 0 0 0 304 48,059 4,091 104 82 52,335 Trading Revenues: Cash & Derivative Instruments Interest rate** Foreign exchange** Equity** Commodity & other (including credit derivatives)** Total trading revenues** 2,810 1,942 2,826 1,380 8,959 4,647 3,841 4,148 2,036 14,671 4,947 2,167 -1,040 612 6,686 4,371 662 1,427 634 7,094 1,581 2,718 1,805 1,152 7,256 77.7 -28.6 56.6 19.8 23.5 0 0 0 0 0 0 0 0 0 0 9 3 7 0 20 445 -172 -9 141 405 2,356 2,111 2,828 1,239 8,533 6.3 28.6 9.9 305.8 4.2 60.1 4.5 20.9 4.3 18.7 0.0 0.0 0.0 0.0 0.5 2.5 1.1 4.4 8.5 40 620 18,644,568 15,009,146 625 18,555,550 14,853,065 616 17,928,518 13,891,758 641 16,491,529 12,797,489 662 16,313,116 12,531,710 -6.3 14.3 19.8 3 202 166 160 80,670 66,171 326 1,142,622 930,133 118 5,567,049 4,527,051 13 11,854,025 9,485,624 3,162,895 534,403 25,479 34,264 3,757,040 3,009,014 527,333 24,768 32,974 3,594,089 2,934,180 529,987 22,318 32,277 3,518,762 2,564,078 462,834 19,009 31,059 3,076,980 2,633,532 479,579 17,803 30,910 3,161,823 20.1 11.4 43.1 10.9 18.8 10 0 0 0 10 12,948 0 18 0 12,967 156,174 194 33 34 156,435 716,782 30,088 10,272 2,036 759,178 2,276,980 504,121 15,155 32,193 2,828,450 Credit losses on derivatives**** HELD FOR TRADING Number of institutions reporting derivatives Total assets of institutions reporting derivatives Total deposits of institutions reporting derivatives Share of Revenue Trading revenues to gross revenues (%)** Trading revenues to net operating revenues (%)** HELD FOR PURPOSES OTHER THAN TRADING Number of institutions reporting derivatives Total assets of institutions reporting derivatives Total deposits of institutions reporting derivatives Derivative Contracts by Underlying Risk Exposure Interest rate Foreign exchange Equity Commodity & other Total notional amount 2,773,556 123,773,205 1,593,741 37,549,813 84,343 3,912,704 79,088 1,422,720 4,530,728 166,658,442 All line items are reported on a quarterly basis. N/M - Not Meaningful * Includes 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. ** Does not include banks filing the FFIEC 051 report form, which was introduced in first quarter 2017. *** Derivative contracts subject to the risk-based capital requirements for derivatives. **** Credit losses on derivatives is applicable to all banks filing the FFIEC 031 report form and banks filing the FFIEC 041 report form that have $300 million or more in total assets, but is not applicaable to banks filing the FFIEC 051 form. 12 FDIC QUARTERLY QUARTERLY BANKING PROFILE TABLE VII-A. Servicing, Securitization, and Asset Sales Activities (All FDIC-Insured Call Report Filers)* Asset Size Distribution (dollar figures in millions) Assets Securitized and Sold with Servicing Retained or with Recourse or Other Seller-Provided Credit Enhancements Number of institutions reporting securitization activities Outstanding Principal Balance by Asset Type 1-4 family residential loans Home equity loans Credit card receivables Auto loans Other consumer loans Commercial and industrial loans All other loans, leases, and other assets Total securitized and sold Maximum Credit Exposure by Asset Type 1-4 family residential loans Home equity loans Credit card receivables Auto loans Other consumer loans Commercial and industrial loans All other loans, leases, and other assets Total credit exposure Total unused liquidity commitments provided to institution’s own securitizations Securitized Loans, Leases, and Other Assets 30-89 Days Past Due (%) 1-4 family residential loans Home equity loans Credit card receivables Auto loans Other consumer loans Commercial and industrial loans All other loans, leases, and other assets Total loans, leases, and other assets Securitized Loans, Leases, and Other Assets 90 Days or More Past Due (%) 1-4 family residential loans Home equity loans Credit card receivables Auto loans Other consumer loans Commercial and industrial loans All other loans, leases, and other assets Total loans, leases, and other assets Securitized Loans, Leases, and Other Assets Charged-off (net, YTD, annualized, %) 1-4 family residential loans Home equity loans Credit card receivables Auto loans Other consumer loans Commercial and industrial loans All other loans, leases, and other assets Total loans, leases, and other assets Seller’s Interests in Institution's Own Securitizations – Carried as Loans Home equity loans Credit card receivables Commercial and industrial loans Seller’s Interests in Institution's Own Securitizations – Carried as Securities Home equity loans Credit card receivables Commercial and industrial loans Assets Sold with Recourse and Not Securitized Number of institutions reporting asset sales Outstanding Principal Balance by Asset Type 1-4 family residential loans All other loans, leases, and other assets Total sold and not securitized 3rd Quarter 2020 2nd Quarter 2020 1st Quarter 2020 4th Quarter 2019 3rd Quarter 2019 % Change 19Q320Q3 Less Than $100 Million $100 Million to $1 Billion $1 Billion to $10 Billion $10 Billion to $250 Billion Greater Than $250 Billion 33 8 58 61 63 63 67 -13.4 0 6 11 $406,116 8 0 579 1,669 0 88,993 497,365 $449,854 9 0 980 1,512 0 90,064 542,419 $452,586 9 0 1,196 1,587 0 88,439 543,817 $474,309 11 0 1,448 1,661 0 83,875 561,304 $452,433 11 0 1,793 1,738 537 76,770 533,282 -10.2 -27.3 0.0 -67.7 -4.0 -100.0 15.9 -6.7 $0 0 0 0 0 0 0 0 $4,051 0 0 0 0 0 0 4,051 $10,271 0 0 0 0 0 8,321 18,592 1,403 0 0 38 0 0 2,010 3,451 71 1,522 0 0 48 0 0 2,205 3,775 32 1,726 0 0 53 0 0 1,645 3,424 29 1,326 0 0 59 0 0 1,366 2,751 24 1,371 0 0 66 0 0 1,324 2,761 203 2.3 0.0 0.0 -42.4 0.0 0.0 51.8 0.0 -65.0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 51 0 0 0 0 0 91 142 0 633 0 0 38 0 0 93 764 0 719 0 0 0 0 0 1,826 2,545 71 3.0 7.2 0.0 3.1 2.3 0.0 1.5 3.1 5.9 8.3 0.0 2.6 3.0 0.0 4.7 6.5 3.7 19.7 0.0 4.5 3.7 0.0 0.1 3.4 3.5 9.8 0.0 3.2 3.6 0.0 0.1 3.2 3.6 7.8 0.0 2.7 3.3 0.0 0.3 3.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 2.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.6 0.0 0.0 0.0 0.0 0.0 0.1 0.0 1.7 7.2 0.0 3.1 1.2 0.0 1.6 2.2 3.6 0.0 0.0 0.0 3.5 0.0 1.7 3.2 2.9 27.8 0.0 0.8 2.2 0.0 2.9 2.8 4.6 28.9 0.0 0.9 3.2 0.0 0.4 4.3 1.0 29.3 0.0 0.8 3.6 0.0 0.3 0.8 1.0 33.6 0.0 0.6 3.7 0.0 0.3 0.8 1.1 33.5 0.0 0.5 3.4 0.0 0.3 0.9 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1.8 0.0 0.0 0.0 0.0 0.0 0.0 0.0 2.7 0.0 0.0 0.0 0.0 0.0 0.3 0.0 3.5 27.8 0.0 0.8 0.5 0.0 0.4 2.2 2.6 0.0 0.0 0.0 4.4 0.0 3.3 2.8 0.1 10.2 0.0 2.0 0.8 0.0 0.2 0.1 0.1 8.4 0.0 1.1 0.4 0.0 0.1 0.1 0.0 6.9 0.0 0.5 0.1 0.0 0.1 0.0 0.2 8.6 0.0 1.9 0.7 0.0 0.3 0.2 0.2 6.9 0.0 1.2 0.5 0.0 0.2 0.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 10.2 0.0 2.0 0.2 0.0 0.5 0.1 0.1 0.0 0.0 0.0 1.4 0.0 0.2 0.1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 629 0.0 0.0 -100.0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0.0 0.0 0.0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 $105,592 $286,202 8 0 0 0 579 0 926 743 0 0 3,532 77,140 110,637 364,085 347 345 339 371 388 -10.6 6 117 152 63 9 31,869 128,103 159,972 28,990 126,493 155,483 27,752 123,427 151,179 30,320 124,159 154,479 29,841 122,896 152,737 6.8 4.2 4.7 62 0 62 5,147 11 5,158 12,841 68 12,910 12,158 35,470 47,628 1,661 92,553 94,214 Maximum Credit Exposure by Asset Type 1-4 family residential loans All other loans, leases, and other assets Total credit exposure 12,870 36,997 49,867 10,753 36,423 47,176 9,675 35,313 44,989 10,161 34,793 44,953 10,181 34,483 44,665 26.4 7.3 11.6 2 0 2 923 11 934 5,299 18 5,318 5,806 11,233 17,039 839 25,735 26,574 Support for Securitization Facilities Sponsored by Other Institutions Number of institutions reporting securitization facilities sponsored by others Total credit exposure Total unused liquidity commitments 36 24,893 412 35 26,480 413 36 22,894 208 36 23,214 413 37 23,169 411 -2.7 7.4 0.2 1 0 0 8 0 0 14 0 0 8 1,591 295 5 23,302 117 5,921,643 5,912,001 6,185,782 6,187,243 6,101,596 -2.9 3,173 142,296 474,894 1,265,092 4,036,187 17,209 17,348 18,170 17,948 16,186 6.3 0 0 0 0 17,209 59,373 1,366 92 3.7 30,319 -246 39 3.8 30,889 -1,757 37 3.6 31,652 2,204 138 3.6 30,536 300 65 3.6 94.4 355.3 41.5 0 7 0 0.0 0 213 17 0.0 0 206 6 0.0 1,543 318 13 0.7 57,830 622 55 2.9 Other Assets serviced for others** Asset-backed commercial paper conduits Credit exposure to conduits sponsored by institutions and others Unused liquidity commitments to conduits sponsored by institutions and others Net servicing income (for the quarter) Net securitization income (for the quarter) Total credit exposure to Tier 1 capital (%)*** * Does not include banks filing the FFIEC 051 report form, which was introduced in first quarter 2017. ** The amount of financial assets serviced for others, other than closed-end 1-4 family residential mortgages, is reported when these assets are greater than $10 million. *** Total credit exposure includes the sum of the three line items titled “Total credit exposure” reported above. FDIC QUARTERLY 13 QUARTERLY BANKING PROFILE COMMUNITY BANK PERFORMANCE Community banks are identified based on criteria defined in the FDIC’s 2012 Community Banking Study. When comparing community bank performance across quarters, prior-quarter dollar amounts are based on community banks designated as such in the current quarter, adjusted for mergers. In contrast, prior-quarter performance ratios are based on community banks designated during the previous quarter. Net Income for Community Banks Increases 10 Percent Year Over Year Net Interest Margin Continues to Compress and Reaches a Record-Low Level Loan Balances Grow 13.4 Percent Year Over Year Asset Quality Weakens Slightly Net Income Increases 10 Percent Year Over Year In aggregate, 4,590 FDIC-insured community banks reported annual growth in quarterly net income of $659.7 million despite a 116.6 percent increase in provision expense and continued net interest margin (NIM) compression.1 Nearly half of all community banks (48 percent) reported higher quarterly net income in third quarter 2020 compared with third quarter 2019. Higher revenue from loan sales (up $1.9 billion, or 154.2 percent) drove the improvement in quarterly net income. The NIM for community banks compressed 41 basis points from the year-ago quarter to a record low of 3.27 percent, as the decline in average earning asset yields outpaced the decline in average funding costs. This was the fourth consecutive quarter in which community banks reported NIM compression. The NIM declined in the third quarter even though the ratio of earning assets to total assets reached the highest level (93.5 percent) in the history of the Quarterly Banking Profile (QBP). The pretax return on average assets (ROA) ratio declined 8 basis points from the year-ago quarter to 1.43 percent as growth in average assets outpaced that of net income. Still, the community bank pretax ROA was 21 basis points higher than that reported by noncommunity banks. Provision expense declined 32.3 percent between second quarter and third quarter 2020 to $1.6 billion. This decline, along with a quarterly increase in revenue from loan sales, supported an increase in net income of $692.7 million, or 10.6 percent, in third quarter 2020. 1 Results exclude one institution with an active charter that sold most of its assets to a credit union and, therefore, did not file a Call Report this quarter. Chart 1 Chart 2 Contributors to the Year-Over-Year Change in Income FDIC-Insured Community Banks Positive Factor $ Billions 2.5 $0.66 $0.64 $0.87 $2.15 $1.27 Negative Factor $0.19 Percent Community Banks (3.27) Industry (2.68) 4.05 $0.16 3.80 2.0 3.55 1.5 3.30 1.0 3.05 0.5 0.0 Net Interest Margin +10% +4% Net Income Net Interest Income Source: FDIC. +117% +44% +9% Loan Loss Noninterest Noninterest Provisions Income Expense +126% +12% Realized Gains on Securities Income Taxes 2.80 2.55 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Source: FDIC. FDIC QUARTERLY 15 2020 • Volume 14 • Number 4 Revenue From Loan Sales Continues to Bolster Net Operating Revenue Increases in net interest income and noninterest income lifted net operating revenue by $2.8 billion (12.1 percent) to $25.8 billion from the year-ago quarter. Higher revenue from loan sales drove the increase in noninterest income (up $2.1 billion, or 44 percent) year over year. This increase pushed noninterest income as a percentage of net operating revenue up more than 6 percentage points from the year-ago quarter to 27.2 percent—a 30-year high. Higher interest income from commercial and industrial (C&I) loans (up 14.8 percent) and a decline in interest expense (down 36.8 percent) drove the increase in net interest income from third quarter 2019. The Shift in Funding Mix and Low Rates Support Lower Interest Expense Interest expense on domestic deposits declined $1.6 billion (38.2 percent) from the yearago quarter, driving the continued decline in total interest expense. Average funding costs declined for the fourth consecutive quarter to 0.53 percent, just 7 basis points above the 30-year low. In addition to low interest rates, a lower ratio of short-term time deposits to total assets—down 3.5 percentage points from a year earlier to 13.2 percent—contributed to lower funding costs. Payroll Expense Continues to Grow as Average Assets per Employee Reaches a Record High An increase in salary and benefit expense of $835.7 million (9.8 percent) drove the $1.3 billion (8.7 percent) increase in noninterest expense from the year-ago quarter. Higher average assets per employee from the year-ago quarter accompanied the increase in payroll expense. Average assets per employee rose to $6.3 million (up 14.4 percent) from the yearago quarter—the highest level reported in the history of the QBP. Quarterly Loan Growth Rises Moderately Total loans and leases grew $17 billion (1 percent) from second quarter 2020 to $1.7 trillion. Growth in nonfarm nonresidential lending (up 1.9 percent) accounted for more than half (52 percent) of the quarterly increase in loan volume. Non-owner occupied nonfarm nonresidential lending and multifamily lending both increased 2.1 percent from the previous quarter. Over half of all community banks (57.8 percent) reported higher loan and lease balances from second quarter 2020. Chart 3 Chart 4 Noncurrent Loan Rates for FDIC-Insured Community Banks Change in Loan Balances and Unused Commitments FDIC-Insured Community Banks Change 3Q 2020 vs. 3Q 2019 Change 3Q 2020 vs. 2Q 2020 $ Billions 160 143.8 140 Share of Loan Portfolio Noncurrent Percent 16 12 100 80 10 60 8 0 C&I Loans Home Equity Farm Loans 14 120 40 32.5 20 C&D Loans Nonfarm Nonresidential RE 1–4 Family RE 8.9 0.4 8.1 3.4 3.4 4.8 1.3 18.8 6 4.8 -1.6 -1.0 -20 Nonfarm Commercial Nonresidential & Industrial RE Source: FDIC. 7.0 1–4 Family Construction & Agricultural Commercial RE Commercial Residential Development Production & Construction & Industrial RE Loan Balances 16 FDIC QUARTERLY Unused Commitments 4 2 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Source: FDIC. QUARTERLY BANKING PROFILE Total loans and leases rose $203 billion (13.4 percent) from the year-ago quarter. C&I lending (up $143.8 billion, or 71 percent) drove the annual increase in loan volume. This growth primarily reflects loans made under the Paycheck Protection Program in second quarter 2020. Nonfarm nonresidential lending (up $32.5 billion, or 7.2 percent) and 1–4 family residential real estate lending (up $8.1 billion, or 2.1 percent) also rose. Securities increased 12 percent from the year-ago quarter to $409.6 billion, while cash and balances due from insured depository institutions and Federal Reserve Banks increased 57.1 percent to $231.8 billion from third quarter 2019. Noncurrent Loan Rates Increase Moderately Noncurrent balances for total loans and leases rose $93.7 million (0.7 percent) from second quarter 2020, but the noncurrent rate for total loans and leases was unchanged at 0.80 percent. Noncurrent balances for total loans and leases were up $1.6 billion (13.5 percent) from the year-ago quarter. Higher noncurrent nonfarm nonresidential loans (up $629.8 million, or 21 percent), C&I loans (up $351.6 million, or 18 percent), and farm loans (up $297 million, or 18 percent) contributed most to the annual increase in noncurrent loans. Noncurrent rates for farmland loans (up 26 basis points to 1.73 percent) and agricultural production loans (up 25 basis points to 1.21 percent) increased most among all loan portfolios from the year-ago quarter. The noncurrent rate for nonfarm nonresidential loans also weakened, increasing 10 basis points to 0.76 percent from third quarter 2019. Net Charge-Off Rates Remain Low Net charge-off balances for total loans and leases fell $118.7 million (22.1 percent) year over year pulling the net charge-off rate for total loans and leases down 5 basis points to 0.10 percent—well below historical highs. Net charge-off rates for major loan categories remain low. Noninterest-Bearing Deposit Growth Supports Lower Cost Deposit Mix Total deposits of $2.05 trillion were up 1.8 percent from second quarter 2020 and 16.7 percent from the year-ago quarter. Domestic noninterest-bearing deposit growth (up 2 percent quarter over quarter and 35.6 percent year over year) outpaced domestic interestbearing deposit growth (up 1.7 percent quarter over quarter and 11.6 percent year over year), supporting a lower-cost deposit mix. Community Bank Leverage Ratio Remains Strong The community bank leverage ratio (CBLR) for the 1,854 banks that made this election remained strong at 11.23 percent. The tier 1 risk-based capital ratio for non-CBLR filers was 14.44 percent, up 11 basis points from second quarter 2020. However, the leverage capital ratio for non-CBLR filers declined 8 basis points to 10.40 percent as average asset growth outpaced tier 1 capital formation. Equity capital grew $4.9 billion (1.8 percent) quarter over quarter. Number of Community Banks Declines Slightly and Includes One De Novo Bank The number of community banks declined by 34 (less than 1 percent) to 4,590 from second quarter 2020. The quarterly change in the number of community banks includes one new community bank, three banks transitioning from noncommunity to community banks, eight banks transitioning from community to noncommunity banks, 29 community bank mergers or consolidations, and one community bank self-liquidation. Authors: Alex M. Kokkinakis Senior Financial Analyst Division of Insurance and Research Erica Jill Tholmer Senior Financial Analyst Division of Insurance and Research FDIC QUARTERLY 17 2020 • Volume 14 • Number 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 (%) 2020* 2019* 2019 2018 2017 2016 2015 1.07 9.46 10.40 0.64 0.11 10.97 3.43 -6.46 4,590 4.64 1.21 10.43 11.24 0.67 0.12 0.57 3.68 0.06 4,827 3.77 1.20 10.25 11.15 0.65 0.13 -1.17 3.66 -4.04 4,750 3.98 1.19 10.58 11.09 0.70 0.13 2.22 3.72 28.01 4,980 3.63 0.96 8.65 10.80 0.78 0.16 1.17 3.62 0.21 5,228 5.72 0.99 8.81 10.69 0.94 0.16 2.97 3.57 2.42 5,462 4.67 0.99 8.85 10.67 1.07 0.15 2.74 3.57 9.57 5,736 5.04 * 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 2020 2nd Quarter 2020 3rd Quarter 2019 %Change 19Q3-20Q3 4,590 390,661 4,624 391,446 4,827 402,917 -4.9 -3.0 $2,478,392 1,211,065 391,904 481,865 114,262 42,943 346,080 64,237 2,021 51,075 44,900 1,281 1,716,077 21,835 1,694,243 409,632 2,081 17,912 354,524 $2,457,876 1,202,384 389,832 476,768 114,480 43,614 348,818 62,788 1,847 52,426 38,622 1,381 1,703,658 20,789 1,682,869 396,591 2,236 18,059 358,121 $2,233,435 1,212,229 397,964 472,439 113,186 47,072 212,054 65,697 2,103 53,556 43,776 542 1,586,769 18,017 1,568,752 376,168 2,717 17,338 268,460 11.0 -0.1 -1.5 2.0 1.0 -8.8 63.2 -2.2 -3.9 -4.6 2.6 136.2 8.1 21.2 8.0 8.9 -23.4 3.3 32.1 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 2,478,392 2,049,529 2,047,170 2,359 60,915 1,445,317 131,838 241 25,099 271,684 271,583 2,457,876 2,024,462 2,022,074 2,387 64,586 1,445,645 139,781 237 25,237 268,159 268,055 2,233,435 1,832,214 1,829,902 2,311 69,728 1,338,330 116,388 370 20,325 264,139 264,051 11.0 11.9 11.9 2.1 -12.6 8.0 13.3 -34.7 23.5 2.9 2.9 Loans and leases 30-89 days past due Noncurrent loans and leases Restructured loans and leases Mortgage-backed securities Earning assets FHLB Advances Unused loan commitments Trust assets Assets securitized and sold Notional amount of derivatives 6,672 13,660 5,556 189,380 2,318,133 83,496 337,843 262,884 21,601 203,286 6,937 13,668 5,487 186,381 2,297,891 89,502 326,187 280,254 20,355 171,765 7,827 12,256 5,698 173,915 2,077,215 94,716 314,900 259,743 17,240 105,446 -14.8 11.5 -2.5 8.9 11.6 -11.8 7.3 1.2 25.3 92.8 (dollar figures in millions) Number of institutions reporting Total employees (full-time equivalent) CONDITION DATA Total assets Loans secured by real estate 1-4 Family residential mortgages Nonfarm nonresidential Construction and development Home equity lines Commercial & industrial loans Loans to individuals Credit cards Farm loans Other loans & leases Less: Unearned income Total loans & leases Less: Reserve for losses* Net loans and leases Securities** Other real estate owned Goodwill and other intangibles All other assets INCOME DATA Total interest income Total interest expense Net interest income Provision for credit 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 First Three Quarters 2020 First Three Quarters 2019 %Change 3rd Quarter 2020 3rd Quarter 2019 %Change 19Q3-20 Q3 $66,298 10,690 55,608 5,762 17,551 45,868 673 3,621 1 18,582 18,546 1,328 8,063 10,484 18,003 $70,498 14,438 56,060 2,065 13,914 44,723 582 4,027 117 19,858 19,849 1,339 9,562 10,287 19,247 -6.0 -26.0 -0.8 179.0 26.1 2.6 15.7 -10.1 N/M -6.4 -6.6 -0.8 -15.7 1.9 -6.5 $21,832 3,017 18,815 1,617 7,029 15,794 343 1,503 0 7,272 7,252 417 2,532 4,720 6,992 $24,055 5,044 19,011 775 5,086 15,150 165 1,409 2 6,929 6,924 576 3,008 3,916 6,785 -9.2 -40.2 -1.0 108.6 38.2 4.3 108.2 6.7 N/M 5.0 4.7 -27.5 -15.8 20.5 3.0 * For institutions that have adopted ASU 2016-13, this item represents the allowance for credit losses on loans and leases held for investment and allocated transfer risk. ** For institutions that have adopted ASU 2016-13, securities are reported net of allowances for credit losses. *** For institutions that have adopted ASU 2016-13, this item represents provisions for credit losses on a consolidated basis; for institutions that have not adopted ASU 2016-13, this item represents the provision for loan and lease losses. **** See Notes to Users for explanation. 18 FDIC QUARTERLY N/M - Not Meaningful QUARTERLY BANKING PROFILE TABLE II-B. Aggregate Condition and Income Data, FDIC-Insured Community Banks Prior Periods Adjusted for Mergers 3rd Quarter 2020 2nd Quarter 2020 3rd Quarter 2019 %Change 19Q3-20 Q3 4,590 390,661 4,589 389,273 4,583 388,456 0.2 0.6 $2,478,392 1,211,065 391,904 481,865 114,262 42,943 346,080 64,237 2,021 51,075 44,900 1,281 1,716,077 21,835 1,694,243 409,632 2,081 17,912 354,524 $2,445,850 1,196,236 388,549 473,015 112,940 43,614 345,641 62,648 1,926 52,086 43,832 1,371 1,699,072 20,752 1,678,320 393,335 2,227 17,643 354,325 $2,137,603 1,157,062 383,763 449,327 107,228 45,110 202,328 63,065 2,187 52,705 38,241 523 1,512,877 17,356 1,495,521 365,685 2,669 16,415 257,313 15.9 4.7 2.1 7.2 6.6 -4.8 71.0 1.9 -7.6 -3.1 17.4 144.9 13.4 25.8 13.3 12.0 -22.0 9.1 37.8 Total liabilities and capital Deposits Domestic office deposits Foreign office deposits Brokered deposits Estimated insured deposits Other borrowed funds Subordinated debt All other liabilities Total equity capital (includes minority interests) Bank equity capital 2,478,392 2,049,529 2,047,170 2,359 60,915 1,445,317 131,838 241 25,099 271,684 271,583 2,445,850 2,013,148 2,010,761 2,387 61,817 1,435,380 140,566 237 25,113 266,784 266,683 2,137,603 1,755,739 1,753,428 2,311 61,984 1,285,824 108,455 261 19,485 253,664 253,579 15.9 16.7 16.8 2.1 -1.7 12.4 21.6 -7.4 28.8 7.1 7.1 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 6,672 13,660 5,556 189,380 2,318,133 83,496 337,843 262,884 21,601 203,286 6,910 13,567 5,632 184,775 2,287,425 89,819 325,233 276,934 20,587 171,333 7,628 12,033 5,723 168,472 1,988,253 87,892 299,733 247,647 17,412 99,908 -12.5 13.5 -2.9 12.4 16.6 -5.0 12.7 6.2 24.1 103.5 (dollar figures in millions) Number of institutions reporting Total employees (full-time equivalent) CONDITION DATA Total assets Loans secured by real estate 1-4 Family residential mortgages Nonfarm nonresidential Construction and development Home equity lines Commercial & industrial loans Loans to individuals Credit cards Farm loans Other loans & leases Less: Unearned income Total loans & leases Less: Reserve for losses* Net loans and leases Securities** Other real estate owned Goodwill and other intangibles All other assets INCOME DATA Total interest income Total interest expense Net interest income Provision for credit 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 First Three Quarters 2020 First Three Quarters 2019 %Change 3rd Quarter 2020 3rd Quarter 2019 %Change 19Q3-20 Q3 $66,298 10,690 55,608 5,762 17,551 45,868 673 3,621 1 18,582 18,546 1,328 8,063 10,484 18,003 $67,061 13,618 53,443 1,958 13,303 42,745 560 3,824 141 18,920 18,907 1,261 9,186 9,721 18,303 -1.1 -21.5 4.1 194.3 31.9 7.3 N/M -5.3 N/M -1.8 -1.9 5.3 -12.2 7.8 -1.6 $21,832 3,017 18,815 1,617 7,029 15,794 343 1,503 0 7,272 7,252 417 2,532 4,720 6,992 $22,953 4,775 18,178 747 4,881 14,529 152 1,340 3 6,599 6,592 536 2,887 3,705 6,465 -4.9 -36.8 3.5 116.6 44.0 8.7 N/M 12.2 N/M 10.2 10.0 -22.1 -12.3 27.4 8.2 * For institutions that have adopted ASU 2016-13, this item represents the allowance for credit losses on loans and leases held for investment and allocated transfer risk. ** For institutions that have adopted ASU 2016-13, securities are reported net of allowances for credit losses. *** For institutions that have adopted ASU 2016-13, this item represents provisions for credit losses on a consolidated basis; for institutions that have not adopted ASU 2016-13, this item represents the provision for loan and lease losses. **** See Notes to Users for explanation. N/M - Not Meaningful FDIC QUARTERLY 19 2020 • Volume 14 • Number 4 TABLE III-B. Aggregate Condition and Income Data by Geographic Region, FDIC-Insured Community Banks Third Quarter 2020 (dollar figures in millions) Geographic Regions* All Community Banks New York Atlanta Chicago Kansas City Dallas San Francisco 4,590 390,661 508 78,806 520 42,940 1,007 81,626 1,246 70,185 1,024 83,470 285 33,634 $2,478,392 1,211,065 391,904 481,865 114,262 42,943 346,080 64,237 2,021 51,075 44,900 1,281 1,716,077 21,835 1,694,243 409,632 2,081 17,912 354,524 $622,956 352,548 134,960 130,639 25,953 13,000 77,824 15,906 422 587 9,195 224 455,835 5,408 450,427 86,279 325 5,137 80,788 $262,857 128,192 38,880 58,512 14,378 5,807 38,270 6,043 100 1,423 3,549 224 177,252 2,223 175,030 44,069 360 1,256 42,143 $458,950 215,165 67,822 82,516 18,048 9,273 65,689 12,545 209 8,284 12,549 132 314,099 3,831 310,268 81,788 398 3,541 62,955 $421,830 187,828 55,228 64,711 17,083 4,829 60,637 11,376 572 28,683 7,336 161 295,699 4,038 291,661 70,640 405 2,679 56,446 $456,815 208,549 67,485 86,559 28,669 4,451 62,648 12,412 326 9,074 7,291 279 299,696 3,891 295,805 85,541 498 2,928 72,043 $254,983 118,784 27,529 58,927 10,131 5,583 41,014 5,955 393 3,024 4,980 260 173,497 2,445 171,052 41,315 96 2,371 40,149 Total liabilities and capital Deposits Domestic office deposits Foreign office deposits Brokered deposits Estimated insured deposits Other borrowed funds Subordinated debt All other liabilities Total equity capital (includes minority interests) Bank equity capital 2,478,392 2,049,529 2,047,170 2,359 60,915 1,445,317 131,838 241 25,099 271,684 271,583 622,956 506,348 505,804 544 21,860 356,602 39,849 133 8,568 68,057 68,029 262,857 218,925 218,912 13 4,168 151,507 13,500 12 2,218 28,202 28,207 458,950 377,392 377,235 157 10,835 281,681 26,742 31 4,221 50,563 50,505 421,830 350,909 350,909 0 11,668 262,061 20,982 11 3,624 46,304 46,303 456,815 385,166 385,166 0 8,003 267,433 17,233 42 3,662 50,712 50,695 254,983 210,789 209,144 1,645 4,382 126,033 13,532 11 2,806 27,846 27,845 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 6,672 13,660 5,556 189,380 2,318,133 83,496 337,843 262,884 21,601 203,286 1,704 3,841 1,757 48,554 583,693 28,387 88,339 57,407 7,843 61,319 698 1,270 480 20,346 245,246 7,510 30,235 8,185 104 23,643 1,127 2,519 1,349 34,219 429,446 17,806 63,255 57,783 5,288 48,652 1,113 2,290 886 27,612 395,133 14,060 62,759 90,840 4,424 35,840 1,578 2,841 725 33,908 425,839 9,767 54,191 31,333 3,751 20,417 452 899 360 24,740 238,776 5,965 39,063 17,336 191 13,415 $21,832 3,017 18,815 1,617 7,029 15,794 343 1,503 0 7,272 7,252 417 2,532 4,720 6,992 $5,236 864 4,373 426 1,288 3,606 147 380 0 1,395 1,394 90 312 1,082 1,283 $2,309 292 2,018 212 664 1,718 40 143 0 649 644 49 130 514 616 $3,974 547 3,427 301 1,872 3,112 30 344 0 1,572 1,568 76 646 922 1,546 $3,885 566 3,319 248 1,347 2,730 48 238 0 1,498 1,498 79 632 866 1,455 $4,243 539 3,704 274 1,305 3,104 59 212 0 1,477 1,468 90 566 902 1,427 $2,184 209 1,975 155 553 1,524 18 187 0 680 680 33 247 433 665 Number of institutions reporting Total employees (full-time equivalent) CONDITION DATA Total assets Loans secured by real estate 1-4 Family residential mortgages Nonfarm nonresidential Construction and development Home equity lines Commercial & industrial loans Loans to individuals Credit cards Farm loans Other loans & leases Less: Unearned income Total loans & leases Less: Reserve for losses** Net loans and leases Securities*** Other real estate owned Goodwill and other intangibles All other assets INCOME DATA Total interest income Total interest expense Net interest income Provision for credit losses**** Total noninterest income Total noninterest expense Securities gains (losses) Applicable income taxes Extraordinary gains, net***** Total net income (includes minority interests) Bank net income Net charge-offs Cash dividends Retained earnings Net operating income * See Table V-A for explanation. ** For institutions that have adopted ASU 2016-13, this item represents the allowance for credit losses on loans and leases held for investment and allocated transfer risk. *** For institutions that have adopted ASU 2016-13, securities are reported net of allowances for credit losses. **** For institutions that have adopted ASU 2016-13, this item represents provisions for credit losses on a consolidated basis; for institutions that have not adopted ASU 2016-13, this item represents the provision for loan and lease losses. ***** See Notes to Users for explanation. 20 FDIC QUARTERLY QUARTERLY BANKING PROFILE Table IV-B. Third Quarter 2020, FDIC-Insured Community Banks All Community Banks Performance ratios (annualized, %) Yield on earning assets Cost of funding earning assets Net interest margin Noninterest income to assets Noninterest expense to assets Loan and lease loss provision to assets Net operating income to assets Pretax return on assets Return on assets Return on equity Net charge-offs to loans and leases Loan and lease loss provision to net charge-offs Efficiency ratio Net interest income to operating revenue % of unprofitable institutions % of institutions with earnings gains 3rd Quarter 2020 3.80 0.53 3.27 1.14 2.57 0.26 1.14 1.43 1.18 10.80 0.10 387.52 60.60 72.80 4.84 48.43 2nd Quarter 2020 4.14 0.63 3.51 1.03 2.63 0.41 1.05 1.35 1.13 10.01 0.13 460.97 60.39 76.04 5.10 53.55 Third Quarter 2020, Geographic Regions* New York 3.63 0.60 3.03 0.84 2.34 0.28 0.83 1.15 0.91 8.28 0.08 473.68 62.89 77.25 6.30 51.18 Atlanta 3.80 0.48 3.32 1.02 2.64 0.33 0.95 1.21 0.99 9.24 0.11 431.79 63.47 75.25 7.31 45.96 Chicago 3.73 0.51 3.22 1.65 2.73 0.26 1.36 1.68 1.38 12.57 0.10 395.76 58.30 64.67 4.57 54.82 Kansas City 3.96 0.58 3.39 1.29 2.61 0.24 1.39 1.66 1.43 13.08 0.11 314.64 58.09 71.12 3.37 48.23 Dallas 4.01 0.51 3.50 1.15 2.73 0.24 1.26 1.48 1.29 11.73 0.12 305.39 61.70 73.95 4.39 41.89 San Francisco 3.68 0.35 3.33 0.87 2.41 0.24 1.05 1.37 1.07 9.88 0.08 465.07 59.72 78.13 6.67 49.82 Dallas 4.33 0.63 3.70 1.03 2.82 0.31 1.18 1.39 1.23 10.83 0.15 319.45 62.76 76.98 3.91 46.97 San Francisco 4.01 0.47 3.53 0.78 2.50 0.39 0.94 1.22 0.97 8.44 0.13 455.16 61.07 80.89 7.02 44.56 Table V-B. First Three Quarters 2020, FDIC-Insured Community Banks All Community Banks Performance ratios (%) Yield on earning assets Cost of funding earning assets Net interest margin Noninterest income to assets Noninterest expense to assets Loan and lease loss provision to assets Net operating income to assets Pretax return on assets Return on assets Return on equity Net charge-offs to loans and leases Loan and lease loss provision to net charge-offs Efficiency ratio Net interest income to operating revenue % of unprofitable institutions % of institutions with earnings gains First Three Quarters 2020 4.09 0.66 3.43 1.01 2.64 0.33 1.04 1.28 1.07 9.46 0.11 433.75 62.14 76.01 4.64 50.63 First Three Quarters 2019 4.63 0.95 3.68 0.85 2.74 0.13 1.18 1.46 1.21 10.43 0.12 154.21 63.53 80.12 3.77 63.91 First Three Quarters 2020, Geographic Regions* New York 3.88 0.76 3.12 0.74 2.42 0.37 0.69 0.88 0.69 6.15 0.09 590.96 65.16 79.69 8.66 36.22 Atlanta 4.11 0.61 3.50 0.93 2.75 0.38 0.87 1.11 0.92 8.21 0.09 620.97 64.95 77.76 8.08 44.42 Chicago 4.01 0.64 3.36 1.43 2.77 0.28 1.25 1.55 1.28 11.32 0.10 406.74 60.14 68.74 4.47 57.40 Kansas City 4.30 0.71 3.59 1.12 2.66 0.28 1.33 1.58 1.37 12.22 0.12 332.27 59.00 74.94 1.77 58.03 * See Table V-A for explanation. FDIC QUARTERLY 21 2020 • Volume 14 • Number 4 Table VI-B. Loan Performance, FDIC-Insured Community Banks Geographic Regions* September 30, 2020 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 0.37 0.39 0.28 0.16 0.39 0.51 0.32 1.18 1.40 1.17 0.38 0.39 0.33 0.31 0.31 0.20 0.46 0.38 0.41 1.18 0.97 1.18 0.32 0.37 0.40 0.36 0.26 0.19 0.36 0.67 0.27 1.16 1.40 1.16 0.14 0.39 0.38 0.39 0.30 0.13 0.36 0.57 0.27 0.60 1.03 0.59 0.29 0.36 0.36 0.45 0.27 0.17 0.36 0.47 0.32 0.74 2.24 0.66 0.44 0.38 0.47 0.42 0.31 0.14 0.47 0.72 0.35 2.31 0.64 2.36 0.50 0.53 0.23 0.44 0.17 0.05 0.26 0.33 0.24 0.94 1.48 0.90 0.26 0.26 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 0.84 0.66 0.76 0.29 0.58 1.00 0.65 0.54 0.59 0.54 0.92 0.80 0.90 0.84 0.89 0.25 0.68 1.15 0.70 0.46 0.74 0.46 0.39 0.84 0.77 0.62 0.65 0.31 0.46 0.99 0.59 0.57 0.35 0.57 0.53 0.72 0.89 0.68 0.88 0.43 0.51 0.96 0.66 0.32 0.30 0.32 0.61 0.80 0.79 0.56 0.71 0.33 0.26 0.57 0.55 0.34 0.89 0.31 1.20 0.77 0.96 0.54 0.79 0.22 0.50 1.29 0.83 1.09 0.34 1.11 1.09 0.95 0.50 0.66 0.39 0.18 0.92 0.47 0.49 0.41 0.44 0.41 1.03 0.52 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 0.04 0.03 0.06 0.00 0.02 0.02 0.25 0.75 5.40 0.60 0.18 0.11 0.04 0.04 0.08 0.00 0.03 0.02 0.15 0.76 4.46 0.66 0.13 0.09 0.00 0.00 0.00 0.00 0.01 0.00 0.31 0.70 1.46 0.68 0.30 0.09 0.05 0.04 0.08 0.02 0.01 0.02 0.25 0.30 1.71 0.27 0.15 0.10 0.06 0.06 0.11 0.00 0.02 0.01 0.16 0.88 12.24 0.26 0.16 0.12 0.04 0.02 0.06 0.01 0.06 0.04 0.35 0.96 1.31 0.95 0.21 0.15 0.01 0.05 0.01 0.00 -0.01 0.00 0.34 1.08 2.39 0.98 0.28 0.13 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 $1,211.1 114.3 481.9 104.0 42.9 391.9 346.1 64.2 2.0 62.2 96.0 1,717.4 $352.5 26.0 130.6 45.8 13.0 135.0 77.8 15.9 0.4 15.5 9.8 456.1 $128.2 14.4 58.5 6.2 5.8 38.9 38.3 6.0 0.1 5.9 5.0 177.5 $215.2 18.0 82.5 19.8 9.3 67.8 65.7 12.5 0.2 12.3 20.8 314.2 $187.8 17.1 64.7 11.9 4.8 55.2 60.6 11.4 0.6 10.8 36.0 295.9 $208.5 28.7 86.6 7.7 4.5 67.5 62.6 12.4 0.3 12.1 16.4 300.0 $118.8 10.1 58.9 12.6 5.6 27.5 41.0 6.0 0.4 5.6 8.0 173.8 Memo: Unfunded Commitments (in millions) Total Unfunded Commitments Construction and development: 1-4 family residential Construction and development: CRE and other Commercial and industrial 337,843 26,268 64,854 115,693 88,339 4,713 19,480 29,820 30,235 3,718 6,672 9,162 63,255 3,237 10,561 24,824 62,759 4,147 9,492 20,619 54,191 7,720 12,397 17,906 39,063 2,733 6,252 13,363 * See Table V-A for explanation. Note: Noncurrent loan rates represent the percentage of loans in each category that are past due 90 days or more or that are in nonaccrual status. 22 FDIC QUARTERLY QUARTERLY BANKING PROFILE INSURANCE FUND INDICATORS Deposit Insurance Fund Increases by $1.8 Billion DIF Reserve Ratio Is Unchanged at 1.30 Percent No Insured Institutions Failed in the Third Quarter During the third quarter, the Deposit Insurance Fund (DIF) balance increased by $1.8 billion to $116.4 billion. Assessment income of $2.0 billion, interest earned on investments of $392 million, and negative provisions for insurance losses of $74 million were the largest sources of the increase. Operating expenses of $451 million and losses on available-forsale securities of $284 million reduced the fund. No insured institutions failed in the third quarter of 2020. The deposit insurance assessment base—average consolidated total assets minus average tangible equity—increased by 1.7 percent in the third quarter and by 16.1 percent over 12 months.1,2 Total estimated insured deposits increased by 1.0 percent in the third quarter of 2020 and by 15.3 percent year over year. The DIF’s reserve ratio (the fund balance as a percent of estimated insured deposits) was 1.30 percent on September 30, 2020, unchanged from the previous quarter. The third quarter reserve ratio is 11 basis points lower than the previous year. The sharp 12-month decline was almost entirely the result of extraordinary insured deposit growth in the first and second quarter of 2020. If the reserve ratio drops below 1.35 percent, the Dodd Frank Act requires that the FDIC has a minimum of eight years to return the reserve ratio to 1.35 percent (or longer if warranted by extraordinary circumstances), reducing the likelihood of a large increase in assessment rates. On September 15, 2020, the Federal Deposit Insurance Corporation (FDIC) Board of Directors (Board) voted to adopt a Restoration Plan to restore the Deposit Insurance Fund (DIF) reserve ratio to at least 1.35 percent within 8 years, as required by the Federal Deposit Insurance Act. Under the Restoration Plan, the FDIC will: (1) monitor deposit balance trends, potential losses, and other factors that affect the reserve ratio; (2) maintain the current schedule of assessment rates for all insured depository institutions (IDIs); and (3) provide updates to its loss and income projections at least semiannually. Author: Kevin Brown Senior Financial Analyst Division of Insurance and Research 1 There are additional adjustments to the assessment base for banker’s banks and custodial banks. for estimated insured deposits and the assessment base include insured branches of foreign banks, in addition to insured commercial banks and savings institutions. 2 Figures FDIC QUARTERLY 23 2020 • Volume 14 • Number 4 Table I-C. Insurance Fund Balances and Selected Indicators Deposit Insurance Fund* (dollar figures in millions) 3rd Quarter 2020 2nd Quarter 2020 1st Quarter 2020 4th Quarter 2019 3rd Quarter 2019 2nd Quarter 2019 1st Quarter 2019 4th Quarter 2018 3rd Quarter 2018 2nd Quarter 2018 1st Quarter 2018 4th Quarter 2017 3rd Quarter 2017 Beginning Fund Balance $114,651 $113,206 $110,347 $108,940 $107,446 $104,870 $102,609 $100,204 $97,588 $95,072 $92,747 $90,506 $87,588 2,047 1,790 1,372 1,272 1,111 1,187 1,369 1,351 2,728 2,598 2,850 2,656 2,568 392 454 507 531 544 535 507 481 433 381 338 305 274 0 451 0 465 0 460 0 460 0 443 0 459 0 434 0 453 0 434 0 445 0 433 0 443 0 404 -74 -47 12 -88 -192 -610 -396 -236 -121 -141 -65 -203 -512 5 2 2 21 4 9 2 2 2 3 1 3 1 -284 1,783 -383 1,445 1,450 2,859 -45 1,407 86 1,494 694 2,576 421 2,261 788 2,405 -234 2,616 -162 2,516 -496 2,325 -481 2,242 -33 2,918 116,434 114,651 113,206 110,347 108,940 107,446 104,870 102,609 100,204 97,588 95,072 92,747 90,506 8.37 6.71 7.95 7.54 8.72 10.10 10.31 10.63 10.72 11.42 11.95 11.53 12.14 1.30 1.30 1.38 1.41 1.41 1.40 1.36 1.36 1.36 1.33 1.30 1.30 1.27 8,926,625 8,836,026 8,178,645 7,825,347 7,741,394 7,692,252 7,696,440 7,522,441 7,375,867 7,353,996 7,333,159 7,154,379 7,099,292 15.31 14.87 6.27 4.03 4.96 4.60 4.95 5.14 3.90 4.35 3.59 3.45 4.16 12,788,773 12,725,363 12,659,406 12,367,954 12,280,904 12,305,817 12,129,503 11,966,478 Changes in Fund Balance: Assessments earned Interest earned on investment securities Realized gain on sale of investments Operating expenses Provision for insurance losses All other income, net of expenses Unrealized gain/(loss) on available-for-sale securities** Total fund balance change Ending Fund Balance Percent change from four quarters earlier Reserve Ratio (%) Estimated Insured Deposits Percent change from four quarters earlier Domestic Deposits Percent change from four quarters earlier 15,714,977 15,562,008 14,350,253 13,262,206 13,020,253 3.79 3.73 3.99 Assessment Base*** Percent change from four quarters earlier 18,463,453 18,153,297 16,483,948 16,156,678 15,904,511 15,684,025 15,561,869 15,452,229 15,229,530 15,113,666 15,068,512 15,001,411 14,834,140 20.70 ` Number of Institutions Reporting 21.68 12.77 4.76 5.27 4.14 3.41 4.37 3.36 16.09 15.74 5.93 4.56 4.43 3.77 3.27 3.01 2.67 2.79 3.06 3.01 3.14 5,042 5,075 5,125 5,186 5,267 5,312 5,371 5,415 5,486 5,551 5,615 5,679 5,747 DIF Reserve Ratios Deposit Insurance Fund Balance and Insured Deposits ($ Millions) Percent of Insured Deposits 1.27 1.30 9/17 12/17 1.30 1.33 3/18 3.83 6/18 1.36 1.36 9/18 12/18 1.36 3/19 1.40 1.41 6/19 1.41 9/19 12/19 1.38 3/20 1.30 6/20 DIF Balance 1.30 9/17 12/17 3/18 6/18 9/18 12/18 3/19 6/19 9/19 12/19 3/20 6/20 9/20 9/20 $90,506 92,747 95,072 97,588 100,204 102,609 104,870 107,446 108,940 110,347 113,206 114,651 116,434 DIF-Insured Deposits $7,099,292 7,154,379 7,333,159 7,353,996 7,375,867 7,522,441 7,696,440 7,692,252 7,741,394 7,825,347 8,178,645 8,836,026 8,926,625 Table II-C. Problem Institutions and Failed Institutions (dollar figures in millions) 2020**** 2019**** Problem Institutions Number of institutions Total assets 2019 2018 56 $53,884 55 $48,779 51 $46,190 60 $48,489 95 $13,939 123 $27,624 183 $46,780 291 $86,712 Failed Institutions Number of institutions Total assets***** 2 $253 1 $37 4 $209 0 $0 8 $5,082 5 $277 8 $6,706 18 $2,914 * Quarterly financial statement results are unaudited. ** Includes unrealized postretirement benefit gain (loss). *** Average consolidated total assets minus tangible equity, with adjustments for banker’s banks and custodial banks. **** Through September 30. ***** Total assets are based on final Call Reports submitted by failed institutions. 24 FDIC QUARTERLY 2017 2016 2015 2014 QUARTERLY BANKING PROFILE Table III-C. Estimated FDIC-Insured Deposits by Type of Institution (dollar figures in millions) September 30, 2020 Commercial Banks and Savings Institutions FDIC-Insured Commercial Banks FDIC-Supervised OCC-Supervised Federal Reserve-Supervised FDIC-Insured Savings Institutions OCC-Supervised FDIC-Supervised Federal Reserve-Supervised Total Commercial Banks and Savings Institutions Other FDIC-Insured Institutions U.S. Branches of Foreign Banks Total FDIC-Insured Institutions Number of Institutions Total Assets Domestic Deposits* Est. Insured Deposits 4,401 2,927 774 700 $19,897,357 3,390,248 13,491,152 3,015,957 $14,586,807 2,739,911 9,649,136 2,197,760 $8,024,078 1,738,115 5,181,694 1,104,269 632 284 312 36 1,322,385 578,850 378,334 365,202 1,083,231 457,078 291,671 334,482 865,217 381,609 223,999 259,609 5,033 21,219,742 15,670,039 8,889,295 9 95,661 44,938 37,329 5,042 21,315,403 15,714,977 8,926,625 * 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, 2020 (dollar figures in billions) Annual Rate in Basis Points* Number of Institutions Percent of Total Institutions Amount of Assessment Base Percent of Total Assessment Base 1.50 - 3.00 2,929 57.71 $3,243.4 17.87 3.01 - 6.00 1,425 28.08 12,331.3 67.93 6.01 - 10.00 579 11.41 2,371.0 13.06 10.01 - 15.00 72 1.42 177.0 0.97 15.01 - 20.00 66 1.30 30.4 0.17 20.01 - 25.00 1 0.02 0.0 0.00 > 25.00 3 0.06 0.3 0.00 * Beginning in the second quarter of 2011, the assessment base was changed to average consolidated total assets minus tangible equity, as required by the Dodd-Frank Act. FDIC QUARTERLY 25 2020 • Volume 14 • Number 4 Notes to Users This publication contains financial data and other information for depository institutions insured by the Federal Deposit Insurance Corporation (FDIC). These notes are an integral part of this publication and provide information regarding the comparability of source data and reporting differences over time. Tables I-A through VIII-A. The information presented in Tables I-A through VIII-A of the FDIC Quarterly Banking Profile is aggregated for all FDIC-insured Call Report filers, both commercial banks and savings 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. and reached 87 in 2016. The maximum level of deposits for any one office is $1.25 billion in deposits in 1985 and reached $6.97 billion in deposits in 2016. 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 quarterly and below which the limits on banking activities and geographic scope are waived. The asset-size limit is $250 million in 1985 and reached $1.39 billion in 2016. This final step acknowledges the fact that most of those small banks that are not excluded as specialty banks meet the requirements for banking activities and geographic limits in any event. Summary of FDIC Research Definition of Community Banking Organizations Community banks are designated at the level of the banking organization. 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://www.fdic.gov/regulations/resources/cbi/report/cbi-full.pdf. (All charters under designated holding companies are considered community banking charters.) The determination of which insured institutions are considered community banks is based on five steps. — Foreign Assets ≥ 10% of total assets The first step in defining a community bank is to aggregate all charter-level data reported under each holding company into a single banking organization. This aggregation applies both to balance-sheet measures and the number and location of banking offices. Under the FDIC definition, if the banking organization is designated as a community bank, every charter reporting under that organization is also considered a community bank when working with data at the charter level. The second step is to exclude any banking organization where more than 50 percent of total assets are held in certain specialty banking charters, including: credit card specialists, consumer nonbank banks, industrial loan companies, trust companies, bankers’ banks, and banks holding 10 percent or more of total assets in foreign offices. Once the specialty organizations are removed, the third step involves including organizations that engage in basic banking activities as measured by the total loans-to-assets ratio (greater than 33 percent) and the ratio of core deposits to assets (greater than 50 percent). Core deposits are defined as non-brokered deposits in domestic offices. Analysis of the underlying data shows that these thresholds establish meaningful levels of basic lending and deposit gathering and still allow for a degree of diversity in how individual banks construct their balance sheets. The fourth step includes organizations that operate within a limited geographic scope. This limitation of scope is used as a proxy measure for a bank’s relationship approach to banking. Banks that operate within a limited market area have more ease in managing relationships at a personal level. Under this step, four criteria are applied to each banking organization. They include both a minimum and maximum number of total banking offices, a maximum level of deposits for any one office, and location-based criteria. The limits on the number of and deposits per office are adjusted upward quarterly. For banking offices, banks must have more than one office, and the maximum number of offices is 40 in 1985 26 FDIC QUARTERLY Exclude: Any organization with: — No loans or no core deposits — More than 50% of assets in certain specialty banks, including: • credit card specialists • consumer nonbank banks1 • industrial loan companies • trust companies • bankers’ banks Include: All remaining banking organizations with: — Total assets < indexed size threshold 2 — Total assets ≥ indexed size threshold, where: • Loan to assets > 33% • Core deposits to assets > 50% • More than 1 office but no more than the indexed maximum number of offices.3 • Number of large MSAs with offices ≤ 2 • Number of states with offices ≤ 3 • No single office with deposits > indexed maximum branch deposit size.4 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 institutions, estimated FDIC-insured deposits, as well as assessment rate information. Depository insti- 1 Consumer nonbank banks are financial institutions with limited charters that can make commercial loans or take deposits, but not both. 2 Asset size threshold indexed to equal $250 million in 1985 and $1.39 billion in 2016. 3 Maximum 4 Maximum number of offices indexed to equal 40 in 1985 and 87 in 2016. branch deposit size indexed to equal $1.25 billion in 1985 and $6.97 billion in 2016. QUARTERLY BANKING PROFILE tutions 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. 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 (TFR) 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, c ertain 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 f ilers began filing Call Reports effective with the quarter ending March 31, 2012.) All condition and performance ratios represent weighted averages, which is the sum of the individual numerator values divided by the sum of individual denominator values. All asset and liability figures used in calculating performance ratios represent average amounts for the period (beginning-of-period amount plus endof-period amount plus any interim periods, divided by the total number of periods). For “pooling-of-interest” mergers, the assets of the acquired institution(s) are included in average assets, since the year-to-date income includes the results of all merged institutions. No adjustments are made for “purchase accounting” mergers. Growth rates represent the percentage change over a 12-month period in totals for institutions in the base period to totals for institutions in the current period. For the community bank subgroup, growth rates will reflect changes over time in the number and identities of institutions designated as community banks, as well as changes in the assets and liabilities, and income and expenses of group members. Unless indicated otherwise, growth rates are not adjusted for mergers or other changes in the composition of the community bank subgroup. When community bank growth rates are adjusted for mergers, prior period balances used in the calculations represent totals for the current group of community bank reporters, plus prior period amounts for any institutions that were subsequently merged into current community banks. 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; institutions can move their home offices between regions, savings institutions can convert to commercial banks, or commercial banks may convert to savings institutions. ACCOUNTING CHANGES Financial accounting pronouncements by the Financial Accounting Standards Board (FASB) can result in changes in an individual bank’s accounting policies and in the Call Reports they submit. Such accounting changes can affect the aggregate amounts presented in the QBP for the current period and the period-to-period comparability of such financial data. The current quarter’s Financial Institution Letter (FIL) and related Call Report supplemental instructions can provide additional explanation to the QBP reader beyond any material accounting changes discussed in the QBP analysis. https://www.fdic.gov/news/financial-institution-letters//2020/ fil20097.html https://www.fdic.gov/regulations/resources/call/call.html Further information on changes in financial statement presentation, income recognition and disclosure is available from the FASB. http://www.fasb.org/jsp/FASB/Page/ LandingPage&cid=1175805317350. DEFINITIONS (in alphabetical order) All other assets – total cash, balances due from depository insti- tutions, 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 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 deposits in banks’ domestic offices with certain adjustments. Assessment rate schedule – Initial base assessment rates for small institutions are based on a combination of financial ratios and CAMELS component ratings. Initial rates for large institutions— generally those with at least $10 billion in assets—are also based on CAMELS component ratings and certain 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). The FDIC may take additional information into account to make a limited adjustment to a large institution’s scorecard results, which are used to determine a large institution’s initial base assessment rate. While risk categories for small institutions (except new institutions) were eliminated effective July 1, 2016, initial rates for small institutions are subject to minimums and maximums based on an institution’s CAMELS composite rating. (Risk categories for large institutions were eliminated in 2011.) The current assessment rate schedule became effective July 1, 2016. Under the current schedule, initial base assessment rates range from 3 to 30 basis points. An institution’s total base assessment rate FDIC QUARTERLY 27 2020 • Volume 14 • Number 4 may differ from its initial rate due to three possible adjustments: (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 3 basis points would have a maximum unsecured debt adjustment of 1.5 basis points and could not have a total base assessment rate lower than 1.5 basis points. (2) Depository Institution Debt Adjustment: For institutions that hold long-term unsecured debt issued by another insured depository institution, a 50 basis point charge is applied to the amount of such debt held in excess of 3 percent of an institution’s Tier 1 capital. (3) Brokered Deposit Adjustment: Rates for 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. The assessment rate schedule effective July 1, 2016, is shown in the following table: Construction and development loans – includes loans for all roperty types under construction, as well as loans for land acquisip tion and development. Core capital – common equity capital plus noncumulative perpet- ual preferred stock plus minority interest in consolidated subsidiaries, less goodwill and other ineligible intangible assets. The amount of eligible intangibles (including servicing rights) included in core capital is limited in accordance with supervisory capital regulations. Cost of funding earning assets – total interest expense paid on Total Base Assessment Rates* Established Small Banks 1 or 2 3 4 or 5 Large and Highly Complex Institutions** Initial Base Assessment Rate 3 to 16 6 to 30 16 to 30 3 to 30 Unsecured Debt Adjustment -5 to 0 -5 to 0 -5 to 0 -5 to 0 Brokered Deposit Adjustment N/A N/A N/A 0 to 10 Total Base Assessment Rate 1.5 to 16 3 to 30 11 to 30 1.5 to 40 CAMELS Composite * 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. ** Effective July 1, 2016, large institutions are also subject to temporary assessment surcharges in order to raise the reserve ratio from 1.15 percent to 1.35 percent. The surcharges amount to 4.5 basis points of a large institution’s assessment base (after making certain adjustments). 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. Assets securitized and sold – total outstanding principal bal- ance 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 non cumulative preferred stock issued by publicly-traded banks are reflected as well in “Surplus.” Warrants to purchase common stock or noncumulative preferred stock of not-publicly-traded bank stock are classified in a bank’s balance sheet as “Other liabilities.” Common equity Tier 1 capital ratio – ratio of common equity Tier 1 capital to risk-weighted assets. Common equity Tier 1 capital includes common stock instruments and related surplus, retained earnings, accumulated other comprehensive income (AOCI), and 28 FDIC QUARTERLY limited amounts of common equity Tier 1 minority interest, minus applicable regulatory adjustments and deductions. Items that are fully deducted from common equity Tier 1 capital include goodwill, other intangible assets (excluding mortgage servicing assets) and certain deferred tax assets; items that are subject to limits in common equity Tier 1 capital include mortgage servicing assets, eligible deferred tax assets, and certain significant investments. Beginning March 2020, this ratio does not include institutions that have a Community Bank Leverage Ratio election in effect at the report date. deposits and other borrowed money as a percentage of average earning assets. Credit enhancements – techniques whereby a company attempts to reduce the credit risk of its obligations. Credit enhancement may be provided by a third party (external credit enhancement) or by the originator (internal credit enhancement), and more than one type of enhancement may be associated with a given issuance. Deposit Insurance Fund (DIF) – the Bank (BIF) and Savings Association (SAIF) Insurance Funds were merged in 2006 by the Federal Deposit Insurance Reform Act to form the DIF. Derivatives notional amount – the notional, or contractual, amounts of derivatives represent the level of involvement in the types of derivatives transactions and are not a quantification of market risk or credit risk. Notional amounts represent the amounts used to calculate contractual cash flows to be exchanged. Derivatives credit equivalent amount – the fair value of the derivative plus an additional amount for potential future c redit exposure based on the notional amount, the remaining maturity and type of the contract. Derivatives transaction types: Futures and forward contracts – contracts in which the buyer agrees to purchase and the seller agrees to sell, at a specified future date, a specific quantity of an underlying variable or index at a specified price or yield. These contracts exist for a variety of variables or indices, (traditional agricultural or physical commodities, as well as currencies and interest rates). Futures contracts are standardized and are traded on organized exchanges which set limits on counterparty credit exposure. Forward contracts do not have standardized terms and are traded over the counter. Option contracts – contracts in which the buyer acquires the right to buy from or sell to another party some specified amount of an underlying variable or index at a stated price (strike price) during a period or on a specified future date, in return for compensation (such as a fee or premium). The seller is obligated to purchase or sell the variable or index at the discretion of the buyer of the contract. Swaps – obligations between two parties to exchange a series of cash flows at periodic intervals (settlement dates), for a QUARTERLY BANKING PROFILE pecified period. The cash flows of a swap are either fixed, or s determined for each settlement date by multiplying the quantity (notional principal) of the underlying variable or index by specified reference rates or prices. Except for currency swaps, the notional principal is used to calculate each payment but is not exchanged. Derivatives underlying risk exposure – the potential exposure characterized by the level of banks’ concentration in particular underlying instruments, in general. Exposure can result from market risk, credit risk, and operational risk, as well as, interest rate risk. Domestic deposits to total assets – total domestic office deposits as a percent of total assets on a consolidated basis. Earning assets – all loans and other investments that earn interest or dividend income. Efficiency ratio – Noninterest expense less amortization of intan- gible 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 noninterest-bearing transaction accounts were fully insured, without limit, from December 31, 2010, through December 31, 2012. Failed/assisted institutions – an institution fails when regulators take control of the institution, placing the assets and liabilities into a bridge bank, conservatorship, receivership, or another healthy institution. This action may require the FDIC to provide funds to cover losses. An institution is defined as “assisted” when the institution remains open and receives assistance in order to continue operating. Fair Value – the valuation of various assets and liabilities on the alance sheet—including trading assets and liabilities, availableb for-sale securities, loans held for sale, assets and l iabilities 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 ervicing rights, purchased credit card relationships, and other s identifiable intangible assets. Goodwill is the excess of the purchase price over the fair market value of the net assets acquired, less subsequent impairment adjustments. Other intangible assets are recorded at fair value, less subsequent quarterly amortization and impairment adjustments. Loans secured by real estate – includes home equity loans, junior liens secured by 1-4 family residential properties, and all other loans secured by real estate. Loans to individuals – includes outstanding credit card balances and other secured and unsecured consumer loans. Long-term assets (5+ years) – loans and debt securities with remaining maturities or repricing intervals of over five years. Maximum credit exposure – the maximum contractual credit exposure remaining under recourse arrangements and other sellerprovided credit enhancements provided by the reporting bank to securitizations. Mortgage-backed securities – certificates of participation in pools of residential mortgages and collateralized mortgage obligations issued or guaranteed by government-sponsored or private enter prises. Also, see “Securities,” below. Net charge-offs – total loans and leases charged off (removed from balance sheet because of uncollectability), less amounts recovered on loans and leases previously charged off. Net interest margin – the difference between interest and divi- dends 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 filed a Thrift Financial Report (TFR), the v aluation allowance subtracted also includes allowances for other repossessed assets. Also, for TFR filers the components of other real estate owned are reported gross of valuation allowances. (TFR filers began filing Call Reports effective with the quarter ending March 31, 2012.) Percent of institutions with earnings gains – the percent of institutions that increased their net income (or decreased their losses) compared to the same period a year earlier. FDIC QUARTERLY 29 2020 • Volume 14 • Number 4 “Problem” institutions – federal regulators assign a composite rating to each financial institution, based upon an evaluation of financial and operational criteria. The rating is based on a scale of 1 to 5 in ascending order of supervisory concern. “Problem” institutions are those institutions with financial, operational, or managerial weaknesses that threaten their continued financial viability. Depending upon the degree of risk and supervisory concern, they are rated either a “4” or “5.” The number and assets of “problem” institutions are based on FDIC composite ratings. Prior to March 31, 2008, for institutions whose primary federal regulator was the OTS, the OTS composite rating was used. Recourse – an arrangement in which a bank retains, in form or in substance, any credit risk directly or indirectly associated with an asset it has sold (in accordance with generally accepted accounting principles) that exceeds a pro rata share of the bank’s claim on the asset. If a bank has no claim on an asset it has sold, then the retention of any credit risk is recourse. Reserves for losses – the allowance for loan and lease losses on a consolidated basis. Restructured loans and leases – loan and lease financing receivables with terms restructured from the original contract. Excludes restructured loans and leases that are not in compliance with the modified terms. Retained earnings – net income less cash dividends on common and preferred stock for the reporting period. Return on assets – bank net income (including gains or losses on securities and extraordinary items) as a percentage of average total (consolidated) assets. The basic yardstick of bank profitability. Return on equity – bank net income (including gains or losses on securities and extraordinary items) as a percentage of average total equity capital. Risk-weighted assets – assets adjusted for risk-based capital definitions which include on-balance-sheet as well as off-balancesheet items multiplied by risk-weights that range from zero to 200 percent. A conversion factor is used to assign a balance sheet equivalent amount for selected off-balance-sheet accounts. Securities – excludes securities held in trading accounts. Banks’ securities portfolios consist of securities designated as “held-tomaturity” (reported at amortized cost (book value)), securities designated as “available-for-sale” (reported at fair (market) value), and equity s ecurities with readily determinable fair values not held for trading. Securities gains (losses) – realized gains (losses) on held-to- maturity and available-for-sale securities, before adjustments for income taxes. Thrift Financial Report (TFR) filers also include gains (losses) on the sales of assets held for sale. (TFR filers began filing Call Reports effective with the quarter ending March 31, 2012.) Seller’s interest in institution’s own securitizations – the reporting bank’s ownership interest in loans and other assets that have been securitized, except an interest that is a form of recourse or other seller-provided credit enhancement. Seller’s interests differ from the securities issued to investors by the securitization structure. The principal amount of a seller’s interest is generally equal to the total principal amount of the pool of assets included in the securitization structure less the principal amount of those 30 FDIC QUARTERLY 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 (https:// home.treasury.gov/policy-issues/small-business-programs/ small-business-lending-fund). Under the SBLF Program, the Treasury Department purchased noncumulative perpetual preferred stock from qualifying depository institutions and holding companies (other than Subchapter S and mutual institutions). When this stock has been issued by a depository institution, it is reported as “Perpetual preferred stock and related surplus.” For regulatory capital purposes, this noncumulative perpetual preferred stock qualifies as a component of Tier 1 capital. Qualifying Subchapter S corporations and mutual institutions issue unsecured subordinated debentures to the Treasury Department through the SBLF. Depository institutions that issued these 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 and 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. THE IMPORTANCE OF COMMUNITY BANKS IN PAYCHECK PROTECTION PROGRAM LENDING Community banks play an important role providing financial services to local customers and small businesses.1 Despite their relatively small size and share of banking industry assets, community banks have consistently demonstrated an ability to serve their customers. Even before the COVID-19 pandemic, community banks held an outsized share of small business loans.2 At year-end 2019, community banks held about 25 percent of small business loans, well above their share of 15 percent of total banking industry loans. Community bank participation in the U.S. Small Business Administration’s Paycheck Protection Program (PPP) was also proportionately larger than their size in the banking industry. Other published analyses have discussed PPP activity in aggregate and by institution size. This article focuses on contributions of community banks to the PPP and explores how factors such as community bank location, specialty, and size affected participation. What Is the Paycheck Protection Program? The Paycheck Protection Program (PPP) was created through Section 1102 of the Coronavirus Aid, Relief, and Emergency Services Act (CARES Act). This program—which is administered by the U.S. Small Business Administration (SBA) with support from the U.S. Department of the Treasury—made $659 billion available to small businesses in potentially forgivable loans to pay up to 24 weeks of eligible employee salaries, payroll costs, and benefits as well as other qualified expenses, such as mortgage interest, rent, and utilities. The bank forgives 100 percent of the loan if 60 percent of the funds were used for those purposes. The SBA guarantees the loans and pays banks for the forgiven loans and accrued interest as prescribed in Section 1106 of the CARES Act. Applications for PPP loans were accepted from April 3, 2020, through August 8, 2020, and more than $525 billion in loans were originated. The loans had a $10 million limit, a 1 percent interest rate, and a term of two years, or a term of up to five years for loans made on June 5, 2020, and after. Lenders received an origination fee of 1 to 5 percent, depending upon the size of the loan. The SBA began accepting applications for loan forgiveness on August 10, 2020. Community Banks Were Active Participants in the PPP Banks hold the vast majority of the $525 billion in PPP loans made by banks and nonbanks. Community banks’ participation in the PPP outpaced noncommunity banks. As of June 30, 2020, banks held $482 billion, or 92 percent of total PPP loans. Community banks held $148 billion—28 percent of total PPP loans and 31 percent of PPP loans held by banks.3 This share is significant, as community banks held 12 percent of total industry assets and 15 percent of total industry loans as of June 30, 2020 (Chart 1). PPP loan origination contributed to total quarterly loan growth at community banks, which outpaced quarterly loan growth in the banking industry in second quarter 2020. Industry loan growth between first and second quarter 2020 was $34 billion, or 0.3 percent (Chart 2). The banking industry’s commercial and industrial (C&I) loans, where most PPP loans were categorized, grew 6 percent quarter over quarter.4 Community banks, however, reported a quarterly loan growth rate of 10 percent in second quarter 2020 and a quarterly C&I loan growth rate of 63 percent in second quarter 2020. 1 In this article, the term community banks refers to those institutions that meet the definition created in the FDIC 2012 Community Bank Study (https://www.fdic.gov/regulations/resources/cbi/study.html). 2 In this article, small business loans are commercial and industrial (C&I) loans with original amounts of $1 million or less. 3 Banks began reporting participation in the PPP starting with second quarter 2020 Consolidated Reports of Condition and Income (Call Reports). The instructions for the line item for the outstanding balance of PPP loans state “held for investment and held for sale” rather than “originated.” This line item does not report the amount of loans originated, but PPP loans reported by banks are assumed to have originated or been purchased by those banks. 4 PPP loans are presumed to be predominantly C&I loans because of the lack of collateral and the loan purposes prescribed by the program. FDIC QUARTERLY 31 2020 • Volume 14 • Number 4 Chart 1 Community Banks Hold a Disproportionately High Share of PPP Loans Share of Industry Loan Balances Total Loans Percent 90 Commercial and Industrial Loans PPP Loans 87% 85% 75 69% 60 45 31% 30 15% 15 13% 0 Community Banks (4,624 Banks) Noncommunity Banks (442 Banks) Source: FDIC. Note: Not all banks in the count displayed hold Paycheck Protection Program (PPP) loans: 83 percent of the 4,624 community banks and 73 percent of the 442 noncommunity banks hold PPP loans. Data as of June 30, 2020. Chart 2 Community Banks Reported Much Larger Total Loan Growth and C&I Loan Growth Than the Industry Overall in Second Quarter 2020 Quarterly Growth Rate Total Loans Percent 70 Commercial and Industrial Loans 63% 60 50 40 30 20 10 0 6% 0.3% Industry 10% Community Banks Source: FDIC. Note: Data as of June 30, 2020. The average PPP loan for noncommunity banks was $112,000, while at community banks the average PPP loan was $103,000. Based on these sizes, the average PPP loan would be reported as a small business loan in the Call Report. In aggregate, as of second quarter 2020, community bank small business loans increased $90 billion (101 percent) year over year to $179 billion, while noncommunity bank small business loans rose $168 billion (60 percent) to $447 billion. 5 In second quarter 2019, one year before the PPP began, community banks held 25 percent of small business loans. As of second quarter 2020, community banks held 29 percent. Therefore, PPP loans boosted community banks’ share of loans to small businesses (Chart 3). 5 The 32 FDIC QUARTERLY growth rate for small C&I loans is annual, as the data were collected from June 30 and December 31 Call Reports. IMPORTANCE OF COMMUNITY BANKS IN PAYCHECK PROTECTION PROGRAM LENDING Chart 3 PPP Loans Boosted Community Banks’ Share of Loans to Small Businesses Community Bank Share 2017 Percent 30 2018 2019 2020 29% 28% 26% 25% 20 10 0 Small Loans to Businesses Source: FDIC. Note: PPP stands for Paycheck Protection Program. Data as of June 30 each year. Community Banks Throughout the United States Participated in PPP PPP loans provide small businesses with funds to pay employees during the slowdown in business or temporary closures related to stay-at-home orders during the pandemic. Regardless of the degree of business closure, community banks in all 50 states provided PPP loans to small businesses. Nearly all 50 states and five territories reported 75 percent or more of their community banks participated in the program, based on outstanding loans as of June 30, 2020 (see map). Nearly All States Reported 75 Percent or More of Their Community Banks Participated in the PPP Percentage of CBs Participating in The PPP >75% < = 75% Source: FDIC. Note: PPP stands for Paycheck Protection Program. Based on the state in which the community bank (CB) is headquartered. Data as of June 30, 2020. FDIC QUARTERLY 33 2020 • Volume 14 • Number 4 Community banks in metropolitan, micropolitan, and rural areas hold PPP loans.6 The share of PPP loans held by community banks in micropolitan areas (63 percent) and rural areas (84 percent) closely matches their share of total loans and C&I loans in those areas. Community banks in metropolitan areas, however, hold a higher share of PPP loans than other loans. Community banks hold 26 percent of total PPP loans in metropolitan areas, well above their 10 percent share of total C&I loans in metropolitan areas (Chart 4). Community banks in metropolitan areas held the vast majority ($110 billion or 74 percent) of PPP loans in community banks nationally, and 85 percent of community banks in metropolitan areas participated in the PPP loan program. Chart 4 Metropolitan Community Banks Hold a Greater Share of PPP Loans Than Their Share of Other Loans Community Bank Share Percent Total Loans 90 Commercial and Industrial Loans 86% 84% PPP Loans 84% 75 63% 60 63% 63% 45 30 15 26% 12% 10% 0 Metro Micro Rural Source: FDIC. Note: PPP stands for Paycheck Protection Program. Numerator is community bank loan balances in area; denominator is all bank loan balances in area. Figures are based on where the bank is headquartered. Data as of June 30, 2020. Commercial Lending Specialists Hold the Most PPP Loans Among all bank lending specialty categories, commercial lenders dominated community bank PPP lending.7 Commercial specialty community banks and agriculture specialty community banks hold a total of $143 billion in PPP loans, or 96 percent of all community bank PPP loans. Most banks (61 percent) that held PPP loans as of second quarter 2020 are commercial specialty banks.8 Commercial specialty noncommunity banks hold 52 percent ($1.4 trillion) of industry C&I loans and 77 percent ($373 billion) of industry PPP loans. Commercial specialty community banks hold 22 percent ($306 billion) of the specialty’s C&I loans, yet hold 36 percent ($133 billion) of the specialty’s PPP loans (Chart 5). The next-largest specialty group holding PPP loans—by the number of banks— is the a griculture specialty group, with 24 percent of banks. Agriculture specialty banks hold 2 percent ($11 billion) of industry PPP loans and hold 1 percent of industry C&I loans.9 Almost all agriculture specialty banks (99 percent) are community banks. Agriculture 6 As defined by the U.S. Census Bureau, metropolitan areas consist of metropolitan statistical areas or counties with more than 50,000 persons; micropolitan areas consist of micropolitan statistical areas or counties with less than 50,000 but more than 10,000 persons. Rural areas are all counties that do not meet either definition. 7 Bank specialties include international, agriculture, credit card, commercial, mortgage, consumer, other less than $1 billion, all other less than $1 billion, and all other greater than $1 billion. Specialties are hierarchical, mutually exclusive, and based on percentage of assets. The percentage varies among specialty definitions. For example, credit card banks have 50 percent of assets in credit card loans, while agriculture banks have agriculture loans equal to or greater than 25 percent of loans. Specialty groups are detailed in the FDIC Quarterly Banking Profile. 8 Commercial specialists are banks that are not international, agriculture, or credit card specialists, and whose commercial and industrial loans, real estate construction and development loans, and loans secured by commercial real estate exceed 25 percent of total assets. 9 Since many farms are small businesses, some PPP loans were made for agricultural production purposes, although the exact dollar amount is not shown in Call Reports. 34 FDIC QUARTERLY IMPORTANCE OF COMMUNITY BANKS IN PAYCHECK PROTECTION PROGRAM LENDING specialty community banks hold 94 percent ($28 billion) of the specialty’s C&I loans and 93 percent ($10 billion) of the specialty’s PPP loans. While community banks in other specialty groups also hold PPP loans and made a disproportionate share of PPP loans given their specialty’s share of industry loan balances, their aggregate total was just $5.5 billion, or 4 percent of the $148 billion total for all community banks. Chart 5 Community Banks Specializing in Commercial Lending Made the Majority of Community Bank PPP Loans Dollars of PPP Loans (Millions) Number of PPP Loans 150,000 1,500,000 $132,939 120,000 Number of Loans 1,158,082 1,200,000 Dollars of Loans 90,000 900,000 60,000 600,000 30,000 $9,928 0 Commercial (2,497 Banks) 200,071 Agriculture (1,191 Banks) 300,000 $5,481 80,238 0 Other (936 Banks) Source: FDIC. Note: Community banks only. Not all banks in the count of banks hold Paycheck Protection Program (PPP) loans. Other includes mortgage, consumer, and other specialty banks. Data as of June 30, 2020. Community Banks of All Sizes Participated in the PPP Community banks, regardless of asset size, participated in the PPP. Not surprisingly, smaller community banks made smaller loans, while larger community banks made larger loans. Average PPP loan sizes ranged from $50,000 to $129,000 (Chart 6). Each size group participated in the PPP at approximately the same rate as their share of total community bank C&I loans. For example, community banks with less than $100 million in assets made 1.1 percent of the dollar volume of the community bank PPP loans. These banks hold approximately 1.5 percent of the total dollar volume of community bank C&I loans. At the other end of the spectrum, community banks with total assets greater than $1 billion hold 59 percent of the total dollar volume of community bank C&I loans and hold 57 percent of the dollar volume of community bank PPP loans. Chart 6 On Average, the Smallest Community Banks Hold the Smallest PPP Loans Average PPP Loan Size by Community Bank Asset Size $ Thousands 150 125 100 Average PPP Loan Size Among Community Banks: $103,000 75 50 25 0 Less Than $100 Million (982 Banks) $100 to $250 Million (1,377 Banks) $250 to $500 Million (1,032 Banks) $500 Million to $1 Billion (676 Banks) Greater Than $1 Billion (557 Banks) Source: FDIC. Note: Community banks only. Not all banks in the count of banks hold Paycheck Protection Program (PPP) loans. Data as of June 30, 2020. FDIC QUARTERLY 35 2020 • Volume 14 • Number 4 Summary While community banks hold a smaller share of industry-wide loans by dollar volume and number than noncommunity banks, their participation in the PPP has been larger than their share of both total loans and C&I loans. Community banks in all states participated in the PPP program, and most states had at least three quarters of community banks holding PPP loans as of June 30, 2020. Community banks headquartered in metropolitan areas drove the participation rates, reporting greater shares of PPP loans than their share of total loans or C&I loans. Commercial and agriculture specialty lenders were the most common participants in the PPP lending program, consistent with the most common borrowers in the program and the number of banks identified in these specialty bank groups. Community banks of all sizes participated in the PPP and each size group participated at approximately the same rate as their share of total community bank C&I loans. The PPP program filled a need for credit at a critical time in our nation’s financial history, and community banks’ participation in this lending was instrumental. Authors: Margaret Hanrahan Chief, Financial Analysis Section Division of Insurance and Research Angela Hinton Senior Financial Analyst Division of Insurance and Research 36 FDIC QUARTERLY
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