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As one of the federal agencies that regulates banks in the United States, the FDIC has a bird’s eye view of how the banks and savings institutions that it insures and supervises are doing. It aggregates the data from the quarterly Call Reports filed by the banks and from other sources in its Quarterly Banking Profile.

The publication starts off with brief summaries of recent developments in the bank sector, such as loan growth and loan charge-off trends. For those who want to delve deeper into the numbers, the summaries are followed by several tables that provide statistics on many aspects of bank operations, including regional breakdowns of loan concentrations, problem and delinquent credits, derivatives, and bank asset servicing/securitization activities. Information concerning the FDIC’s insurance fund and regarding problem and failed institutions in recent years is also provided. The publication ends with definitions of terms specific to banking, such as Earning Assets.

So what did the August edition of the Quarterly Banking Profile say about the industry’s performance in the June period? The report indicated that the industry’s earnings rose over 20% year to year, to $34.5 billion, in the quarter, with nearly 63% of the over 7,200 institutions insured by the FDIC posting higher earnings, for the 12th consecutive period. Just under 11% posted losses.

The report painted a mostly positive picture of banks’ credit quality. Loan losses have declined for eight consecutive periods, to the industry’s lowest level since the March quarter of 2008, driven by sharp reductions in credit card, residential mortgage, and construction loan charge-offs. Noncurrent loan balances fell at 58% of insured banks and savings institutions.

It goes on to say that provisions to the banks’ loan loss reserves fell to the lowest quarterly level in five years in the June interim. The lower provisions helped offset a slight (0.3%) year-to-year decline in net interest revenue in the quarter. Although loans increased 1.4%, led by a 3.6% rise in commercial credits, the average net interest margin contracted 15 basis points year to year, to 3.46%, as the yields on loans and investment securities fell faster than banks’ funding costs. Noninterest revenue contributed to the earnings increase, advancing 2.8% from the like quarter of 2011, aided by gains on loan and securities sales.

Among the sundry trends gleaned from the statistical tables are slight year-to-year and consecutive-quarter increases in the June period in full-time equivalent employees (employees adjusted for part-timers) at banks and savings institutions in spite of the significant workforce reduction initiatives under way at some banks. Elsewhere, the report also mentions that it has been over six quarters since a new bank charter was added, except to absorb a failed bank. The banking business apparently is becoming more concentrated, with fewer players.

The summaries and tables give investors a sense of the substantial impact of the big banks on industry trends, owing to their size. Although the big banks seem to get all the attention, there are many more small banks and savings institutions in the United States than large ones, as the tables indicate. At mid-2012, there were 5,699 insured banks and 887 savings institutions with less than $1 billion of assets in the nation compared with only 523 banks and 137 savings institutions with more than $1 billion of assets.

But the big banks still make a bigger splash when the numbers are expressed in dollars. The report points out that, even though a greater number of banks (54%) increased their loan loss reserves in the June quarter than reduced reserves, the reserve reductions in dollars, mostly at the largest banks, exceeded the reserve increases. 

The numbers provide a lot of other insights into the banking business and the economy. For example, the greater Atlanta region, which includes much of the southeastern United States, an area that was hit hard by the real estate downturn, still had the highest ratio of noncurrent assets to total assets (3.62%) of six broad banking regions in the first half of 2012. The region also had the highest number of failed institutions in the first half. It apparently is taking time for the Southeast to recover from the recession.

In sum, the FDIC’s Quarterly Banking Profile probably provides more information than most bank stock investors need, but it may be worthwhile for those who want to delve deeper to check the Profile from time to time. 

At the time of this article’s writing, the author did not have positions in any of the companies mentioned.