HPS FDIC Quarterly Banking Profile Preview

7/29/2019 HPS FDIC Quarterly Banking Profile Preview

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HPS FDIC QUARTERLY BANKINGPROFILE PREVIEW

February 14, 2013


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Executive Summary

Hamilton Place Strategies | 2

The HPS FDIC Quarterly Banking Profile Preview examines FDIC-regulated entities progress in three keyareas: safety and soundness, performance, and support to the economy. In the Q412, we find:

U.S. commercial banks Tier One Common Capital Ratio was 12.6 percent as U.S. commercial banksincreased common capital levels to $1.13 trillion.

U.S. commercial bank's Net Income decreased slightly quarter-over-quarter to $32.26 billion, but is themost profitable year since the crisis on an annual basis.

U.S. commercial bank's ROAA and ROAE followed the same pattern as Net Income on both aquarterly and annual basis, and ended the year at 1.02 and 9.08, respectively.

U.S. commercial banks Loan-to-Deposit ratio fell to 70.3 percent, in a large part due to the increase indeposits.

U.S. commercial banks topped $10 trillion in deposits, an all-time high. Total bank deposits rose tonear $11 trillion.

Total reserves fell by three percent to $151 million for U.S. commercial banks; while non-performingassets as a percentage of total assets fell to 2.0 percent, a six percent drop.

Total loans and leases reached 7.7 trillion for all U.S. banks, a record high. U.S. banks employed 2.1 million full-time workers. Domestic business loans broke pre-crisis highs as commercial banks held $2.1 trillion.Note: With the 2010 adoption of the Dodd-Frank Act, which mandated that the Office of Thrift Supervision be eliminated as a banking regulator, savings

institutions (thrifts) are now filing call reports instead of thrift financial reports. This means that analysts and other industry observers no longer have to

reconcile two different data sources when examining the universe of FDIC-insured institutions. Please take note of these changes when conducting

analysis using data on savings banks, or a combination of commercial and savings banks.


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Outline


SAFETY AND SOUNDNESS

PERFORMANCE MEASURES

SUPPORTING THE ECONOMY


4/28

The Hamilton Financial Index Is 28% Above Pre-Crisis Norms

Hamilton Place Strategies | 4Source: HPS Insight, SNL Financial, FDIC, St. Louis Federal Reserve


0.4

0.5

0.6

0.7

0.8

0.9

1.0

1.1

1.2

1.3

Index

+28%

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

The Hamilton Financial Index

Index Value

Pre-Crisis Norms


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Tier 1 Common Capital And Tier 1 CommonCapital Ratio for Commercial and Savings Banks

Tier 1 Common Capital Ratio Is 12.6% For U.S.Commercial Banks

Hamilton Place Strategies | 5Source: FDIC, SNL Financial

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1.0

1.1

1.2

1.3

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

Tier1CommonCapital($

T)

+37%

2012

Tier1

CommonRisk-BasedRatio(%)

2011

2010

2009

2008

2007

2006

2005

2004

2003

Savings Banks

Commercial Banks

Savings Banks

Commercial Banks


Tier 1 Common Capital Tier 1 Common Capital Ratio


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Equity-To-Assets Is 11.1% In Q412 ForCommercial Banks, Slightly Down From 11.3%


0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1.0

1.1

1.2

1.3

1.4

1.5

1.6

1.7

7

8

9

10

11

12

13

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

+19%

Equity/Assets(%)B

ankEquity($T)

Savings Banks

Commercial BanksCommercial Banks

Savings Banks

Total Equity and Equity/Assets for Commercialand Savings Banks


Total Equity Equity/Assets


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U.S. Commercial Banks Risk-Weighted Assets FellTo 67.3% As A Percent Of Total Assets In Q412


50

55

60

65

70

75

80

2011

2010

2009

2007

2008

2005

2004

2006

Risk-

WeightedAssets/TotalAssets(%)

-14%

2003

2012

Savings Banks

Commercial BanksCommercial and Savings Banks Risk-WeightedAssets as a Percent of Total Assets


Source: FDIC, SNL Financial

Risk-Weighted Assets as a Percent of Total Assets


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By A Simpler Measure, Bank Capital Levels Are Up33 Percent Since 2008


5

6

7

8

9

10

11

2009

2012

2011

2010

+33%

2008

2007

2006

2005

2004

2003

Tan

gibleEquity/TangibleAssets(%)

Savings Banks

Commercial BanksTangible Equity to Tangible Assets for Commercial andSavings Banks


Tangible Equity to Tangible Assets


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Commercial Banks Loan-To-Deposit RatiosContinued To Fall In Q412


60

65

70

75

80

85

90

95

100

-23%

Percent(%)

2011

2012

2003

2009

2010

2007

2008

2006

2005

2004

Commercial Banks

Savings Banks

Commercial and Savings Banks Loans-to-DepositsRatio


Loans/Deposits (%)


10/28

Commercial Banks Increased Their Liquidity RatioTo 35.2% In Q412


14

16

18

20

22

24

26

28

30

32

34

36

LiquidityRatio(%)

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

+13%

Commercial Banks

Savings Banks

Liquidity Ratio for Commercial and SavingsBanks


Liquidity Ratio


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Outline






12/28

0

2

4

6

8

10

12

14

16

Savings Banks

Commercial Banks

Commercial Bank Assets Rose To $13.4 Trillion InQ412


2012

2011

2010

TotalAssets($T)

2009

2008

2007

2006

2005

2004

2003

Total Assets for Commercial and Savings Banks


Total Assets


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Total Deposits for Commercial and Deposit Banks

Total U.S. Commercial Bank Deposits Topped $10Trillion In Q412


0

1

2

3

4

5

6

7

8

9

10

11

TotalDeposits($T)

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

Savings BanksCommercial Banks


Total Deposits


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Commercial Bank Net Income Was $32.2 Billion InQ412


-30

-25

-20

-15

-10

-5

0

5

10

15

20

25

30

35

40

-12

-10

-8

-6

-4

-2

0

2

4

6

8

10

12

14

16

2005

2006

2008

NetIncome($B)

ROAAandROAE(%)

2007

2012

2011

2004

2010

2009

2003

ROAE (%)

Net Income ($B)ROAA (%)Commercial Banks ROAA, ROAE, Net Income


Commercial Banks


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Savings Banks Net Income Dipped Slightly To$2.8 Billion In Q412


-1.0

-0.5

0.0

0.5

1.0

1.5

2.0

2.5

3.0

-9

-6

-3

0

3

6

9

12

15

18

21

24

27

2005

NetIncome($B)

ROAAandROAE(%)

2012

2011

2003

2004

2007

2010

2009

2008

2006

ROAA, ROAE and Net Income for Savings Banks

ROAE (%)

Net Income ($B)ROAA (%)


Savings Banks


16/28

Led By A Steep Drop In Noncurrent Real EstateLoans, Total NCLs Fell 6% In Q412 To $254 Billion


0

50

100

150

200

250

300

350

400

0

1

2

3

4

5

6

7

8

9

2003

2010

2006

2007

To

talNoncurrentLoans($B)

Percent(%)

-36%

-23%

2011

2012

2004

2005

-65%

2009

2008

Total Noncurrent Loans (%)

Total Noncurrent Loans ($B)Noncurrent Non-RE Loans (%)

Noncurrent Real Estate Loans (%)Noncurrent Loans for Commercial Banks


Commercial Banks


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Noncurrent Loans Fell Under $22 Billion In Q412For Savings Banks


0

2

4

6

8

10

12

14

16

18

20

22

24

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

2007

2004

2010

2005

2008

2009

NoncurrentLoans($B)

Percent(%)

2011

2012

2003

2006

Total Loans & Leases (%)Total Noncurrent Loans ($B)Noncurrent Non-RE Loans (%)

Noncurrent Real Estate Loans (%)Noncurrent Loans for Savings Banks


Savings Banks


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NPAs Continue To Fall As A Percent Of TotalAssets For Commercial Banks In Q412


3.0

1.5

2.0

2.5

1.0

0.5

0.0

Percent(%)

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

-28%

Commercial Banks

Savings Banks

Non-Performing Assets as a Percent of TotalAssets For Commercial and Savings Banks

Non-Performing Assets/Total Assets



19/28

Commercial Bank Reserves Fell 3% In Q412 To$151 Million


220

20

180

140

40

120

0

80

260

240

160

60

200

100

2012

2008

2009

2010

2007

2006

2005

2004

2003

Dollars($M)

2011

Commercial Banks

Savings Banks

Total Reserves for Commercial and Savings Banks

Total Reserves



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Commercial Banks Net Chargeoffs Totaled $17Billion In Q412


0

5

10

15

20

25

30

35

40

45

50

55

0

1

2

3

4

5

2012Q4

2012Q1

2011Q1

2010Q1

2009Q1

2008Q1

2007Q1

2006Q1

2005Q1

2004Q1

2003Q1

Percent(%) Do

llars($B)

Net Chargeoffs/ Avg Loans (%)Total Loan & Lease NCOs ($B)Net Chargeoffs/ Avg Loans: Non Real Estate (%)

Net Chargeoffs/ Avg Loans: Real Estate (%)Chargeoffs for Commercial Banks


Commercial Banks


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Net Chargeoffs For Savings Banks Fell To $1.34Billion In Q412


0

150

300

450

600

750

900

1,050

1,200

1,350

1,500

1,650

0.0

0.5

1.0

1.5

2.0

2.5

Dollars($M)P

ercent(%)

2012Q4

2012Q1

2011Q1

2010Q1

2009Q1

2008Q1

2007Q1

2006Q1

2005Q1

2004Q1

2003Q1

Net Chargeoffs/ Avg Loans (%)Total Loan & Lease NCOs ($M)Net Chargeoffs/ Avg Loans: Non Real Estate (%)

Net Chargeoffs/ Avg Loans: Real Estate (%)Chargeoffs for Savings Banks


Savings Banks


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Outline






23/28

Gross Loans And Leases For Commercial BanksTopped $7 Trillion In Q412, An All-Time High


2

3

4

5

6

7

8

2004

2006

2007

2008

2011

Dollars($T)

2003

2012

2005

2010

2009

Commercial banksSavings Banks*

Gross Loans and Leases for Savings andCommercial Banks


Gross Loans and Leases


24/28

U.S. Banks Employed Over 2 Million Full-TimeWorkers In Q412



1,500

1,600

1,700

1,800

1,900

2,000

0

20

40

60

80

100

120

140

160

FTE

CommercialBanks(Thou

sands)

2006

2005

2004

2003

2007

2008

2009

FTE

SavingsBanks(Thousan

ds)

2010

2011

2012

Commercial BanksSavings Banks*

FTE For Commercial and Savings Banks

Full-Time Employees


25/28

Non-Real Estate Loans Increased In Q412, WhileTotal Real Estate Remained Essentially Flat


0

1

2

3

4

5

6

7

8

2012

2011

2010

2009

Dollars($T)

2007

2006

2005

2004

2003

2008

Total Non-Real Estate Loans ($T)

Total Real Estate Loans ($T)Non-Real Estate and Real Estate Loans forCommercial and Savings Banks


Commercial and Savings Banks


26/28

Commercial And Industrial Loans Increased 4% To$1.5 Trillion In Q412


0.0

0.3

0.6

0.9

1.2

1.5

1.8

2.1

2.4

2.7

3.0

2004

2005

2006

2007

2008

2009

2010

Dollars($T)

2011

2003

2012

Consumer Loans ($T)Commerical and Industrial Loans ($T)Commercial and Industrial and ConsumerLoans at Commercial and Savings Banks


Commercial and Savings Banks


27/28

Domestic Business Loans Rose To $2.14 Trillion InQ412, An All-time High


0.6

0.8

1.0

1.2

1.4

1.6

1.8

2.0

2.2

2.4

2005

2006

2008

2007

2004

2003

Dollars($T)

2011

2012

2009

2010

Commercial BanksSavings Banks

Domestic Business Loans fromCommercial and Savings Banks


Domestic Business Loans


28/28

About HPS

H ilt Pl St t i | 28

HPS is a policy and communications consulting firm based in Washington. Our focus andexpertise lie at the intersection of government, business and media. Our deep experiences in

all of these fields allow us to serve clients who need to navigate the paths between Washingtonand the private sector.

HPS provides clients invaluable insight and advice on what governments are doing now, whattheyre likely to do in the future, and the global implications of those actions.

Our team includes those who have recently served at the highest levels of government and canshow clients how the policy process works and how it can be shaped.

This report was prepared by:

Matt McDonald, Partner

Robert Terra, Managing Director

Patrick Sims, Director

Ashley Smith, Senior Associate

Russ Grote, Senior Analyst

Documents

HPS FDIC Quarterly Banking Profile Preview