Tuesday, February 26, 2008

FDIC Quarterly Banking Profile

The Federal Deposit Insurance Corporation (FDIC) just released its quarterly banking profile for the 12/31/2007 ending period. The content wasn't all that unexpected, but it is worth it to review the highlights:

1) Fourth-quarter net income of $5.8 billion was the lowest amount reported by the industry since the fourth quarter of 1991.

2) The average return on assets (ROA) in the quarter was 0.18 percent. This is the lowest quarterly ROA since the fourth quarter of 1990.

3) Trading losses totaled $10.6 billion, marking the first time that the industry has posted a quarterly net trading loss.

4) Net charge-offs registered a sharp increase in the fourth quarter, rising to $16.2 billion, compared to $8.5 billion in the fourth quarter of 2006. The annualized net charge-off rate in the fourth quarter was 0.83 percent, the highest since the fourth quarter of 2002.

5) Total noncurrent loans — loans 90 days or more past due or in nonaccrual status — rose by $26.9 billion (32.5 percent) in the last three months of 2007. This is the largest percentage increase in a single quarter in the 24 years for which noncurrent loan data are available.

Some surprises as well:

1) The magnitude of the decline in industry earnings was attributable to a relatively small number of large institutions. In contrast to the steep 102 basis-point drop in the industry’s ROA, the median ROA fell by only 14 basis points as seven large institutions accounted for more than half of the total year-over-year increase in loss provisions. It looks like the "smart money" screwed up more this cycle.

2) Capital Ratios still look fairly good:

The leverage ratio fell from 8.14 percent to 7.98 percent.

Total risk-based capital ratio, which includes loss reserves, increased from 12.74 percent to 12.79 percent.


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Eric J. Fox said...