Recent Trends in Banking Industry: Insights and Analysis
Trends in the banking industry, including consolidation of state-chartered banks, capital growth, asset quality trends, earnings and profitability, liquidity improvements, and market risk sensitivity. Discover key statistics and shifts in the banking landscape over the past few years.
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Presentation Transcript
Recent Industry Trends Consolidation of State Chartered Banks 58 in 2011 down to 54 in 2013 More to come Improved Condition 28 Troubled Institutions in 2011 16 Troubled Institutions currently Asset Growth Tale of two States, pockets of growth
Capital Trends Banks have started to grow assets Tier 1 Capital (Median) 10.9 10.8 10.76% 10.7 10.6 T1 Capital (Med) 10.5 10.4 10.4% 10.3 10.2 10.17% 10.1 10 9.9 9.8 2011 2012 2013
Asset Quality Trends Adversely Classified Coverage Ratio continues to improve (Adversely classified items over Capital and the ALLL) Decline in ALLL commensurate with risk 60 55% 50 41% 40 ALLL to Total Loans Coverage Ratio (Med) 30 29% 20 10 2.15% 2.42% 1.92% 0 2011 2012 2013
Earnings and Profitability Percent of Profitable Banks in Washington State 90% 84% 80% 77% 70% 69% 60% 50% % of Profitable Banks 40% 30% 20% 10% 0% 2011 2012 2013
Earnings and Profitability NIMs have been compressed in the low interest rate environment Net Interest Margin (Median) 4.1 4.05 4.03% 4 3.95 3.9 NIM (Med) 3.84% 3.85 3.8 3.75 3.74% 3.7 3.65 3.6 3.55 2011 2012 2013
Earnings and Profitability ROA has improved with a decline in provision expenses, recapture of DTA s, and a reduction on overhead expenses Return on Average Assets (Median) 0.8 0.71% 0.7 0.6 0.60% 0.5 ROA (Med) 0.4 0.32% 0.3 0.2 0.1 0 2011 2012 2013
Liquidity Core Funding has Improved True brokered deposits have declined Increased reliance on Internet Deposits Balance Sheet liquidity starting to decline with asset growth
Sensitivity to Market Risk Interest Rate Risk remains a concern Asset maturities have been lengthened while non-maturity deposits have increased 50 45 45.15 40 37.49% Loans & Securities > 3yrs 35 32.73% 30 Loans & Securities > 5yrs 25 24.16% 20 21.03% 15 17.81% 10 5 0 2011 2012 2013
Commercial Real Estate (CRE) Concentrations Western Region Total CRE concentrations exceed other regions Owner Occupied (OO) performed similarly to non-OO in the West, not necessarily in Washington FDIC Initiative focus on growth and CRE concentrations (3/10/14 Bankers Call at 1pm)
CRE Concentrations Charge-Offs
CRE Concentrations Past Dues
CRE Concentrations On going regulatory focus on growth, Total CRE and limits on OO CRE Diversification and capital commensurate with risk are key
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