Q4 2008 QBP: Banking industry loses $26.2 billion, failures hit 15-year high
Every quarter, the FDIC releases a document called the Quarterly Banking Profile. It provides a wealth of data about banking industry losses, loan performance, failed banks, and more. The latest report (PDF Link) just hit the tape, and here are some of the details:
* The banking industry as a whole lost $26.2 billion. That was a large swing from the year-ago profit of $575 million that the industry generated. It was also the first time since Q4 1990 that U.S. banks, in the aggregate, lost money.
* Loan loss provisions soared to $69.3 billion from $32.1 billion in Q4 2007. Large trading losses and goodwill impairments were big contributors to bank losses. Noninterest income declined as loan servicing income fell $3.1 billion YOY and securitization income plunged 52.3%. On the other hand, net interest income climbed 4.9% and net interest margins inched up to 3.34% from 3.32%. The FDIC noted, however, that the improvement was mostly seen at large institutions. Smaller banks (sub-$1 billion in assets) had the worst margins since Q2 1988 due to upward pressure on deposit rates.
* Total net chargeoffs of loans and leases surged 132% to $37.9 billion from $16.3 billion a year earlier. If you annualize the quarterly charge-off rate, you get a reading of 1.91%, tying Q4 1989 for a record high (data collection goes back 25 years). By loan category, real estate construction and development loan charge-offs increased 448% year-over-year. One to four family residential mortgage charge-offs jumped 206%, while commercial and industrial COs climbed 97.3% and credit card COs rose 60.1%.
* Noncurrent loans and leases are also climbing. Noncurrent loans rose to $230.7 billion from $110.7 billion a year earlier, a surge of 108.4%. Some 2.93% of loans and leases are now noncurrent, the highest percentage since 1992.
* Banks added $16.5 billion to their reserves in the fourth quarter, while cutting total loans. That cause the ratio of reserves to total loans to rise to a 14-year high of 2.2%. But noncurrent loans rose more sharply than reserves, driving the reserves-to-noncurrent loans (or coverage) ratio down to 75 from 83.9. That's the lowest since 1992.
* Finally, 25 banks with assets of $372 billion failed last year. That's the highest tally since 1993, when 41 banks with assets of $3.8 billion failed. The total number of banks on the FDIC's "Problem List" jumped to 252 from 76 at year-end 2007. Those institutions had total assets of $159 billion, up more than seven-fold from $22 billion a year earlier.
* The banking industry as a whole lost $26.2 billion. That was a large swing from the year-ago profit of $575 million that the industry generated. It was also the first time since Q4 1990 that U.S. banks, in the aggregate, lost money.
* Loan loss provisions soared to $69.3 billion from $32.1 billion in Q4 2007. Large trading losses and goodwill impairments were big contributors to bank losses. Noninterest income declined as loan servicing income fell $3.1 billion YOY and securitization income plunged 52.3%. On the other hand, net interest income climbed 4.9% and net interest margins inched up to 3.34% from 3.32%. The FDIC noted, however, that the improvement was mostly seen at large institutions. Smaller banks (sub-$1 billion in assets) had the worst margins since Q2 1988 due to upward pressure on deposit rates.
* Total net chargeoffs of loans and leases surged 132% to $37.9 billion from $16.3 billion a year earlier. If you annualize the quarterly charge-off rate, you get a reading of 1.91%, tying Q4 1989 for a record high (data collection goes back 25 years). By loan category, real estate construction and development loan charge-offs increased 448% year-over-year. One to four family residential mortgage charge-offs jumped 206%, while commercial and industrial COs climbed 97.3% and credit card COs rose 60.1%.
* Noncurrent loans and leases are also climbing. Noncurrent loans rose to $230.7 billion from $110.7 billion a year earlier, a surge of 108.4%. Some 2.93% of loans and leases are now noncurrent, the highest percentage since 1992.
* Banks added $16.5 billion to their reserves in the fourth quarter, while cutting total loans. That cause the ratio of reserves to total loans to rise to a 14-year high of 2.2%. But noncurrent loans rose more sharply than reserves, driving the reserves-to-noncurrent loans (or coverage) ratio down to 75 from 83.9. That's the lowest since 1992.
* Finally, 25 banks with assets of $372 billion failed last year. That's the highest tally since 1993, when 41 banks with assets of $3.8 billion failed. The total number of banks on the FDIC's "Problem List" jumped to 252 from 76 at year-end 2007. Those institutions had total assets of $159 billion, up more than seven-fold from $22 billion a year earlier.
posted by Mike Larson at
2:30 PM
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