Minnesota Banking Conditions Showed Solid Improvement in Third Quarter 2014
Minnesota banks reported improved profitability and loan growth in the third quarter of 2014, with problem loans falling a bit, according to Ron Feldman, executive vice president of Supervision, Regulation and Credit at the Federal Reserve Bank of Minneapolis. “Loan growth and bank profitability improved moderately among Minnesota banks, while asset quality made a small improvement,” he said.
The findings were included in a Minneapolis Fed analysis of data from Ninth Federal Reserve District banks’ quarterly regulatory submissions, known as “call reports.”
Minnesota banks’ median annual rate of loan growth increased 1.35 percentage points to 6.31 percent during the third quarter. The year-over-year change in the amount of outstanding loans slightly outpaced the 6.05 percent median rate for the nation as a whole.
The level of problem loans compared with the resources banks have to cover loan losses improved by 67 basis points in the quarter. At 8.05 percent, Minnesota’s median problem assets ratio was just better than the national 8.33 percent median.
Profitability measures also improved during the third quarter of 2014. Minnesota’s median return on average assets increased 6 basis points to 1.02 percent. That level exceeded the national 0.91 percent rate of return and surpassed the benchmark 1 percent for the first time since 2008, though bank profitability remains low compared to prior decades.
Measures of liquidity and capital remain at healthy levels. The state’s total risk-based capital ratio stands at 15.72 percent after an 11-basis-point increase. The median use of noncore funding (in contrast to more stable bank deposits) stands at 13.58 percent of liabilities. Both are strong by historical standards and compared to the median national performance.
The data for Minnesota’s 330 commercial banks and the nation are found in the tables below. The attachment to this release provides additional data on the characteristics of banks in the region and definitions and explanations of those data.
Data for Minnesota and the nation [pdf]
More details on banking conditions can be found on the following page: Banking Conditions in Ninth District States.
Montana Banks Report Improved Profitability and Loan Growth in Third Quarter of 2014; Problem Loans Still Higher than the Nation
Montana banks saw continued improvements in profitability and loan growth in the third quarter of 2014, but problem loans continue to be a challenge, according to Ron Feldman, executive vice president of Supervision, Regulation and Credit at the Federal Reserve Bank of Minneapolis. “Montana bank health currently compares well with the rest of the country,” he said. “Earnings and loan growth were both up in the third quarter and now surpass the national median rates, although Montana earnings have yet to reach their precrisis levels. Problem loans, while significantly lower than a year ago, experienced an uptick during the third quarter.”
The findings were included in a Minneapolis Fed analysis of data from banks’ quarterly regulatory submissions, known as “call reports.”
Montana banks’ median return on average assets, a key metric of earnings, was up 15 basis points from the previous quarter at 1.01 percent, surpassing the 0.91 percent national median ratio. However, for most of the previous two decades, this measure was at or above 1.2 percent.
Montana’s median net loan growth rate improved 47 basis points in the third quarter. The four-quarter growth rate of 7.18 percent was an improvement of almost 4 percentage points from a year ago. The national median four-quarter growth rate trails at 6.05 percent.
After showing improvement in the second quarter of 2014, the level of problem loans as a percentage of resources banks must set aside to cover potential loan losses grew 44 basis points in the third quarter to 9.44 percent. That compares to a national median of 8.33 percent.
Key measures of capital and liquidity remain stronger than national medians. The total risk-based capital ratio improved 14 basis points to 17.3 percent, and the median bank’s reliance on noncore resources (as opposed to more stable bank deposits) decreased 56 basis points to 15.67 percent. Both capital and liquidity measures remain healthy by historical standards.
Data for Montana’s 59 commercial banks and the nation are found in the tables below. The attachment to this release provides additional data on the characteristics of banks in the region and definitions and explanations of those data.
Data for Montana and the nation [pdf]
More details on banking conditions can be found on the following page: Banking Conditions in Ninth District States.
North Dakota Bank Performance Improves and Remains Strong in Third Quarter 2014
North Dakota banking conditions compare well with the rest of the nation, and most measures of bank health strengthened further in the third quarter of 2014, according to Ron Feldman, executive vice president of Supervision, Regulation and Credit at the Federal Reserve Bank of Minneapolis. “North Dakota banks continued to make gains in profitability and asset quality in the third quarter,” he said. “Even though loan growth slipped a bit, the overall strength of the state’s banks stands out compared with national metrics, and some measures are at record levels of strength.”
The findings were included in a Minneapolis Fed analysis of data from Ninth Federal Reserve District banks’ quarterly regulatory submissions, known as “call reports.”
In the second quarter of 2014, median problem loans as a percentage of the resources banks have to cover losses fell by 59 basis points to 4.11 percent. That ratio is the lowest it has been since at least 1990, and is more than 4 percentage points lower than the national median.
North Dakota bank profitability also gained on existing strength, as measured by the median return on average assets, rising 9 basis points to 1.25 percent. That is well above the 0.91 percent national median rate of return.
The state median four-quarter net loan growth rate decreased by 1.1 percentage points over last quarter to 9.62 percent, but is still nearly 4 percentage points better than last year and more than 3½ percentage points stronger than the national median of 6.05 percent.
Capital and liquidity measures remain strong at North Dakota banks. Liquidity, as measured by the median bank use of noncore funds (rather than more stable traditional deposits) stands stronger than the national median at 13.45 percent. Capital levels fell very slightly during the quarter, as measured by the median total risk-based capital ratio, but are still considered healthy at 13.38 percent.
The data for North Dakota’s 84 commercial banks and the nation are found in the tables below. The attachment to this release provides additional data on the characteristics of banks in the region and definitions and explanations of those data.
Data for North Dakota and the nation [pdf]
More details on banking conditions can be found on the following page: Banking Conditions in Ninth District States.
South Dakota Banking Conditions Improve and Remain Robust in Third Quarter 2014 Despite Softening Loan Growth
South Dakota banks reported improvement and robust conditions in the third quarter of 2014 despite some weakening in loan growth, according to Ron Feldman, executive vice president of Supervision, Regulation and Credit at the Federal Reserve Bank of Minneapolis. “Problem loans in South Dakota declined to record lows in the third quarter,” he said. “While loan growth softened, earnings increased and overall South Dakota banking conditions continue to stand out relative to the rest of the nation.”
The data were included in a Minneapolis Fed analysis of Ninth Federal Reserve District banks’ quarterly regulatory submissions, known as “call reports.”
At the median, South Dakota bank problem loans as a percentage of the resources to cover potential losses declined 63 basis points to 2.94 percent. That ratio stands at less than half the national median for problem loans and is a historic low for the state.
Return on average assets, a key measure of earnings, continues to show relative strength in the state, increasing 13 basis points to 1.21 percent. That performance compares favorably with the national median 0.91 percent rate of return.
After reaching a record high in the first quarter of 2014, South Dakota median year-over-year net loan growth continued to slow during the third quarter, falling by 96 basis points to 8.95 percent. Despite this decrease, the state’s growth rate still surpasses the rest of the nation by nearly 3 percentage points.
Capital and liquidity measures both softened in the third quarter, but also continue to compare favorably with the national figures. The median total risk-based capital ratio slipped by 28 basis points to 16.08 percent, compared with the 16.27 national median. Reliance on noncore funding (as opposed to more stable bank deposits) increased 1.43 percentage points to 19.52 percent.
The data for South Dakota’s 67 commercial banks and the nation are found in the tables below. The attachment to this release provides additional data on the characteristics of banks in the region and definitions and explanations of those data.
Data for South Dakota and the nation [pdf]
More details on banking conditions can be found on the following page: Banking Conditions in Ninth District States.
Banking Conditions in Upper Peninsula Michigan Improved in Third Quarter 2014, but Weakness Persists
The banks in Michigan’s Upper Peninsula experienced significant improvement in asset quality in the third quarter of 2014, but profitability was flat and continued to be well below the U.S. average. According to Ron Feldman, executive vice president of Supervision, Regulation and Credit at the Federal Reserve Bank of Minneapolis, “While U.P. banks reduced their share of problem loans and saw slightly increased loan growth, earnings were flat for the quarter and remain lower than a year ago. Banking conditions in the Upper Peninsula continue to be considerably weaker than for the nation as a whole.”
The findings were included in a Minneapolis Fed analysis of data from Ninth Federal Reserve District banks’ quarterly regulatory submissions, known as “call reports.”
U.P. bank problem loan levels showed strong improvements in the third quarter. The median ratio of loans that are behind on payments as a percentage of the resources that banks have to cover potential loan losses decreased by 4½ percentage points, from 19.45 percent in the second quarter to 14.94 percent. Still, U.P. banks’ problem loans remain significantly higher than the national median of 8.33 percent.
The U.P.’s rate of loan growth over the last four quarters climbed 47 basis points to 1.48 percent. That pace is well below the national median year-over-year loan growth rate of 6.05 percent.
In contrast, earnings, as measured by the median return on average assets (ROAA), were flat from the second quarter. The Upper Peninsula’s median ROAA of 0.70 percent remains substantially weaker than the national median of 0.91 percent.
Key measures of capital and liquidity in the U.P. weakened during the third quarter, although both continued to be stronger than the national median. The total risk-based capital ratio slipped by 43 basis points to 19.06 percent—still significantly better than the national median of 16.27 percent. Banks’ dependence on the use of noncore funding (as opposed to more stable traditional deposits) climbed 1.22 percentage points to 18.58 percent, compared to the national median of 19.57 percent.
Data for the 21 banks in the Upper Peninsula of Michigan and the nation are found in the tables below. The attachment to this release provides additional data on the characteristics of banks in the region and definitions and explanations of those data.
Data for Michigan and the nation [pdf]
More details on banking conditions can be found on the following page: Banking Conditions in Ninth District States.
Western Wisconsin Banks Report Improvement in Third Quarter 2014, with Some Metrics Still Lagging Benchmarks
The 52 Wisconsin banks in the Federal Reserve Ninth District reported a reduction in problem loans in the third quarter of 2014, some loan growth and a gain in earnings, but gaps between benchmarks still exist, according to Ron Feldman, executive vice president of Supervision, Regulation and Credit at the Federal Reserve Bank of Minneapolis. “At the median, western Wisconsin banks achieved reduction in problem loans during the third quarter, but this metric lags the nation,” he said. “And while earnings were up a little, they are at a lower level than a year ago.”
The findings were included in a Minneapolis Fed analysis of data from Ninth Federal Reserve District banks’ quarterly regulatory submissions, known as “call reports.”
In the third quarter of 2014, banks in the western part of Wisconsin saw a 2.2 percentage point drop in problem loans (as a percentage of funds set aside to cover potential loan losses) to 10.88 percent. Despite the decline, that level of problem loans remains higher than the 8.33 percent U.S. median.
Western Wisconsin bank earnings, as measured by the return on average assets, increased a mere 2 basis points from the previous quarter to 0.91 percent, on par with the national median. By a longer-run view, earnings are still below the historically normal levels above 1 percent and are a bit below the level from a year ago.
The year-over-year growth in the outstanding balance of loans at banks in the western part of Wisconsin increased 48 basis points to the highest rate since 2009, at 3.54 percent in the third quarter, but still well below the 6.05 percent national rate.
Key measures of capital and liquidity remain strong. The total risk-based capital ratio of 17.10 percent is near record highs. Noncore funding as a percentage of liabilities fell by 97 basis points to 16.79 percent. Both metrics compare favorably with the rest of the country.
The data for the 52 banks in western Wisconsin and the nation are found in the tables below. The attachment to this release provides additional data on the characteristics of banks in the region and definitions and explanations of those data.
Data for Wisconsin and the nation [pdf]
More details on banking conditions can be found on the following page: Banking Conditions in Ninth District States.
Twin Cities Banks Report Some Improvement in Third Quarter 2014, but Earnings Continue to Lag
Banks in the Twin Cities metropolitan area turned in improvement across key metrics of health in the third quarter of 2014, according to Ron Feldman, executive vice president of Supervision, Regulation and Credit at the Federal Reserve Bank of Minneapolis. “Twin Cities banks reduced problem loans in the third quarter, and loan growth continued to show strong improvement, but earnings were relatively flat and remain below historically normal levels,” he said.
The findings were included in a Minneapolis Fed analysis of data from Ninth Federal Reserve District banks’ quarterly regulatory submissions, known as “call reports.”
While still below the national and state of Minnesota median growth rates, Twin Cities loan growth continued to make notable gains in the third quarter, increasing by 1½ percentage points. The metro area’s four-quarter net loan growth increased to 5.24 percent—up more than 5 percentage points from last year.
Problem assets were down slightly at the median Twin Cities metro bank, as measured by the value of loans that are behind in their payments as a percentage of the resources banks have set aside to cover potential losses. The measure stands at 6.99 percent, 46 basis points lower than a quarter earlier and down nearly 4½ percentage points from a year ago. By comparison, the national bank figure stands at 8.33 percent.
Return on average assets, a key measure of earnings, was relatively flat, improving by only 3 basis points to 0.92 percent, on par with the national median rate but below the long-run median return of 1.10 percent.
Key indicators of liquidity and capital remain strong. The total risk-based capital ratio gained 21 basis points to 15.97 percent. The median use of noncore funding (as opposed to more stable traditional deposits) slipped by 5 basis points to 13.11 percent, still considerably outperforming the 19.66 percent median for U.S. banks overall.
The data for the 88 commercial banks in the 13-county Minneapolis-St. Paul metro area and the nation are found in the tables below. The attachment to this release provides additional data on the characteristics of banks in the region and definitions and explanations of those data.
Data for the Twin Cities Metro and the nation [pdf]
More details on banking conditions can be found on the following page: Banking Conditions in Ninth District States.