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Quarterly Report

Second Quarter 2013


Introduction

The Quarterly Report presents summary statistics for banks, industrial banks, credit unions, offices of foreign banks and trust companies. The intention of the Quarterly Report is to show at-a-glance significant changes on the balance sheets and reports of income of DFI licensees. We invite readers to review the Financial Statistics page on our website, and the financial data published by the Federal Reserve Bank, Federal Deposit Insurance Corporation and National Credit Union Administration.

New this Quarter

Starting with the Second Quarter 2013, in order to provide for more in-depth analysis, the Quarterly Report will now feature comparisons with the prior quarter, in addition to comparisons with the same quarter one year ago. 


Commercial Banks

As of June 30, 2013, the number of state-chartered banks decreased by 10 or 5.7% to 166 from 176 on June 30 one year ago.  It was a decrease of four or 2.4% from March 31.  Assets went from $269.9 billion to 285.3 billion, up $15.4 billion or 5.7% from June 30 one year ago, and up $3.7 billion or 1.3% from March 31. Total equity capital was $37.2 billion up 3.5%, from $35.9 billion one year ago and a trace from the prior quarter.  This caused the equity capital to total asset ratio to decrease from 13.31% in June 2012 and from 13.21% in the prior quarter to 13.04% at midyear 2013. 
Loans were $193.3 billion, up $15.2 billion or 8.5% from $178.1 billion a year ago and up 3.2% from the $187.3 billion on March 31. Deposits were $228.1 billion, up $14.0 billion or 6.6% from June 30 one year ago and up 3.2% or $6.0 billion from last quarter. This caused the loan to deposit ratio to increase to 84.77% from 83.21% one year previous and from 82.87% at the end of the First Quarter 2013.
State-chartered banks reported net income of $1.5 billion in the first half of 2013, up $36.7 million or 2.5% from the first half of 2012. Loan loss provisions went from $310.5 million at midyear 2012 to $121.6 million, down $188.9 million, a decrease of 60.8 percent.
Quarterly earnings for state-chartered banks in the second quarter were $759.7 million, down $44.9 million or 5.6% from the $804.7 million earned in the second quarter 2012 and down 1.1% from the $768.5 million earned in the first quarter of 2013.  Loan loss provisions made in the Second Quarter 2013 were $58.9 million, down $3.7 million or 5.9% for the same quarter of 2012.
The net interest margin for the first six months of 2013 was 3.38% down from 3.59% one year ago and from 3.40% in March. Loan loss reserves as of June 30, 2013 were $3.1 billion, down $183.1 million or 5.6% from the $3.2 million at midyear 2012 and unchanged from the prior quarter. 
Noncurrent loans were down $617.8 million or 18.6% from $3.3 billion to $2.7 billion over the year, and down $192.1 million or 6.6% from last quarter. This caused reserve coverage of noncurrent loans to increase to 112.93% from 97.47% in June 2012 and from 106.21% in the prior quarter.  Other real estate owned went from $959.0 billion as of June 30, 2012 to $609.3 million a year later, a change of $349.7 million or 36.5% from one year ago and a change of $58.2 million or 8.7% from the $667.5 million in OREO reported as of March 31, 2013.


Industrial Banks

As of June 30, 2013 there were eight industrial banks, down from nine one year previous and no change from the prior quarter..  Total assets were $8.5 billion, down 3.2% from the $8.8 billion reported one year ago and in March 2013. At $1.3 billion, total equity capital was unchanged from midyear 2012 and down 5.3% from the $1.4 billion last quarter. This caused the equity capital to asset ratio, at 15.42% to increase from 14.84% in the prior year and decrease from 15.77% in the prior quarter. Loans, at $6.8 billion, were up 2.3% over the year and down a fraction of a percent from last quarter. Deposits were $6.4 billion, down 4.1% from $6.6 billion in the previous year and down 3.4% from the prior quarter, which caused the loan to deposit ratio to increase to 106.11% from 99.45% in the prior year and 103.32 % in the prior quarter.
Industrial banks reported net income of $70.7 million in the first half of 2013, up $5.2 million or 7.9% from the first half of 2012.  Loan loss provisions in the same period went from $20.1 million to $11.5 million, down $8.5 million or 42.5 percent.
Quarterly earnings for industrial banks in the second quarter were $31.3 million, up $3.0 million or 10.6% from the $28.3 million earned in the second quarter 2012 and down $8.0 million or 20.4% from the $39.4 million earned in the first quarter of 2013.  Loan loss provisions made in the Second Quarter 2013 were $7.4 million, down $3.3 million or 51.7% from the $15.4 million provision for the same quarter of 2012 and up $3.3 million or 80.6% from the $4.1 million in the First Quarter 2013.
Noncurrent loans were $76.3 million, down $107.6 million or 58.5% from $184.0 million at midyear 2012 and down $42.6 million or 35.8% from last quarter. This caused reserve coverage of noncurrent loans to increase to 164.56% from 78.19% in June 2012 and from 111.32% in March.  Other real estate owned went from $24.2 million as of June 30, 2012 to $9.4 million a year later, a change of $14.9 million or 61.4% from one year ago and a change of $10.8 million or 53.5% from the $20.1 million in OREO reported last quarter.


Credit Unions

Total assets at June 30, 2013 were $79.0 billion, up $3.0 billion or 4.0% from $76.0 billion one year ago, but down 1.4% from the $79.3 billion in the previous quarter. Shares, at $68.0 billion were up by 3.6% from $65.7 billion one year ago but were down a fraction of a percent from the prior quarter. Loans were up 1.6% over the year, going from $40.0 billion to $40.6 billion approximately the same as the change from the prior quarter. Net worth, at $8.4 billion was up 10.7% from $7.6 billion one year ago and up 2.7% from the $8.2 billion reported in the first quarter. This caused the net worth to asset ratio to increase to 10.63% from 9.99% one year ago and from 10.33% in the previous quarter. The allowance for loan losses was down 26.4% from $1.0 billion one year ago to $756.0 million and down 7.4% from $816.7 million in the first quarter. Delinquent loans, at $478.7 million were down 12.5% from $547.2 million one year ago, but were up $47.4 million or 11.0% from $431.4 million in the previous quarter.  Delinquent loans as a percentage of total loans were 1.18% as of June 30, 2013 as compared to 1.37% one year ago and 1.08% in the last quarter.  Other real estate owned was $63.4 million as of midyear 2013; down $69.5 million or 52.3% from $132.9 million a year previous and down $29.6 million or 31.9% from the $93 million reported in the last quarter.
Net margin to average assets at 3.75% was down from 4.05% one year ago and from 3.77% last quarter, while the provision for loan losses was down 111.8%, going from $124.6 million at midyear 2013 to a negative $14.7 million over the year.  Net income was up 21.8% from $357.7 million for the first half of 2012 to $435.5 million for the first half of 2013.  Quarterly income for credit unions in the second quarter was $219.6 million, up $26.1 million or 13.5% from the $193.5 million earned in the second quarter 2012 and up $3.7 million or 1.7% from the $215.9 million earned in the first quarter of 2013. 
The number of credit unions went from 157 to 151; a decrease of six, or 3.8 percent from the prior year and a decrease of one from the prior quarter.


Foreign Banks

Total assets of state chartered offices of foreign banks at the close of the Second Quarter 2013 were $30.1 billion, up $4.7 billion or 18.9% from $25.3 billion one year ago, and down 3.7% from the $31.3 billion in the previous quarter.  Loans, at $24.1 billion were up 11.0% from $21.7 billion one year ago and up 1.5% from the previous quarter. Deposits were $11.7 billion; up 22.3% over the year from $9.6 billion and up 8.0 percent over the quarter from $11.7 billion.  The number of foreign banking organizations with state-chartered offices in California remained constant at 31 during the year.  Agencies and branches of foreign banks reported $131.0 million in net income, an increase of 24.9% or $26.1 million from the $104.8 million in net income for the first six months of 2012.


Trust Companies

Total corporate assets of trust companies at June 30, 2013 were $339.4 million, down $33.0 million or 8.9% from the $372.5 million a year previous and down $25.6 million or 7.0% from the $365.0 in the prior quarter. Income from fiduciary activities in the first half of 2013 was $181.4 million, up $10.3 million or 6.0% from $171.1 million in the first half of 2012. For the quarter, income from fiduciary activities was $92.8 million, down $2.7 million or 2.8% from the $95.5 million reported in the first quarter 2013.
Net income for the first half of 2013 was a net loss of $15.5 million, down from the $19.2 million net loss in the first half of 2012.  The number of trust companies remained constant at eight during the period.


For more information contact Patrick Carroll at patrick.carroll@dbo.ca.gov