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DBO - Quartely Report - 4th Quarter 2013

Introduction

The Quarterly Report presents summary statistics for banks, industrial banks, credit unions, offices of foreign banks and trust companies with a comparison to one year and one quarter ago. 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 of San Francisco, Federal Deposit Insurance Corporation and National Credit Union Administration.
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Commercial Banks

As of December 31, 2013, the number of state-chartered banks decreased by eleven or 6.4% to 160 from 171 on December 31 one year ago.  It was a decrease of four or 2.4% from September 30.  Assets as of yearend 2013 were 302.4 billion, up $20.8 billion or 7.4% from $281.7 billion reported in the prior year, and up $5.6 billion or 1.9% from the $296.9 billion reported in the prior quarter. Total equity capital was $38.1 billion, up 3.0% from $36.9 billion one year ago and up 1.0% from the $37.7 billion reported in the prior quarter.  This caused the equity capital to total asset ratio to decrease to 12.58 percent from 13.12% in December 2012 and from 12.69% in the prior quarter.
 
Loans were $205.4 billion, up $18.5 billion or 9.9% from $186.9 billion a year ago and up 2.7% from the $199.9 billion on September 30. Deposits were $241.6 billion, up $15.9 billion or 7.0% from December 31 one year ago and up 1.4% or $3.2 billion from last quarter. This caused the loan to deposit ratio to increase to 85.03% from 82.83% one year previous and from 83.88% in the previous quarter.

State-chartered banks reported net income of $3.2 billion for the year, up $174.6 million or 5.8% from 2012. Loan loss provisions went from $554.1 million at yearend 2012 to $220 million, down $334.1 million, a decrease of 60.3 percent.
Quarterly earnings for state-chartered banks in the fourth quarter were $796.8 million, up $40.7 million or 5.4% from the $756.1 million earned in the fourth quarter of 2012 and down 8.6% or $75.3 million from the $872.1 million earned in the prior quarter of 2013.  Loan loss provisions made in the fourth quarter 2013 were $44.8 million, down $72.6 million or 61.8% for the fourth quarter of 2012.

The net interest margin for 2013 was 3.24% down from 3.45% one year ago and from 3.30% in September. Loan loss reserves as of December 31, 2013 were $3.0 billion, down $145.0 million or 4.7% from the $3.1 million as of December 31, 2012 and down $66 million or about 2.2% from the prior quarter. 

Noncurrent loans were down $518.9 million or 17.3% from $3.0 billion to $2.5 billion over the year and down $190.9 million or 7.1% from $2.7 billion last quarter. This caused reserve coverage of noncurrent loans to increase to 119.67% from 103.79% in December 2012 and from 113.59% in the prior quarter.  Other real estate owned went from $715.8 million as of December 31, 2012 to $513.9 million a year later, a change of $201.9 million or 28.2% from one year ago and a change of $49.1 million or 8.7% from the $563.0 million in OREO reported as of September 30, 2013.
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Industrial Banks

As of December 31, 2013 there were six industrial banks, down from nine at yearend 2012 and eight in the prior quarter.  Total assets were $8.8 billion, up 1.0% from the $8.7 billion reported one year ago and up 1.5% from the $8.6 billion reported in the prior quarter. At $1.4 billion, total equity capital was up 3.0% from December 31, 2012 and up 2.9% from last quarter. This caused the equity capital to asset ratio, at 15.87% to increase from 15.56% in the prior year and from 15.66% in the prior quarter. Loans, at $7.2 billion, were up 8.6% over the year and up 4.0% from last quarter. Deposits were $6.6 billion, up 1.8% from $6.5 billion at yearend 2012 and up 0.9% from $6.5 billion in the prior quarter. This caused the loan to deposit ratio to increase to 109.37% from 102.57% in the prior year and up from 106.09% in the prior quarter. 

Industrial banks reported net income of $152.5 million in 2013, up $10.3 million or 7.2% from $142.2 million in 2012.  Loan loss provisions in the same period went from $25.4 million in 2012 to $19.4 million, down $5.9 million or 23.3 percent in the prior year and up $5.1 million or 35.5% from the $14.3 million reported in the last quarter.

Quarterly earnings for industrial banks in the fourth quarter were $40.6 million, up $3.0 million or 7.9% from the $37.7 million earned in the fourth quarter 2012 and down $0.6 million or 1.4% from the $41.2 million earned in the third quarter of 2013.  Loan loss provisions made in the fourth quarter 2013 were $5.1 million, down $1.9 million or 59.9% from the $3.2 million provision for the same quarter of 2012 and up $2.3 million or 81.4% from the $2.8 million in the third quarter 2013.

Noncurrent loans were $61.7 million, down $63.4 million or 50.7% from $125.1 million at December 31, 2012 and up $4.9 million or 8.6% from the $56.8 million last quarter. This caused reserve coverage of noncurrent loans to increase to 205.76% from 106.40% in December 2012 and to decrease from 219.40% in September.  Other real estate owned went from $16.8 million as of December 31, 2012 to $8.2 million a year later, a change of $8.6 million or 51.1% from one year ago and a change of $0.2 million or 2.7% from the $8.4 million in OREO reported last quarter.
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Credit Unions

Total assets at December 31, 2013 were $79.6 billion, up $2.9 billion or 3.8% from $76.6 billion one year ago, and up a fraction of a percent from the previous quarter. Shares, at $68.4 billion were up by 3.6% from $66.0 billion one year ago and were up a fraction of a percent from the prior quarter. Loans were up 6.9% over the year, going from $40.2 billion to $42.9 billion and up $1.2 billion or 2.8% from the prior quarter. Net worth, at $8.7 billion was up 9.6% from $8.0 billion one year ago and up 1.9% from the $8.6 billion reported in the third quarter. This caused the net worth to asset ratio to increase to 10.99% from 10.41% one year ago and from 10.81% in the previous quarter. The allowance for loan losses was down 26.5% from $888.0 million one year ago to $652.6 million and down 6.2% from $695.7 million in the third quarter.
 
Delinquent loans, at $405.9 million were down $121.7 million or 23.1% from $527.6 million one year ago and were down $9.8 million or 2.3% from $415.6 million in the previous quarter.  Delinquent loans as a percentage of total loans were 0.95% as of December 31, 2013 as compared to 1.31% one year ago and 1.00% in the last quarter.  Other real estate owned was $49.0 million as of December 31, 2013; down $44.1 million or 47.3% from $93.1 million a year previous and down $8.2 million or 14.3% from the $57.2 million reported in the last quarter.

Net margin to average assets at 3.74% was down from 4.01% last year at this time and down from 3.75% last quarter, while the provision for loan losses was down $210.million or 121.6%, going from $173.4 million at year end 2012 to a negative $37.5 million over the year.  Net income was up 4.0% from $745.5 million in 2012 to $775.6 million for 2013.  Quarterly income for credit unions in the fourth quarter was $159.8 million, down $37.4 million or 19.0% from the $197.2 million earned in the fourth quarter 2012 and down $20.5 million or 11.4% from the $180.3 million earned in the third quarter of 2013. 
The number of credit unions at the close of the fourth quarter went from 152 last year to 145; a decrease of seven, or 5.2 percent from the prior year and a decrease of one or 0.7% from the prior quarter.
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Foreign Banks

Total assets of state chartered offices of foreign banks at the close of the fourth quarter 2013 were $30.4 billion, up $2.6 billion or 9.3% from $27.8 billion one year ago, and down 7.5% from the $32.9 billion in the previous quarter.  Loans, at $25.0 billion were up 10.6% from $22.6 billion one year ago and up 2.0% from the $24.5 billion in the previous quarter. Deposits were $12.0 billion; up 8.3% over the year from $11.1 billion and down 2.0% over the quarter from $12.3 billion.  The number of foreign banking organizations with state-chartered offices in California remained constant at 31 during the year. 
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Trust Companies

Total corporate assets of trust companies at December 31, 2013 were $342.4 million, down $22.6 million or 6.2% from the $365.0 million a year previous and up $9.9 million or 3.0% from the $332.5 million in the prior quarter. Income from fiduciary activities in 2013 was $366.3 million, up $21.6 million or 6.3% from $344.7 million in the same period of 2012. For the quarter, income from fiduciary activities was $93.9 million, up $2.9 million or 1.1% from the $90.9 million reported in the third quarter 2013.

Net income for  2013 was a net loss of $25.8 million, down from the $30.4 million net loss in the same period of 2012.  The number of trust companies remained constant at eight during the period.

 

For more information contact Patrick Carroll (415 263-8559; email: patrick.carroll@dbo.ca.gov