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DBO - Quarterly Report - Third Quarter 2014

Introduction

The Quarterly Report presents summary statistics for banks, industrial banks, credit unions, offices of foreign banks and trust companies with comparison to the prior year and the prior quarter. The  Quarterly Report shows at a glance significant changes on the balance sheets and reports of income of licensees of the Department of Business Oversight's Division of Financial Institutions. 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.

Commercial Banks

As of September 30, 2014, the number of state-chartered banks totaled 157, down by seven, or 4.3%, from 164 from the prior year.  There was an increase of two, or 1.3%, from June 30, 2014..  There was an increase of two or 1.3% from June 30, 2014.  Assets as of September 30 were 343.2 billion, up $46.3 billion or 15.6% from the $296.9 billion reported in the third quarter of 2013, and up $9.4 billion or 2.8% from the prior quarter. Total equity capital at $43.6 billion, was up 15.9% from $37.7 billion one year prior and up 2.0% from the prior quarter.  The equity-capital-to-total-asset ratio to increase to 12.72% from 12.69% one year ago and decreased from 12.82% in the prior quarter.
 
Loans were $231.0 billion, up $31.1 billion or 15.6% from $199.9 billion the prior year and $6.8 billion or 3.0% from $224.2 billion on June 30. Deposits totaled $275.9 billion, up $37.6 billion or 15.8% from September 30, 2013 and 3.8% or $10.2 billion from the prior quarter. The loan-to-deposit ratio decreased to 83.74% from 83.88% on September 30, 2013, and 84.38% in the previous quarter.
Quarterly earnings for state-chartered banks in the third quarter were $882.6 million, up 1.2% from the $872.1 million earned in the third quarter of 2013 and up 16.1% or $122.2 million from the $760.4 million earned in the second quarter of 2013.  Year-to-date income was $2.4 billion, down 1.7% from September 30 one year ago.
The net interest margin was 3.14%, down from 3.30% in the prior year and 3.17% in June. Loan loss reserves totaled $2.9 billion, down $116.4 million or 3.8% from the $3.0 billion as of September 30, 2013, and down a fraction of a percent from the prior quarter. 
Noncurrent loans were down $660.9 million, or 24.7%, from $2.7 billion in the third quarter of 2013, and $180.4 million or 8.2% from last quarter. The reserve coverage of noncurrent loans increased to 145.14% from 113.59% in the third quarter of 2013 and from 132.22% in the prior quarter.  Other real estate owned declined to $394 million from $563.0 million as of September 30, 2013 a decrease of 30.0% over the year and 13.6% from $456.5 million as of June 30, 2014. 

Industrial Banks

As of September 30, 2014 there were five industrial banks, down from six in the prior year. There was no change from the prior quarter.  As a consequence of the merger of a large industrial bank into a commercial bank, double-digit decreases were registered in most categories.  Total assets were $621.2 million, down 92.8% from the $8.6 billion reported one year ago and down 2.3% from the $635.6 billion reported in the prior quarter. At $159.7 million, total equity capital was down 88.2% from September 30, 2013, and up 1.0% from last quarter. The equity capital-to-asset ratio, at 25.71% increased from 15.66% in the prior year and 24.92% in the prior quarter. Loans, at $488.9 million, were down 93.0% over the year and 1.0% from the last quarter. Deposits totaled $410.8 million, down 93.7%% from $6.5 billion in September 2013 and 2.8% from the prior quarter. The loan-to-deposit ratio to increase to 119.03% from 106.09% in the prior year and 116.85% in the prior quarter.
Industrial banks reported net income of $6.0 million year-to-date, down 94.6% from $111.9 million through the first three quarters of 2013.  Loan loss reserves totaled $15.8 million, down $108.8 million or 87.3% from the third quarter 2013 and down 4.0% from the prior quarter. Loan loss provisions made in the third quarter of 2014 totaled $3.8 million, down $10.6 million or 73.6% from the $14.3 million provision for the same quarter of 2013.
Noncurrent loans were $12.1 million, down $44.6 million or 78.6% from $56.8 million on September 30, 2013 and 2.1% from the last quarter. The reserve coverage of noncurrent loans decreased to 129.81% from 219.40% in September 2013 and 132.32% in June.  Other real estate owned as of September 30 totaled $4.6 million, down 44.8% from 8.4 million in the prior year and a fraction of a percent change from the last quarter.

Credit Unions

Total assets at the close of business September 30, 2014 at $84.1 billion were up $4.7 billion or 5.9% from $79.3 billion one year ago, and $1.7 billion or 2.0% from the previous quarter. Shares, at $71.7 billion were up 5.2% from the $68.2 billion in 2013 and 1.9% from the prior quarter. Loans were up 15.6% over the year, increasing from $41.7 billion to $48.2 billion, and were up $2.6 billion or 5.6% from the prior quarter. Net worth, at $9.5 billion, was up 10.3% from $8.6 billion the prior year and 3.0% from the $9.2 billion in the second quarter. The net-worth-to-asset ratio increased to 11.25% from 10.81% in the prior year and 11.15% in the previous quarter. The allowance for loan losses, at $562.8 million was down 19.1% from $695.7 million in the prior year and 3.4% from $582.5 million in the second quarter.
 
Delinquent loans, at $337.3 million were down $78.4 million or 18.9% from $415.6 million in the prior year and $52.2 million or 13.4% from $389.4 million in the previous quarter.  Delinquent loans as a percentage of total loans were 0.70% as of September 30, 2014 compared to 1.00% one year ago and 0.85% in the last quarter.  Other real estate owned totaled $63.1 million as of September 30, 2014; down $5.9 million or 10.2% from $57.2 million a year previous and down $5.8 million or 10.1% from $57.3 million in the last quarter.
The net-margin-to-average-assets ratio at 3.71% was down from 4.01% last September 30 and up from 3.66% in the last quarter. The provision for loan losses was down 94.8%, declining from -$34.8 million as of September 30, 2013 to -$1.8 million over the year.  Net income year-to-date was up 2.2% to $629.5 million, from $615.8 million in the third quarter of 2013. Net income for the quarter was $207.2 million, up $26.9 million or 14.9% from the $180.3 million net income in the third quarter of 2013 and down $20.6 million or 9.0% from the $227.8 million in the previous quarter.
The number of credit unions at the close of the third quarter was 146, unchanged from the prior year and up one from the prior quarter.

Foreign Banks

Total assets of state-chartered offices of foreign banks at the close of the third quarter of 2014 at $29.3 billion, were down $3.6 billion or 11.0% from $32.9 billion one year ago, and $2.1 billion or 6.8% from $31.4 billion in the previous quarter.  Loans, at $25.0 billion were up 1.8% from $24.5 billion one year ago and down 2.0% or $519.0 million from $25.5 billion in the previous quarter. Deposits totaled $11.7 billion, down $592.6 million or 4.8% from $12.3 billion in the same period of 2013 and $633.7 million or 5.1% from the prior quarter.  The number of foreign banking organizations with state-chartered offices in California remained constant at 31 during the year. 

Trust Companies

Total corporate assets of trust companies on September 30, 2014 at $348.6 million, were up $16.1 million or 4.8% from $332.5 million at the end of the third quarter of 2013 and $17.9 million, or 5.4% from $330.6 million in the prior quarter. Income from fiduciary activities as of September 30 totaled $313.7 million, up $41.4 million or 15.2% from $272.4 million in the same period of 2013. Income for the quarter totaled $124.1 million.

Net income year to date through the third quarter of 2014 was -$18.5 million, compared to -$25.9 million in the same period of 2013.  The number of trust companies remained constant at eight during the period.


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