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FDIC: Problem Banks Declined, Residential REO Declined in Q3

by Calculated Risk on 11/30/2021 12:41:00 PM

The FDIC released the Quarterly Banking Profile for Q3 2021 this morning:

Quarterly net income rose $18.4 billion (35.9 percent) to $69.5 billion from the same period one year ago.

Total assets increased $462.6 billion (2 percent) from second quarter 2021 to $23.3 trillion. Securities
rose $225 billion (3.9 percent), while cash and balances due from depository institutions rose $126.8
billion (3.6 percent). Growth in mortgage-backed securities (up $101.9 billion, or 3 percent) and U.S.
Treasury securities (up $99.3 billion, or 8.5 percent) continued to drive quarterly increases in total
securities. Loans and securities with maturities longer than 5 years now make up almost a third (31.3
percent) of total assets, up from 28 percent in fourth quarter 2019.

Loans that were 90 days or more past due or in nonaccrual status (i.e., noncurrent loans) continued to decline (down $13.2 billion, or 10.8 percent) from first quarter 2021. The noncurrent rate for total loans declined 12 basis points from the previous quarter to 1.01 percent. Net charge-offs also continued to decline (down $8.3 billion, or 53.2 percent) from a year ago. The total net charge-off rate dropped 30 basis points to 0.27 percent–the lowest level on record.
emphasis added

Click on graph for larger image.

The FDIC reported the number of problem banks declined to 46.

The number of FDIC-insured institutions declined from 4,951 in second quarter 2021 to 4,914. During
third quarter 2021, three new banks opened, 39 institutions merged with other FDIC-insured
institutions, one bank ceased operations, and no banks failed. The number of banks on the FDIC’s
“Problem Bank List” declined by ten from second quarter to 46, the lowest level since QBP data
collection began in 1984. Total assets of problem banks increased $4.8 billion (10.5 percent) from
second quarter to $50.6 billion.

This graph from the FDIC shows the number of problem banks and assets at 51 institutions.

Note: The number of assets for problem banks increased significantly back in 2018 when Deutsche Bank Trust Company Americas was added to the list (it must still be on the list given the assets of problem banks).

The dollar value of 1-4 family residential Real Estate Owned (REOs, foreclosure houses) declined from $1.37 billion in Q3 2020 to $0.79 billion in Q3 2021. This is the lowest level of REOs in many years. (Probably declined sharply due to foreclosure moratoriums, forbearance programs and house price increases).

This graph shows the nominal dollar value of Residential REO for FDIC insured institutions. Note: The FDIC reports the dollar value and not the total number of REOs.

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