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Size equals Strength

Written by: Milton Joseph, Director of Modeling at VERIBANC, Inc.

The FDIC's recently released September 2013 (Quarterly Banking Profile) reveals an overall sound condition and continued financial improvement among the nation's Insured commercial and savings banks. For the quarter, the sector achieved a nearly 1.0% return on average assets, and, as of September 30th, the industry's Leverage (Core Capital) Ratio reached 9.4%. Nonperforming Assets-to-Assets fell to 1.8% at that date. At mid-year, comparable percentages were 9.3% and 1.9%, respectively.

Our asset size review indicates that small banks and thrifts, those with assets of less than $100 million, demonstrated particular strength. As of September 30th, that category of institution reported a Leverage Ratio of 11.7% and a Loss Reserve-to-Noncurrent Loan Ratio of 87.4%. Both percentage were the highest among any of the measured asset-size peer groups.

Interestingly, at September 30th, deposits held by FDIC-Insured institutions exceeded $11.0 trillion. Included in that total were deposits of close to $1.6 trillion that were higher than the FDIC's $250 thousand Insurance limit. Nearly all of the $1.6 trillion of Un-Insured deposits (91.6%) were held at large institutions with total assets greater than $10 billion. One might conclude that size does continue to equate to strength



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