Quarterly Banking Profile 

Community Bank Results 

Second Quarter 2019 

Division of Insurance & Research

Risk Analysis Branch 

October 10, 2019 
Growth in both net interest income and noninterest income 

supported profitability 

Merger-Adjusted Change in 

Major Income Statement Components 

2Q2019 vs. 2Q2018 

$ Billions Positive Factor Negative Factor 

0.0 

0.5 

1.0 $0.52 $0.94 $0.01 $0.21 $0.82 $0.20 $0.12 

+2% +8% +5% +5% +6% +655% +10% 

 

Net Realized 

Net Interest Loan Loss Noninterest Noninterest Gains on Income 

Income Income Provisions Income Expense Securities Taxes 

Source: FDIC. 

2 
Interest Margin 

Net Interest Margin - Community Banks (3.68) 

4.25 

4.00 

3.75 

3.50 

3.25 

3.00 

2.75 

2009 

So urce: FDIC. 

- Industry (3.39) 

,,r, , ,,,, , ,,1,1 ,,,, , ,,,, , ,,1,t.-11 1 

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 

Net Interest Margins held steady quarter-over-quarter 

3 
Pre-tax ROA increased at community banks but declined at 

noncommunity banks YoY 

Quarterly Pretax Return on Assets 

Pretax Return on Assets 

Percent 

2.00 

1.00 

0.00 

-1.00 

Community Banks (1.48) 

Industry (1.73) 

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 

Source: FDIC. 

4 
 

 

■ 

■ 

Net operating revenue remains steady as a percent of average assets 

0.0 

0.5 

1.0 

1.5 

2.0 

2.5 

3.0 

3.5 

4.0 

4.5 

5.0 

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 

Noninterest Income (0.83) 

Net Interest Income (3.43) 

Quarterly Net Operating Revenue 

Source: FDIC. 

Average Assets 

Percent 

5 
Farm loans continue to show modest signs of stress while other 

portfolios show continued improvements. 

0.0 

2.0 

4.0 

6.0 

8.0 

10.0 

12.0 

14.0 

16.0 

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 

C&D Loans (0.58) Nonfarm Nonres (0.63) 

1-to-4 Family (0.94) C&I Loans (0.87) 

Home Equity (0.49) Farm Loans (1.28) 

Source: FDIC. 

Noncurrent Loan Rate 

Percent 

Noncurrent Loan Rates 

0.0 

0.4 

0.8 

1.2 

1.6 

2.0 

2017 2018 2019 

C&D Loans (0.58) Nonfarm Nonres (0.63) 

1-to-4 Family (0.94) C&I Loans (0.87) 

Home Equity (0.49) Farm Loans (1.28) 

Source: FDIC. 

Noncurrent Loan Rate 

Percent 

Noncurrent Loan Rates 

6 
 

 

 

 

In states with higher numbers of ag banks, noncurrent loan rates have 

been rising in the past four years. 

Percent of Portfolio 

0.00% 

0.20% 

0.40% 

0.60% 

0.80% 

1.00% 

1.20% 

1.40% 

1.60% 

1.80% 

Noncurrent Farmland 

Noncurrent Ag Production 

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 

Source: FDIC. Data is as of June 30 for each year due to seasonality of agriculture loans and is only 

for community banks in those states with more than 20 agriculture banks. 

7 
 

 

•• 

- - • 

•• •• •• •• 

•• •• 

•• •• . .. -- , - - .. .. •• 

0 •• 

•• 

4 l ------

-- t I I , 

0 

? 'f , -- -- ... ■- ? ~ ) -~ I I I I I I I I I I I I I I I I 

Performance varies from state to state and from bank to bank 

Past Due and Nonaccrual Agriculture Loans As a Share of Total Agriculture Loan Portfolio 

Percent 

5 

4 

3 

2 

1 

0 

75th percentile 25th percentile Median 

WI KS IN MT OK MN ND SD GA CO MO NE AR IA IL TX 

Source: FDIC. 

Note: Data are for farm banks, as of second quarter 2019. Includes states with at least 20 farm banks. 8 
 

 

Despite minor increases in a few portfolios, charge-off rates remain 

low for all portfolios 

-1.0 

0.0 

1.0 

2.0 

3.0 

4.0 

5.0 

6.0 

7.0 

8.0 

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 

C&D Loans -(0.03) Nonfarm Nonres (0.05) 

1-to-4 Family (0.03) C&I Loans (0.25) 

Home Equity (0.02) Farm Loans (0.10) 

Source: FDIC. 

Net Charge-Off Rate 

Percent 

Net Charge-Off Rates 

-0.2 

0.0 

0.2 

0.4 

0.6 

0.8 

1.0 

2017 2018 2019 

C&D Loans -(0.03) Nonfarm Nonres (0.05) 

1-to-4 Family (0.03) C&I Loans (0.25) 

Home Equity (0.02) Farm Loans (0.10) 

Source: FDIC. 

Net Charge-Off Rate 

Percent 

Net Charge-Off Rates 

9 
Loan growth remained strong and broad based 

Merger-Adjusted Change 

Percent Loan Balances and Unused Commitments 

Change 

12% Change 2Q 2019 vs. 2Q 2018 Change 2Q 2019 vs. 1Q 2019 

10% 

11.4% 

9.0% 

8.5% 

1.9% 

3.4% 

4.1% 

4.5% 

5.1% 

■ ■ 

8.3% 

8% 7.2% 

6.3% 

6% 

4% 

2.9% 

2.2% 

1.7% 1.8% 2% 1.6% 

0% 

Total NFNR C&I 1-4 Family C&D Ag Prod CRE & C&I 

C&D Loans 

Unused Loan Balances 

Commitments Source: FDIC 

10 
Community banks remain sensitive to rising rates as nearly 50 

percent of their assets have longer-term maturities 

11 

_____________ _,,.,,-

-----~ ..........._ _____ ............... _________ _ 

-... 

Total Assets 

Percent 

50 

Loans and Securities Maturities 

Loans more than 3 years 

40 

Securities more than 3 years 

35 

30 

25 

20 

10 

12 12 

0 

2009 2010 

Source: FDIC 

2011 2012 2013 2014 2015 2016 2017 2018 2019 
■ 

■ 

While liquid assets exceed wholesale funding, the gap 

narrowed in second quarter 2019 

0 

5 

10 

15 

20 

25 

30 

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 

Liquid Assets (16.91) 

Wholesale Funds (13.99) 

Source: FDIC. 

Note: Excludes TFR 

Percent of Total Assets 

Liquid Assets and Wholesale Funds 

12 
Capital ratios continued to improve and remain higher than the industry. 

Bank Regulatory Capital 

Total Risk-Based (15.80) 

Capital Ratios Percent Tier 1 Risk-Based (14.77) 

18 Equity (11.68) 

Leverage (11.14) 

14 

16 

12 

10 

8 

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 

Source: FDIC. 

13 
Rates of Voluntary Attrition, 1985 -1Q2019 

As Percent of Charters Reporting at Previous Year-End 

0% 

-1% 

-2% 

-3% 

-3.3% 

-4% 

-4.1 o/c 

-4.3% 

-5% -4.9% -4.8% 

-6% 

■ Other Closings Rate 

■ Merger Rate 

■ Consolidation Rate 

-7% 

1985 1988 1991 1994 1997 2000 2003 2006 2009 2012 2015 2018 

14