FDIC Advisory Committee on 

Community Banking 

October 26, 2022 

Discussion of Banking Conditions
 

Outline 

• Economic Overview 

• Market and Liquidity Risk 

• Deposit Trends 

• Increased Net Unrealized Losses on Debt Securities 

• Credit Risk 

• Commercial Real Estate 

• Residential Real Estate 

• Consumer Lending 

2 
Across States and Washington, DC 

 

·, . . 

Percentage of Jobs Lost Between March and April 2020 and Recovered as of December 2021 

74 

"" -- 76 

80 

71 

•• 86 

·~~ 

• 71 93 

Source: Bureau of Labor Statistics (Haver Analytics). 

71 75 

\ - 81 

63 L 78 

81 ~ 80 

75 ' 78 75 

91 77 ~79 

82 79 ~ 81 

82 47 

93 92 

89 

88 97 

92 

Share of Jobs Recovered 

■ Tops 

Above Nationwide Average 

Below Nationwide Average 

■ Bottom 5 

National Average: 84 percent 

Note: Among the Bottom 5 is Washingt on, D.C., w hich has recovered 47 percent of jobs lost. 

ECONOMIC OVERVIEW: The Recovery in Jobs Lost Has Been Uneven 

3 
Year-Over-Year Percent Change 

7 

6 

5 

4 

3 

2 

1 

0 

-1 

-2 

-3 

2000 2002 2004 2006 2008 

Source: Bureau of Labor Statistics (Haver Analytics). 

- CPI - Core CPI 

2010 2012 2014 2016 2018 2020 

Note: Shaded areas indicate recession. CPI measures average change over time in prices consumers pay for a 

basket of goods and services. Core CPI excludes more volatile components, including food and energy. 

ECONOMIC OVERVIEW: Both the Headline and Core Consumer Price 

Index Reached Multi-Decade Highs 

4 
 

 

Economic Conditions Discussion 

• How is your bank being affected by inflation, 

rising interest rates, and growing concerns of a 

recession? 

5 
 

Deposits 

$ Trillions 

2.50 

2.25 

2.00 

1.75 

1.50 

82.7 

2012 

Source: FDIC. 

• Deposits (Left Axis) 

- Deposits as a Percent of Total Assets (Right Axis) 

2013 2014 2015 2016 2017 2018 2019 

Deposits to Tota I Assets 

Percent 

85.7 86 

85 

84 

83 

82 

81 

80 

2020 2021 

MARKET RISK: Community Bank Deposits Continue to Reach Record Levels 

6 
 

 

 

 

■ 

■ 

■ 

■ 

MARKET RISK: Since the Pandemic Began, Most Bank Asset Growth Has 

Been in Securities and Cash Accounts 

$ Trillions Gross Loans and Leases 

0 

5 

10 

15 

20 

25 Securities 

Cash and Due From Balances 

All Other Assets 

56.4% 

21.4% 

8.9% 

13.3% 

49.7% 

23.4% 

14.6% 

12.4% 

47.4% 

26.3% 

15.0% 

11.2% 

2019 2020 2021 

Source: FDIC. 

Note: Bars show total gross loans, securities, cash and due from balances, and all other assets amounts from bottom to 

top. Percent of total assets is represented on the bars. 2020 and 2021 do not sum to 100 percent due to rounding. 7 
 

 

Market Risk Discussion 

• What deposit trend is your bank experiencing? 

• How are you managing your securities portfolio in light of 

rising interest rates? 

8 
Net Absorption as a Share of Inventory 

Percent 

5.0 

4.0 

3.0 

2.0 

1.0 

0.0 

-1.0 

Dec-16 

Source: Co Star. 

Dec-17 

Note: Data are annual through December 2021. 

- Multifamily 

- Office 

- Retail 

- Industrial 

Dec-18 Dec-19 Dec-20 Dec-21 

CREDIT RISK-CRE: Demand For Most CRE Property Types Has Improved 

From Pandemic Lows 

9 
C 

 

$ Trillions 

3.0 

2.5 

2.0 

1.5 

1.0 

0.5 

0.0 

■ Acquisition, Development, and Construction 

■ Nonfarm Nonresidential 

■ Multifamily 

■ CRE not Secured by Real Estate 

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 

Source: FDIC. 

Note: Data are quarterly from fourth quarter2008 through fourth quarter 2021. 

CREDIT RISK-CRE: CRE Loans at Banks Are Growing 

10 
 

House Price Index 

Year-over-year percent change 

25 

20 

15 

10 

5 

0 

-5 

-10 

-15 

-20 

2001 2003 2005 

\ 

\ 

\ 

2007 

' ., 

\ I 

' .. , I 

2009 2011 

,. ' , ' 

I ' 

I \ 

Recession 

- - - Midwest 

- - Northeast 

······ South 

- - - West 

- U.S. 

-- ... I ' ..., ... ___ _.. 

--­.... .,. - --...::; 

_,,. ..... _,. --- - ---- ----- --- ---

2013 2015 2017 2019 

Sources: Federa I Housing Fina nee Agency, Moody's, Nation a I Bureau of Economic Resea rch (Haver Analytics). 

Note: Data are quarterly seasonally adjusted purchase-only house price index figures through fourth quarter 

2021. 

,,, ' 

2021 

CREDIT RISK-RESIDENTIAL: Home Price Growth Reached a New Peak in 2021 

11 
Single-Family Housing Starts 

Share of housing stock, percent 

0.5 

0.4 

0.3 

0.2 

0.1 

0.0 

2001 2003 2005 2007 2009 

Existing Single-Family Houses for Sale 

Months of supply 

14 ----- Housing Starts (Left Axis) 

- Existing Houses for Sale (Right Axis) 

2011 2013 

Balanced Supply of Homes 

for Sale - 6 Months 

2015 2017 2019 

12 

10 

8 

-----...... 

I \ 6 , .. , I ' ,, . 

4 

2 

0 

2021 

Sources: Nation a I Association of Rea Ito rs, Census Bureau, Nation a I Bureau of Econo mic Research (Haver Analytics). 

Note: Shaded areas indicate recession. Data a re quarterly figures th rough fourth quarter 2021. 

CREDIT RISK-RESIDENTIAL: Inventory of Existing Homes Remains Low 

Despite Construction Growth 

12 
 

Share of Banks Within Each 1-4 Family Residential Past-Due Rate Bucket 

Percent 

100 

90 

80 

70 

60 

so 

40 

30 

20 

10 

0 

■ 0 to 1 Percent ■ 1 to 3 Percent ■ 3 to 5 Percent ■ > 5 Percent 

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 

Source: FDIC. 

Note: Data as of fourth quarter each yea r. 

CREDIT RISK-RESIDENTIAL: Mortgage Credit Quality Has Improved 

Among Insured Institutions Across the Nation 

13 
Change From January 2020 

Percent 

180 

160 

140 

120 

100 

80 

60 

40 

20 

0 

-20 

- Employee Compensation 

- Government Transfers 

- Other Income 

- Total Personal Income 

Feb-20 Apr-20 Jun-20 Aug-20 Oct-20 Dec-20 Feb-21 Apr-21 Jun-21 Aug-21 Oct-21 Dec-21 

Source: Bureau of Economic Analysis (Haver Ana lytics). 

Note: Data are monthly through December 2021. 

CREDIT RISK-CONSUMER: Government Fiscal Programs Continued to 

Boost Personal Income in 2021 

14 
 

Share of Loans Noncurrent 

Percent 

1.8 

1.6 

1.4 

1.2 

1.0 

0.8 

0.6 

0.4 

0.2 

0.0 

Mar-2019 

Source: FDIC. 

Sep-2019 Mar-2020 

Note: Data a re quarterly th rough fourth quarter 2021. 

- Consumer Loans 

- Credit Card Loans 

- Auto Loans 

- Other Consumer Loans 

Sep-2020 Mar-2021 Sep-2021 

CREDIT RISK-CONSUMER: Noncurrent Rates on Consumer Loans Fell in 2021 

15 
Credit Risk Discussion 

• What is your outlook for loan growth and credit 

quality? 

• Has your bank changed its underwriting standards 

in light of market trends? 

• What trends are of most concern to you? 

16 
 

General Discussion 

• What other risks or concerns would you like to 

highlight? 

17