The FDIC Quarterly provides a comprehensive summary of the most current financial results for the banking industry, along with feature articles. These articles range from timely analysis of economic and banking trends at the national and regional level that may affect the risk exposure of FDIC-insured institutions to research on issues affecting the banking system and the development of regulatory policy. The FDIC Quarterly brings together data and analysis that were previously available through three retired publications -- the FDIC Outlook, the FDIC Banking Review, and the FYI: An Update on Emerging Issues in Banking. Past issues of these publications are archived under their original publication names.
FDIC-insured institutions reported an aggregate profit of $14.5 billion in the third quarter of 2010, a $12.5 billion improvement from the $2 billion the industry earned in the third quarter of 2009. This is the fifth consecutive quarter that earnings have registered a year-over-year increase. Almost two-thirds of all institutions reported improvements in their quarterly net income from a year ago, but nearly one in five institutions had a net loss for the quarter. The average return on assets (ROA) rose to 0.44 percent, from 0.06 percent a year ago.
Insurance Fund Indicators
Estimated insured deposits (based on $250,000 coverage) declined by 0.3 percent during the third quarter of 2010. The Deposit Insurance Fund reserve ratio was -0.15 percent on September 30, 2010, up from -0.28 percent on June 30, 2010, and -0.16 percent one year earlier. Forty-one FDIC-insured institutions failed during the quarter. The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) revised the statutory authorities governing the FDICs management of the deposit insurance fund and requires that the FDIC change the deposit insurance assessment base from domestic deposits to average assets less average tangible equity. The FDIC is implementing these changes and related changes to risk-based premium rates through the rulemaking process.
Temporary Liquidity Guarantee Program
As of September 30, 2010, about 74 percent of FDIC-insured institutions have opted in to the Transaction Account Guarantee Program, and 7,489 eligible entities elected the option to participate in the Debt Guarantee Program. Approximately $107 billion in non-interest-bearing transaction accounts was guaranteed as of September 30, 2010, and $287 billion in guaranteed senior unsecured debt, issued by 68 entities, was outstanding at the end of the third quarter.
Feature Articles:Toward a Long-Term Strategy for Deposit Insurance Fund Management
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The FDIC has developed a comprehensive, long-range management plan for the Deposit Insurance Fund. The plan is designed to reduce pro-cyclicality; keep assessment rates moderate, steady, and predictable throughout economic and credit cycles; and maintain a positive fund balance even during a period of large fund losses. This article presents the FDIC analysis that informed the medium- and long-term elements of the plan. Using multiple simulations, this analysis demonstrates that a moderate, long-term average industry assessment rate, combined with an appropriate dividend or assessment rate reduction policy, would have prevented the fund from becoming negative during both the crises of the 1980s and early 1990s and the current crisis. However, the funds reserve ratio would have had to have exceeded 2 percent before the crises began.
Highlights from the 2010 Summary of Deposits
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Each year as of June 30, the FDIC and the Office of Thrift Supervision survey each FDIC-insured institution to collect information on bank and thrift deposits and operating branches and offices. The resulting Summary of Deposits (SOD) is a valuable resource for analyzing deposit and office trends as well as domestic deposit market share. This article highlights findings from the 2010 SOD.