All bank star ratings are now based on third quarter 2023 financial data and the word of the day is resilience.
However, Bauer currently rates 49 banks 2-Stars or below. (That’s four fewer than last quarter and two fewer than a year ago.) They can all be found on Bauer’s Troubled & Problematic Bank Report.
For the star rating on any federally-insured U.S. bank, simply visit BauerFinancial.com. (New credit union ratings will be coming soon.) Star ratings are always free on our website.
New Bank Star Ratings Just Released
All bank star ratings are now based on third quarter 2023 financial data and the word of the day is resilience.
The regulatory capital classification for all but five banks is “Well-Capitalized”. One bank, Zero-Star Citizens Bank, Sac City, IA dropped from Well-Capitalized all the way down to “Critically Undercapitalized” during the third quarter. It has already been shut down by regulators.
Mind you, Citizens Bank has been listed on Bauer’s Troubled and Problematic Bank Report for four quarters now. That’s because Bauer looks at much more than just capital levels when assigning star ratings. While its capital level looked healthy and it was posting quarterly profits, Citizens Bank was struggling with underwater loans.
After agreeing to an FDIC Consent order on August 3rd, Citizens Bank drowned, just three months later, (November 3rd).
5-Star Iowa Trust & Savings Bank, Emmetsburg, IA purchased the $66 million in assets and assumed its $59 million in total deposits. There were other bidders, but Iowa Trust was clearly the least costly.
Four other banks are currently “Adequately Capitalized” by regulatory standards, however, the FDIC has 44 banks on its “Problem Bank List”. Unfortunately, they won’t tell you which banks are on that list.
However, Bauer currently rates 49 banks 2-Stars or below. (That’s four fewer than last quarter and two fewer than a year ago.) They can all be found on Bauer’s Troubled & Problematic Bank Report.
That’s Resilience, with a capital R.
But there’s a lot more to this story.
Loan Balances increased from last quarter (0.4%) and also from a year ago (2.9%). Credit cards led the charge (pun intended) increasing 2.5% during the quarter and 12.7% over the year. Single family residential mortgages were next increasing by 0.9% and 4.7%, respectively.
The quality of those loans remains fair. Loans reported as 90 days or more past due increased by just 7 basis points during the quarter. However, year-over-year is another story. Between 9/30/22 and 9/30/23: loans past due 30-89 days increased by 9% and those delinquent 90+ days increased 17.6%. Fortunately, our bankers are provisioning for loan losses with a 33% increase in provision expense over the year.
While loans grew, total assets declined. The majority of that decline was in securities portfolios. Compared to a year ago, assets were down 0.9%. Banks with more than a 15% drop in total assets can be found on page 5.
Also declining are deposits, which fell half a percent ($90.4 billion) during the third quarter. In the past 12 months, deposits at our nation’s banks have dropped 4.2% (from $19.357 trillion to $18.554 trillion). Although, curiously (or not), uninsured deposits are estimated to have risen slightly.
And, we saved the best for last: Net Interest Margin (NIM) is up to 3.3%! It is even higher than the pre-pandemic average of 3.25%. Because, although the cost of funding deposits has gone up (faster than the yields on loans, we might add) the cost of non-deposit liabilities did not. Enjoy it while it lasts.
We already mentioned that one bank failed during the third quarter. We also have two de novo banks that opened for business during the quarter. Welcome:
3½-Star Icon Business Bank, Riverside, CA was established on August 22, 2023 with required capital of $22.72 million. By Sept. 30th, it had total assets of $29.977 million and total deposits of $4.205 million.
3½-Star Nave Bank, San Juan, PR just opened its doors on September 18th. Its paid in capital was an impressive $96 million.
