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News Release 2013-154
October 1, 2013
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CHICAGO — National banks and federal savings associations located in nine Midwestern and upper Midwestern states continue to report better earnings compared with 2012 as a result of improving credit quality, the Office of the Comptroller of the Currency reported today in the agency’s second quarter 2013 risk analysis. In addition, the condition of national banks and federal savings associations in the Chicago area is stabilizing, with the number of problem institutions falling modestly since last year.
The analysis covers nine states in the OCC’s Central District: Illinois, Indiana, Michigan, North Dakota, Ohio, Wisconsin, most of Kentucky and Minnesota, and the eastern third of Missouri.
“The trends reflect continued improvement, and we expect further reductions in the number of problem banks,” said OCC District Deputy Comptroller Bert Otto. “Efforts to strengthen bank capitalization and profitability have been successful to date, though additional work remains. As a result of this progress, more of our banks are looking to increase lending activity in their communities. Many have been able to achieve growth in commercial loans as we’ve seen volume pick up there in recent quarters,” Mr. Otto reported.
Financial performance and condition through much of the district had been improving the last two years, with the recovery in Chicago lagging. However, conditions in northeastern Illinois are now looking up, with fewer delinquencies, lower loan losses and improved capital levels. These factors have led to a reduced number of institutions identified by examiners as problems, which require heightened supervision. “Community banks and thrifts throughout the District have made good strides to further bolster their balance sheets and risk systems. Our examiners will continue to work with these institutions in an effort to see the improving trends sustained,” Mr. Otto noted.
The analysis is developed quarterly by the OCC’s Central District’s Risk Committee which analyzes financial data from the Consolidated Reports of Condition and Income, also known as the “Call Report,” in addition to input from the 18 local Assistant Deputy Comptrollers. The analysis identifies current and potential risks facing the district’s national banks and savings institutions and assists banks in proactively identifying and managing potential risks.
The risk analysis also reveals that rapidly growing bank portfolios have historically been a concern as the growth often strains capital and risk management system support.
“Our examiners will closely monitor credit risk selection and underwriting at upcoming exams, particularly in those banks growing their commercial loans rapidly, to ensure standards aren’t being inappropriately compromised,” said OCC Risk Committee Chairman and District Risk Officer John Meade.
Other highlights on the condition of the OCC’s Central District banks include:
The OCC’s Central District supervises 526 community banks and savings institutions which hold a national charter and range in size from $3 million to $11 billion. Combined, the national banks and federal savings associations in the OCC Central District hold $192 billion in assets.
For a breakout of conditions in each of the nine states, please see the attached fact sheets containing state specific information.
Bill Grassano (202) 649-6870