2008 to 2018 Decade Comparison

Transcription

1 2008 to 2018 Decade Comparison Colorado June 30, 2008 to June 30, 2018 Contents: Summary --Why we prepared this brief decade review of Colorado banking. Colorado Banking Performance Summary --Key changes from FDIC's Quarterly Banking Profile Non Interest Expense & Income Metrics --UBPR non-interest metrics included efficiecy ratio. Loan and Capital Amounts --Loan and capital amounts from Call Report total for all Colorado banks. CRE 1 & 2 Ratios --Comparison of CRE concentrations for Colorado banks for two periods. Loan Concentrations by Call Report Category --Comparison of Call Report loan categories concentrations as a % of RBC. Colorado FDIC Insured --Change in deposits by period and location of bank charter. Top 10 Deposit Share 2017 and Change from How the Top 10 market share institutions have fared since Prepared by: Larry Martin Senior Adviser (303) larry@bankstrategiesllc.com

2 Summary It is approximately ten years since Lehman Brothers failed and the start of our severe economic downturn. The downturn had a significant impact on banks in various ways. The impacts included higher loan losses due to real estate values declining, business failures and bankruptcy filiings. Many banks failed as a result, others pursued initiatives to better use capital, reduce expenses and refocus loan portfolios and funding sources. Thought it would be interesting to look at how the Colorado bank structure and performance has changed in the ten years. The following few pages provide a snapshot look at Colorado banking in June 2008 and June While much of the change was not surprising, some were surprising. There is nothing earth shattering. Enjoy purusing the pages. Any feedback you care of offer is welcome.

3 Colorado Banking Performance Summary Quarterly Banking Profile All FDIC-Insured State of Colorado (dollar figures in millions) 30-Jun Jun-18 Value Chng % Change Number of institutions reporting (75) % Total employees (full-time equivalent) 12,523 10,770 (1,753) % AGGREGATE CONDITION AND INCOME DATA Net income (year-to-date) % Total assets 53,968 63,480 9, % Earning assets 49,342 59,194 9, % Total loans & leases 34,457 41,314 6, % Other real estate owned (56) % 1. Total FTEs are only down 14% despite consolidation and focus on expense reduction. 2. Net income is double for banks despite a large reduction in number of banks and narrower NIM. 3. Total and Earning assets are higher than for the lesser number of Colorado banks Total deposits 42,994 53,989 10, % 4. Same for deposits and equity capital. Equity capital 5,319 6,360 1, % 5. ROA and ROE are higher in 2017 than PERFORMANCE RATIOS (YTD, %) 6. Net Loans & Leases to assets is about the same. Yield on earning assets (2) % Cost of funding earning assets (2) % Net interest margin (0) -3.54% Noninterest income to avg. earning asset (0) % Noninterest expense to avg. earning asse (1) % Net charge-offs to loans & leases (0) % Credit-loss provision to net charge-offs % Net operating income to average assets % Retained earnings to average equity % Pre tax return on assets % Return on assets % Return on equity % Percent of unprofitable institutions (12) % Percent of institutions with earning gains % CONDITION RATIOS (%) Net loans and leases to assets % Loss allowance to: Loans and leases (0.16) % Noncurrent loans a % Noncurrent loans & leases to total loans & leas (1.00) % Nonperforming assets to assets (0.76) % Core deposits to total liabilities % Equity capital to total assets % Core capital (leverage) ratio % Total capital to risk-weighted assets % Gross 1-4 family mortgages to gross ass % Gross real estate assets to gross assets %

4 Non Interest Expense & Income Metrics Uniform Bank Performance Report-All Colorado FDIC Insured All Colorado Chartered Value 6/30/2008 6/30/2018 June 30 of each period Change % Change Percent of Average Assets Non Interest Expense Levels Personnel Expense % Occupancy Expense (0.12) % Other Oper Exp (Incl Intangibles) (0.18) % Total Overhead Expense (0.25) -7.55% Overhead Less Nonint Inc (0.06) -2.53% Other Income & Expense Ratios Efficiency Ratio (1.28) -1.88% Avg Personnel Exp Per Empl($000) % Assets Per Employee ($Million) % 1. Efficiency ratio is nearly the same. 2. Assets per employee is nearly the same.

5 Loan and Capital Amounts Colorado Chartered June 30, 2008 and June 30, 2018 Total Loans and Capital Colorado ($ thousands) 6/30/2008 6/30/2018 Value Chng % Change Number of (64) % Total assets 53,968,007 63,480,022 9,512, % Net loans and leases 34,037,769 40,877,037 6,839, % Loan loss allowance 419, ,323 17, % Tier one (core) capital* 4,476,389 5,930,800 1,454, % Tier 2 Risk-based capital* 417, ,597 69, % Total loans and leases 34,457,470 41,314,360 6,856, % All real estate loans 27,381,076 32,645,096 5,264, % Construction and development loans* 9,016,605 3,432,475 (5,584,130) % Residential 1-4 family construction 3,256,316 1,258,304 (1,998,012) % Other construction, all land development and other land 5,760,289 2,174,171 (3,586,118) % Secured by nonfarm nonresidential properties 9,026,997 12,348,994 3,321, % Nonfarm nonresidential secured by owner-occupied properties 3,933,004 4,985,124 1,052, % Commercial real estate other non-farm non-residential** 4,486,407 7,363,870 2,877, % Multifamily residential real estate** 631,370 1,543, , % 1-4 family residential loans 7,420,804 14,049,956 6,629, % Farmland loans 1,285,299 1,269,992 (15,307) -1.19% Loans held in foreign offices 1 - (1) % Farm loans 1,194, ,553 (239,688) % Commercial and industrial loans 4,316,002 4,687, , % Loans to individuals 1,160, ,261 (485,870) % All other loans & leases 458,938 2,380,391 1,921, % Loans not secured by RE** 120, ,839 74, % *Used in calculating CRE1 and 2 ratios **Used in calculating CRE2 ratio 1. Construction and Development loans are dramatically less, probably because some of the bigger 2008 firms failed. 2. C&I loans are only slightly higher despite a focus by many institutions on C&I over the past several years.

6 CRE 1 & 2 Ratios Measures of Concentration in CRE Loans to Risk Based Capital CRE1 and 2 Ratios 6/30/2008 6/30/2018 Change Colorado CRE1 Ratio % 53.49% % None really, focus of banks has been to stay within guidelines. CRE 2 Ratio % % %

7 Loan Concentrations by Call Report Category As a % of Risk Based Capital Call Report Loan Categories Risk Based Capital / RBC 6/30/2008 6/30/2018 Change Total loans and leases % % % All real estate loans 78.51% 78.10% -0.42% Construction and development loans* 14.58% 4.64% -9.94% Residential 1-4 family construction 8.95% 3.49% -5.46% Other construction, all land development and other land 46.93% 46.35% -0.59% Secured by nonfarm nonresidential properties % % % Nonfarm nonresidential secured by owner-occupied properties 26.60% 34.33% 7.73% Commercial real estate other non-farm non-residential** 34.62% 42.48% 7.86% Multifamily residential real estate** 7.50% 12.50% 5.00% 1-4 family residential loans % % 12.73% Farmland loans 15.96% 8.14% -7.82% Loans held in foreign offices 0.00% 0.00% 0.00% Farm loans 92.92% 75.16% % Commercial and industrial loans % % % Loans to individuals 21.05% 11.95% -9.10% All other loans & leases 8.38% 44.40% 36.01% Loans not secured by RE** 7.47% 6.41% -1.06% 1. C&I loans have increased due to deemphasis in CRE

8 Colorado FDIC Insured reported with FDIC insured institutions with Colorado offices Values ($ Thousands) Colorado Based* ,776, ,167, % % 8.12% Based Elsewhere ,363, ,417, % 11.06% % Total Colorado 198 1,665 83,140, , ,584, % % 59.47% *Colorado State Bank Charter **June 2018 data not currently available at time of report preparation Share of Market Colorado Based* 78.79% 50.57% 50.25% 62.86% 38.70% 34.07% % % % Based Elsewhere 21.21% 49.43% 49.75% 37.14% 61.30% 65.93% 75.10% 24.02% 32.53% Total Colorado % % % % % % 0.00% 0.00% 0.00% *Had a Colorado State Bank Charter **June 2018 data not currently available at time of report preparation 30-Jun-08 6/30/2017** % Change 2008 to Jun-08 6/30/2017** % Change 2008 to 2017 Reported Reported Reported Reported 1. The level of total deposit growth of nearly 60%. 2. The low level of growth in deposits of Colorado based banks of only 8%. 3. The correlation between branch growth of out of state institutions and deposits compared to in-state institutions. Reported Reported

9 Top 10 Deposit Share 2017 and Change from 2008 June 2008 June 2017 Top 10 Change 2008 to 2017 Top 10 Deposit Market Share ($ Thousands) State Market Position Market Position (Hqtrd) Share Rank Share Rank % Change Wells Fargo Bank, National Association SD 13,529, % 1 31,778, % 1 18,249, % FirstBank CO 7,655, % 2 14,783, % 2 7,127, % U.S. Bank National Association OH 6,484, % 3 14,619, % 3 8,135, % JPMorgan Chase Bank, National Association OH 4,558, % 4 12,878, % 4 8,319, % Bank of the West CA 2,984, % 5 4,539, % 5 1,554, % KeyBank National Association OH 2,913, % 6 4,196, % 6 1,282, % Alpine Bank CO 2,181, % 8 2,892, % 7 710, % Guaranty Bank and Trust Company CO 1,708, % 10 2,783, % 8 1,075, % First National Bank of Omaha NE 2,081, % 9 2,694, % 9 612, % ZB, National Association UT 1,692, % 11 2,646, % , % Total Colorado 83,140, ,584,197 49,443, % Share Held by Above 45,790, % 93,811, % 48,020, % 1. That Alpine Bank significantly trails overall deposit growth and has lost share.