State of the Banking Industry

Transcription

1 State of the Banking Industry Andrew S. Howell President and Chief Executive Officer

2 Challenges and Opportunities Factors Impacting the Banking Industry o Housing Markets o Mortgage Markets Fifth District Member Performance* o Balance Sheet Changes o Earnings o Asset Quality o Capital Adequacy *Throughout presentation members are as of March 31, 2016 (excluding J.P. Morgan Chase) 2

3 2,250 2,000 1,750 1,500 1,250 1, , , ,036 Housing Starts Annualized (Thousands) Average = 1, * Single-Family Multi-Family * Annualized Starts 2,073 1,812 1, ,001 1,108 1,164 Year-over-Year % Change 6% -13% -26% -33% -38% 6% 4% 28% 18% 8% 11% 5% * Annualized as of May 2016 Source: Federal Reserve 3

4 Case-Shiller 20-City Home Price Index Seasonally Adjusted April % +37% April January January 12-21% +13% February 12 April 16 Total Index Cleveland Index Year-over-Year Percent Change U.S. Index -3.8% -15.7% -13.3% 1.3% -3.9% 0.9% 12.0% 7.9% 5.0% Cleveland Index -3.8% -7.3% -4.8% 0.7% -4.3% 0.0% 4.4% 1.8% 2.0% Source: Federal Reserve 4

5 Case-Shiller Home Price Index Housing Price Increases Vary by Region Change in Home Prices, April 2016 vs. April 2015 and from Peak Price Cities Where Current Price is at Peak Cities Where Current Price < Peak % Change: % Change: 1 Year 10 Years 1 Year 10 Years Portland 12.8% 15.1% Tampa 7.9% (23.2%) Seattle 11.2% 14.4% Atlanta 6.6% (1.6%) Miami 6.6% (23.6%) Denver 9.9% 32.4% San Diego 6.5% (10.5%) Dallas 9.0% 32.1% Los Angeles 6.0% (9.0%) San Francisco 8.3% 4.5% Detroit 5.9% (15.4%) Boston 5.8% 5.1% Las Vegas 5.8% (36.7%) Charlotte 5.1% 12.7% Phoenix 5.6% (29.5%) Minneapolis 4.8% (11.9%) Chicago 3.2% (19.7%) Cleveland 2.9% (9.6%) New York 2.6% (16.2%) Washington, DC 1.9% (14.7%) Source: Case-Shiller Index; Federal Reserve St. Louis 20-City Composite 5.6% (8.9%) 5

6 Beyond Liftoff: Outlook for the U.S. Economy and Fed Policy Jim DeMasi, CFA Stifel, Nicolaus & Company, Inc. Jim will discuss: The outlook for economic growth, Fed policy and interest rates over the next two to three years 6

7 Mortgage Originations and Rates U.S. Banks and Thrifts ($Trillions) $ % $3.00 $ % Mortgage Originations $2.50 $2.00 $1.50 $1.00 $0.50 $ % 47% $ % 49% $ % 50% $ % 68% $ % 67% $ % 64% $2.12 $1.93 $1.35 $1.75 $ * 30% 41% 70% 59% 61% 52% 39% 48% 59% 41% 6.00% 5.50% 5.00% 4.50% 4.00% 3.50% 3.00% 30 Year Mortgage Rate Refinancing Purchase 30 Yr Mtg Rate *Annual Estimate Source: Freddie Mac Economic and Housing Market Outlook 7

8 80% 70% 60% 50% 40% 30% 20% 10% 0% Home Purchase Loans Originated U.S. Market Share 73% 68% 66% 64% 60% 58% Financial Institutions (Banks,Thrifts,Credit Unions) 54% 27% 32% 34% % Others 40% 42% 46% Source: HMDA (Most Recent Data Available) 8

9 Planning for Emerging Technologies: An Executive-Level Roadmap Jack Vonder Heide Technology Briefing Centers, Inc. Jack will discuss: An executive-level overview of new and emerging technologies How banks can compete with non-bank and direct lenders Advice for crafting a strategy that delights customers, improves internal operational efficiencies and provides a foundation for longterm growth 9

10 $800 $750 $700 $650 $600 $550 $500 $450 Loans and Deposits Fifth District Member Banks & Thrifts ($Billions) $84 $749 $ %* 4.2%* $ Q Loans Deposits $ Billions Q Deposit-to-Loan Gap ($62) $6 $20 $54 $59 $73 $74 $78 $84 Loan-to-Deposit Ratio 114% 99% 96% 91% 90% 89% 89% 89% 89% *Compound Annual Growth Rate

11 $250 $200 Investment Securities Fifth District Member Banks & Thrifts ($ Billions) Compound Annual Growth Rate = 14% $150 $100 $50 $ Q Investments as % of Total Assets 13.1% 15.8% 17.2% 18.3% 18.9% 20.3% 21.5% 22.3% 22.0% 11

12 Securities Composition Fifth District Member Banks & Thrifts Other, 7% Year-End 2008 Municipals, 15% Treasuries, 0.4% Agencies, 9% Other, 3% Q Municipals, 9% Treasuries, 5% Agencies, 6% MBS, 69% MBS, 78% 12

13 Loan Growth Fifth District Member Banks and Thrifts ($Billions) $225 $200 $175 $150 *3.8% *7.9% $125 $100 $75 *5.4% *3.4% $ Family Commercial & Industrial Commercial Real Estate Consumer *Compound Annual Growth Rate

14 Loan Growth Fifth District Member Banks and Thrifts ($Billions) Members with Assets Less than $10 Billion Members with Assets Greater than $10 Billion $60 $55 $50 $45 $40 $35 $30 $25 $20 $15 $10 $ Family Commercial & Industrial Commercial Real Estate Consumer 2015 *3.6% *7.2% *8.2% *5.2% $150 $140 $130 $120 $110 $100 $90 $80 $70 $60 $50 $ Family Commercial & Industrial Commercial Real Estate Consumer *7.9% 2015 *3.8% *5.4% *1.1% *Compound Annual Growth Rate

15 Loan Composition Fifth District Member Banks & Thrifts Year-End 2008 Asset Size: < $10 Billion Q Commercial Real Estate, 21% Commercial & Industrial, Consumer, 10% 6% Commercial Real Estate, 26% Commercial & Industrial, 13% Consumer, 6% 1-4 Family Mtg, 40% Other, 24% 1-4 Family Mtg, 38% Other, 17% Year-End 2008 Asset Size: > $10 Billion Q Commercial Real Estate, 12% Commercial & Industrial, 23% 1-4 Family Mtg, 29% Consumer, 15% Other, 21% Commercial Real Estate, 9% Commercial & Industrial, 30% 1-4 Family Mtg, 28% Consumer, 16% Other, 17% 15

16 Maturity & Non-Maturity Deposits Fifth District Member Banks & Thrifts ($ Billions) $700 $600 $500 $400 $300 $200 $100 Compound Annual Growth Rate Non-Maturity Deposits 14% Maturity Deposits 9% $255 $349 $174 $172 $398 $141 $641 $653 $596 $553 $465 $509 $124 $113 $105 $99 $93 $96 $ Q Non-Maturity Maturity 16

17 Deposit Composition Fifth District Member Banks & Thrifts Time, 54% Year-End 2008 Other, 8% Demand, 10% Money Market & Savings, 28% Asset Size: < $10 Billion Time, 30% Q Money Market & Savings, 46% Other, 10% Demand, 14% 46% Non-Maturity Deposits Year-End 2008 Time, 31% Money Market & Savings, 57% Asset Size: > $10 Billion Other, 2% Demand, 10% 70% Non-Maturity Deposits Money Market & Savings, 79% Q Time, 8% Other, 2% Demand, 11% 69% Non-Maturity Deposits 92% Non-Maturity Deposits 17

18 Managing IRR and Core Deposit Analysis Ryan W. Hayhurst Managing Director, The Baker Group Ryan will discuss: How to analyze non-maturity deposits and prepare for possible migration Balance sheet strategies appropriate for the current interest rate environment Improving investment portfolio performance 18

19 7.00% Net Interest Spread Fifth District Member Banks & Thrifts 6.00% 5.00% 6.31% 5.63% 5.25% 4.94% 4.61% 4.33% 4.24% 4.18% 4.15% 4.00% 3.00% 2.00% 1.00% 0.00% 3.45% 3.41% 3.69% 3.77% 3.78% 3.66% 3.67% 3.65% 3.64% 2.87% 2.22% 0.83% 0.67% 0.57% 0.52% 0.51% 1.56% 1.16% Q Yield on Earning Assets Cost of Funds Net Interest Spread Change in Basis Points Q Yield on Earning Assets (69) (38) (31) (33) (28) (9) (7) (2) Cost of Funds (64) (66) (39) (33) (16) (10) (5) (1) Note: Calculations based on simple-average 19

20 8.00% 7.00% 6.00% 5.00% 4.00% 3.00% 2.00% 7.07% 5.13% Yield on Investments & Loans Fifth District Member Banks & Thrifts 6.42% 4.57% 6.23% 3.87% 6.04% 3.62% 5.84% 2.86% 5.58% 5.37% 5.26% 5.17% 2.60% 2.65% 2.59% 2.74% Q Yield on Investment Securities Yield on Loans Change in Basis Points Q Yield on Investment Securities (56) (70) (25) (76) (26) +5 (6) +15 Yield on Loans (65) (19) (19) (20) (26) (21) (11) (9) Note: Calculations based on simple-average 20

21 Performance-Based Comparison Fifth District Member Banks & Thrifts Q Net Interest Margin 3.69% 3.69% 3.80% 3.85% 3.79% 3.71% 3.71% 3.69% 3.68% Loan Loss Provision-to-Avg. Assets 0.42% 0.59% 0.55% 0.45% 0.34% 0.20% 0.13% 0.10% 0.09% Non-Interest Income-to-Avg. Assets 0.72% 0.72% 0.72% 0.68% 0.80% 0.76% 0.74% 0.82% 0.78% Non-Interest Expense-to-Avg. Assets 3.08% 3.16% 3.04% 3.05% 3.09% 3.10% 3.10% 3.13% 3.17% ROAA 0.49% 0.34% 0.56% 0.63% 0.75% 0.75% 0.81% 0.87% 0.79% ROAE 4.85% 3.16% 4.85% 5.31% 6.69% 6.55% 7.08% 7.24% 7.40% Note: Calculations based on simple-average 21

22 Performance Based Comparison Fifth District Member Banks & Thrifts ROAA ROAE 1.25% 1.00% 0.75% 0.50% 0.25% 0.00% -0.25% -0.50% -0.75% -1.00% Q % 10.00% 7.50% 5.00% 2.50% 0.00% -2.50% -5.00% -7.50% % % Q Asset Size: < $1B $1B - $10B > $10B Asset Size: < $1B $1B - $10B > $10B Note: Calculations based on simple average 22

23 Non-Current Loans Fifth District Member Banks and Thrifts (By Loan Category) Banks & Thrifts with Assets less than $10 Billion Banks & Thrifts with Assets greater than $10 Billion 4.5% 4.5% 4.0% 4.0% 3.5% 3.5% 3.0% 3.0% 2.5% 2.5% 2.0% 2.0% 1.5% 1.5% 1.0% 1.0% 0.5% 0.5% 0.0% Q % Q Family Commercial Real Estate 1-4 Family Commercial Real Estate Commercial & Industrial Consumer Commercial & Industrial Consumer Note: Calculations based on simple average 23

24 Fifth District Member Banks & Thrifts Risk-Based Capital Ratios Common Equity Tier 1 Capital Ratio Institution Asset Size: <$10 Billion Institution Asset Size: >$10 Billion 18.0% 18.4% 18.8% 19.3% 19.1% 19.0% 6.5% Well-Capitalized 12.4% 13.3% 13.4% 12.3% 12.2% 12.2% Q Q Core Capital (Leverage) Ratio Institution Asset Size: <$10 Billion Institution Asset Size: >$10 Billion 5% Well-Capitalized 11.0% 11.0% 11.3% 11.6% 11.7% 11.7% 10.4% 10.3% 10.6% 10.5% 9.7% 9.7% Q Q

25 Community Bank Metrics How Community Banks Achieve Higher Earnings Performance Robert Walters, CPA, CVA The Bank Advisory Group, LLC Robert will discuss: The critical factors that deserve focus by financial managers in order to improve performance 25

26 Current Events FHLB Cincinnati website redesign Members Only enhancements in progress FHLB Des Moines and Seattle Merger complete Final Rulemaking by FHFA Regarding Membership On-going mortgage asset test not implemented Acquired Mortgage Asset Notice of Proposed Rulemaking MPP User Group Conference November 2 nd Cincinnati Renaissance Hotel Cyber Security 26

27 Cyber Strength: A Banking Leader s Path to Data Security John Sileo, CSP The Sileo Group John will discuss: The foundational changes that executives and boards must make to ensure data security How to build within your organization a culture of security 27