Ninth District Banks and Their Supervision. Ron Feldman Federal Reserve Bank of Minneapolis November 13, 2012

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1 Ninth District Banks and Their Supervision Ron Feldman Federal Reserve Bank of Minneapolis November 13, 2012

2 Bottom Lines Traditional Community Banks Located in Ninth District Banks Face Comprehensive Supervision We Will Have a Robust Discussion

3 Number of Banks Chartered in Ninth District and Minnesota District Minnesota

4 Urban vs. Rural Banks in Ninth District Source: National Information Center as of 11/1/2012

5 Urban vs. Rural Banks in Ninth District Source: National Information Center as of 11/1/2012

6 District Banks by Total Asset Size As of 6/30/ % 90% 80% 70% 60% 50% 40% 30% 20% Greater than $1 Billion $500 Million to $1 Billion $100 Million to $500 Million $50 Million to $100 Million Less than $50 Million 10% 0% Number of Banks

7 District Banks by Total Asset Size and Share of Assets As of 6/30/ % 90% 80% 70% 60% 50% 40% 30% 20% Greater than $1 Billion $500 Million to $1 Billion $100 Million to $500 Million $50 Million to $100 Million Less than $50 Million 10% 0% Number of Banks Share of Assets

8 Location of District Banks by Total Asset Size As of 6/30/2012

9 Minnesota and District Bank Median Loans as a Percent of Total Assets 75% Loans as a Percent of Total Assets 70% 65% 60% 55% th District Minnesota

10 Minnesota and District Bank Median Cash as a Percent of Total Assets Fed Funds, Repos, Due From, and Currency as a Percent of Total Assets 20% 15% 10% 5% 0% th District Minnesota

11 District Banks with Concentrations of Lending District Banks with Concentrations of Lending As of 6/30/2012

12 District Banks with Concentrations of Lending As of 6/30/2012

13 Deposits as a Share of Total Liabilities Insured and Uninsured, District and Minnesota 100% 90% 80% 70% 9 th District Uninsured 60% 50% Insured 40% 30% Minnesota Uninsured 20% 10% Insured 0%

14 Total Problem Assets, Median Bank District and Minnesota Median Noncurrent and Delinquent Loans as a Percent of Capital and Allowance District Minnesota MN 20 year Median District 20 year Median

15 Profitability, Median Bank District and Minnesota 1.6 District 1.4 Return on Average Assets (%) Minnesota MN 20 year Median District 20 year Median

16 Growth Rate of Outstanding Loan Balances District and Minnesota Net Loan Growth (%) (over last 4 quarters) District Minnesota MN 20 year Median District 20 year Median

17 District Bank Branch Locations and Ownership Source: National Information Center as of 11/1/2012

18 District Bank Branch Locations and Ownership Source: National Information Center as of 11/1/2012

19 District Bank Branch Locations and Ownership Source: National Information Center as of 11/1/2012

20 District Bank Branch Locations and Ownership Source: National Information Center as of 11/1/2012

21 Minnesota Bank Branch Locations and Ownership Source: National Information Center as of 11/1/2012

22 Bank Name (Bank Holding Companies) District Total Deposits ($Millions) Greatest Share of Deposits in District and Minnesota Share CITIGROUP NEW YORK, NY $222, % WELLS FARGO & CO SAN FRANCISCO, CA $166, % U S BANK MINNEAPOLIS, MN $50, % BREMER BANKS, SAINT PAUL, MN $6, % TCF BANK WAYZATA, MN $5, % AMERIPRISE BANK, MINNEAPOLIS, MN $5, % BMO HARRIS BANK WILMINGTON, DE $3, % FIRST INTERSTATE BANCSYSTEM BILLINGS, MT $3, % GLACIER BANK KALISPELL, MT $2, % ASSOCIATED BANK GREEN BAY, WI $2, % Bank Name (Bank Holding Companies) Minnesota Total Deposits ($Millions) Share WELLS FARGO & CO SAN FRANCISCO, CA $86, % U S BANK MINNEAPOLIS, MN $45, % TCF BANK WAYZATA, MN $5, % AMERIPRISE BANK, MINNEAPOLIS, MN $5, % BREMER BANKS, SAINT PAUL, MN $4, % BMO HARRIS BANK WILMINGTON, DE $2, % ASSOCIATED BANK GREEN BAY, WI $1, % KLEIN FINANCIAL CHASKA, MN $1, % MINNWEST CORP MINNETONKA, MN $1, % ANCHOR BC WAYZATA, MN $1, % Source: FDIC Summary of Deposits 2012 Survey

23 Greatest Share of Small Business Lending Bank Name (Bank Holding Companies) District Total ($Millions) Share WELLS FARGO & CO SAN FRANCISCO, CA $3, % BREMER BANKS SAINT PAUL, MN $1, % U S BANK MINNEAPOLIS, MN $1, % M&I MARSHALL & ILSLEY BANK MILWAUKEE, WI $ % ANCHOR BANK WAYZATA, MN $ % KLEIN FINANCIAL CHASKA, MN $ % ASSOCIATED BANK GREEN BAY, WI $ % STATE BSHRS FARGO, ND $ % AMERICAN EXPRESS NEW YORK, NY $ % BANCWEST CORP HONOLULU, HI $ % Bank Name (Bank Holding Companies) Minnesota Total Deposits ($Millions) Share WELLS FARGO & CO SAN FRANCISCO, CA $1, % BREMER BANKS SAINT PAUL, MN $ % U S BANK MINNEAPOLIS, MN $ % DACOTAH BANKS ABERDEEN, SD $ % STOCKMAN BANK MILES CITY, MT $ % M&I MARSHALL & ILSLEY BANK MILWAUKEE, WI $ % FIRST INTERSTATE BANC SYSTEM BILLINGS, MT $ % STATE BSHRS FARGO, ND $ % ASSOCIATED BANK GREEN BAY, WI $ % ANCHOR BANK WAYZATA, MN $ % Source: FFIEC CRA Disclosure Data 2011

24 Charter Types of District Banks Source: National Information Center as of 11/1/2012

25 Bank Safety/Soundness Supervision CAMELS Ratings Framework One (Excellent) Through Five (Failure) Bad Ratings Lead to: Limits on Activities/Operations Fixes of Problems Supervision is Typically Private

26 Bank Safety/Soundness Supervision CAMELS Composite Components Capital Asset Quality Management Earnings Liquidity Sensitivity

27 Bank Holding Companies Ninth District Banks Often Owned by Bank Holding Companies (BHC) Most Ninth District BHCs Own Just a Bank and Have Limited Activity A Small Number of Ninth District BHCs are Large and Complex

28 BHC Supervision Source of Strength RFI/C (D) Framework (One Through Five) Risk Management Financial Impact Composite (Depository)

29 Consumer/Compliance/CRA Supervision Rate Compliance Program One Through Five Rating System Review Key Aspects of Program Bank Uses to Comply with Consumer Regulations Review Compliance with Specific Regulations/Laws Rate Performance Relative to Community Reinvestment Act Outstanding Through Substantial Noncompliance