bankers bank correspondent day woodland country club monday, june 11, 2012 a supervisors perspective...
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BANKERS BANK CORRESPONDENT DAYWOODLAND COUNTRY CLUBMONDAY, JUNE 11, 2012
A SUPERVISOR’S PERSPECTIVE
RANDALL L. ROWEBANK AND TRUST DIVISION SUPERVISOR
J. DERON THOMPSONREGIONAL FIELD SUPERVISOR
INDIANA DEPARTMENT OF FINANCIAL INSTITUTIONS
Indiana Department of Financial Institutions 1
The Department of Financial Institutions22 field staff examiners - 16 years average
experienceEmploy CPC (Central Point of Contact) program –
each supervised institution is assigned to a specific examiner
CPC monitors financial condition and performance in addition to any other relevant events
Gains an understanding of business plan and banks market
Maintains ongoing contact and communication
Indiana Department of Financial Institutions 2
Department of Financial Institutions (continued)Familiarity with institution enhances
efficiency and effectiveness of examination process
Work closely with Chicago Federal Reserve, Chicago Region of FDIC, and Federal Reserve St. Louis
State chartered institutions benefit from the “second opinion” provided by state and federal examiner vetting and collaboration
Indiana Department of Financial Institutions 3
Department of Financial Institutions (continued)Supervisory responsibility for:
93 FDIC insured depository institutions - $38.9 billion
8 Corporate Fiduciaries - $6.1 billion administered assets
5 industrial authorities and 1 savings association Supervised institutions range in size from $20
million to $4.3 billion
Have recently approved the conversion of 6 federal thrifts to state charters
Indiana Department of Financial Institutions 4
State Chartered institutions Performance SummaryAs of 3.31.12Deposits $32.1 billion (increasing)Net Interest Margin 3.78% (steady)Net charge offs to loans and leases .45%
(declining)Return on Assets 1.04% (increasing),ROE
9.50%ALLL/Loans – 2.00% ALLL/Non-current – 89% Tier 1 Leverage Ratio – 10.13%Total Capital/Risk Weighted Assets – 15.35%
Indiana Department of Financial Institutions 5
Delivery ChannelsBrick and Mortar Branch Approvals2005 352006 332007 292008 182009 102010 112011 92012 4 ( 4 pending)Above totals include de novo and acquired branches
Indiana Department of Financial Institutions 6
Delivery Channels (continued)On line bankingMobile bankingRemote Deposit Capture
Indiana Department of Financial Institutions 7
THE GREAT RECESSIONDecember of 2007 to June of 2009Longest and worst economic recession since
the Great DepressionOctober 2008 – TARP – Capital Purchase
ProgramRevive Banking Sector and fight global credit
crunchInitially TARP perceived as sign of strength –
Ultimately became a negative for those who did not repay
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Indiana Department of Financial Institutions 12
Adversely Classified/Capital and ALLL
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Indiana Department of Financial Institutions 14
Asset Quality Ratings
Indiana Department of Financial Institutions
Indiana Bank Failures
(9-18-2009) Irwin Union Bank, Columbus – Acquired by First Financial Bank, NA
(7-29-2011 ) Integra Bank, Evansville – Acquired by Old National Bank
(2-10-2012) SCB Bank, Shelbyville – Acquired by First Merchants Bank, NA
24 Bank Failures nationally in 2012 (as of May 18, 2012)
Indiana Department of Financial Institutions 16
Bank Failures Nationally2007 3
2008 30
2009 148
2010 157
2011 92
Indiana Department of Financial Institutions 17
Lessons LearnedConcentrations of Credit – Especially CREReliance on non-core fundingIncreased balance sheet leverage – lower capital
ratiosOut of market lendingParticipation interests in out of territory CRE projectsPrivate label mortgage backed securitiesTrust Preferred issuesFNMA/FHLMC Preferred StockLiberal underwriting and weak credit risk
management
Indiana Department of Financial Institutions 18
Where are we today?More supervisory focus on large banks – TBTFSIFI’s, Dodd Frank, CFPBAgency recognition of importance of community
banksRegulatory burden could drive consolidationExcess balance sheet liquidity – inadequate loan
demand or other satisfactory yielding assetsMaintaining expertise in the compliance areaEconomic viability of rural marketsManagement and board succession
Indiana Department of Financial Institutions 19
Other Matters:ALLL – reserve releases (negative provisions)TAG – expires 12.31.12Section 993 A Dodd-Frank – Determination of
“Investment Grade” SecuritiesStress Testing – Credit, liquidity, etc.
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Indiana Department of Financial Institutions 21
Randall L. Rowe317 232 5852
J. Deron Thompson317 453 2175
Indiana Department of Financial Institutions30 South Meridian, Suite 300Indianapolis, Indiana 46204