News Column

Banking Conditions in Ninth District States Second Quarter 2014 Update

September 4, 2014



MINNEAPOLIS, Sept. 4 -- The Federal Reserve Bank of Minneapolis issued the following news release:

Minnesota banks reported modest to little improvement across measures of problem assets, loan growth and profitability in the second quarter of 2014, based on data from the 334 commercial banks in the state. According to Ron Feldman, executive vice president of Supervision, Regulation and Credit at the Federal Reserve Bank of Minneapolis, "Key metrics of Minnesota's bank health turned in a mostly flat performance in the second quarter of 2014. The state's median bank profitability did not change. Problem loans fell, but were already in strong condition. Loan growth improved, but only modestly."

The level of problem loans compared with the resources banks have to cover loan losses improved by a small amount (81 basis points) in the second quarter. At 8.72 percent, Minnesota's median problem assets ratio was just about the same as the national 8.64 percent median and better than the long-run median.

Profitability measures changed little in the quarter. Minnesota's median return on average assets increased 2 basis points to 0.96 percent in the second quarter of 2014 and remains higher than the national 0.88 percent rate of return.

The state's median annual rate of loan growth increased 34 basis points to 4.96 percent this quarter, a very small change by historical standards. The year-over-year change in the amount of outstanding loans remains somewhat below the 5.62 percent median rate for the nation as a whole.

Measures of liquidity and capital remain at healthy levels despite small steps backward in the quarter. The state's total risk-based capital ratio stands at 15.61 percent after an 8-basis-point decrease. The median use of noncore funding (in contrast to more stable bank deposits) stands at 13.57 percent of liabilities. Both are strong, by historical standards.

Data for Minnesota and the nation [pdf] (https://www.minneapolisfed.org/pubs/news/2014/2014-09-04_mn_banking_cond_data.pdf)

Additional data on the characteristics of banks in the region and definitions and explanations of these data [pdf] (https://www.minneapolisfed.org/pubs/news/2014/ninth_district_bank_operations_sept_2014.pdf)

More details on banking conditions can be found on the following page: Banking Conditions in Ninth District States (https://www.minneapolisfed.org/banking/data/bankingconditions/index.cfm).

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