The Bank Information Report by Sageworks U.S. banks seeing higher earnings, lending more, showing less risk

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The Bank Information Report by Sageworks

U.S. banks seeing higher earnings, lending more, showing less risk

Raleigh, N.C., May 21, 2015 – U.S. banks kicked off 2015 with a bang, according to the inaugural Bank Information Report from Sageworks. According to information researched through Sageworks Bank Information, banks in the United States have been seeing higher profits and lending more to businesses of all sizes. These increases during the first quarter of 2015 are based on a comparison to the first quarter of 2014.

Aside from strong earnings and a higher loan volume to the business engines of the country, U.S. banks also saw positive signs in terms of overall risk during the quarter. The average Texas Ratio for U.S. banks was lower than in the year-ago quarter, indicating less risk on the balance sheets of many U.S. financial institutions. A high Texas Ratio is an indicator that a bank may have credit quality issues and a higher risk of failure, while a low Texas Ratio is an indicator of a healthy institution.

Community and regional banks with less than $1 billion in assets reflected most of the overall trends seen by the average U.S. bank. However, mid-sized institutions (larger community and regional banks between $1 billion and $50 billion in asset size) bucked the profitability trend seen by the average U.S. bank with a slightly lower average year-to-date net income than in the first quarter of 2014. However, while earnings slid for these banks, so did their average Texas Ratio; they saw a greater decline in Texas Ratio than financial institutions in other asset ranges.

Mid-sized institutions also drove the overall increase in lending to small businesses in the first quarter. These banks, on average, had $14 million more in loans outstanding to small businesses in the first quarter of this year than in the year-ago period.

The report indicates several differences in regional trends as well. Most notably, banks in the Midwest led the way in terms of earnings growth from last year’s Q1. On average, banks headquartered in the Midwest earned over $1 million more in the first quarter of 2015. The full regional breakdown begins on page 3 of the report.

THE AVERAGE U.S. BANK

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Source:

1_{“C&I” refers to commercial and industrial loans. “CRE” refers to commercial real estate loans. “SMB” refers to small business} loans.

Institution Type Metric Quarter Ended 3/31/15 Quarter Ended 12/31/14 Quarter Ended 3/31/14

Average U.S. Bank Total Assets $2,458,275,788 $2,389,559,573 $2,216,789,140

Net Income $6,210,263 $6,171,430 $5,537,734

Net Interest Margin 3.6% 3.7% 3.6%

C&I Lending Volume $263,737,595 $236,689,852 $230,963,198

CRE Lending Volume $182,667,238 $177,148,746 $167,426,761

SMB Lending Volume $98,149,247 $96,913,247 $91,837,619

Texas Ratio 12.6% 13.7% 16.7%

Sageworks Bank Information P 919.851.7474 5565 Centerview Drive F 919.851.6718 Raleigh, NC 27606 www.sageworks.com

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2 BREAKDOWN BY ASSET SIZE

Source:

Institution Type Metric Quarter Ended 3/31/15 Quarter Ended 12/31/14 Quarter Ended 3/31/14

Average U.S. Bank (< $1B Assets) Total Assets $231,720,329 $230,242,670 $225,360,126

Net Income $571,954 $567,839 $497,032

Texas Ratio 13.2% 14.1% 16.3%

Average U.S. Bank ($1B-$50B Assets) Total Assets $4,872,640,511 $4,978,909,161 $4,738,229,238

Net Income $12,934,280 $14,695,621 $13,397,416

Texas Ratio 8.1% 10.0% 20.8%

Average U.S. Bank (Over $50B Assets) Total Assets $304,041,135,838 $314,154,675,971 $292,688,684,056

Net Income $759,075,216 $781,917,286 $714,719,778

C&I Lending Volume $32,103,034,135 $29,675,380,714 $30,191,528,667

CRE Lending Volume $11,699,205,432 $12,008,729,371 $11,743,488,444

SMB Lending Volume $5,334,691,784 $5,585,656,114 $5,418,028,583

Texas Ratio 7.2% 7.9% 9.8%

U.S. Community Bank Performance - Quarter Ended 3/31/2015

U.S. Mid-size Bank Performance – Quarter Ended 3/31/2015

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3 REGIONAL BREAKDOWN

Source:

Asset Size Metric Quarter Ended 3/31/15 Quarter Ended 12/31/14 Quarter Ended 3/31/14

All Total Assets $2,862,517,636 $2,760,712,120 $2,559,848,596

Net Income $5,033,215 $5,063,346 $4,666,243

Texas Ratio 10.3% 10.5% 12.1%

Under $1 Billion Total Assets $374,335,507 $371,747,583 $364,481,058

Net Income $642,009 $582,420 $572,548

SMB Lending Volume $642,009 $45,614,181 $44,947,417

Texas Ratio 11.2% 11.3% 13.0%

$1 Billion-$50 Billion Total Assets $5,244,602,622 $5,236,057,444 $4,998,528,106

Net Income $9,803,705 $9,741,588 $9,777,550

Texas Ratio 7.4% 7.8% 9.2%

Over $50 Billion Total Assets $162,791,214,500 $157,433,340,000 $148,282,752,000

Net Income $272,549,667 $294,279,167 $262,203,667

C&I Lending Volume $9,338,773,333 $8,842,655,500 $8,421,885,333 CRE Lending Volume $5,613,680,500 $5,150,516,500 $4,939,194,333 SMB Lending Volume $1,242,067,000 $1,292,756,833 $1,330,585,833

Texas Ratio 4.2% 4.5% 6.0%

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4 REGIONAL BREAKDOWN

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Source:

All Total Assets $2,504,709,314 $2,458,745,657 $2,269,480,226

Net Income $6,509,937 $5,200,948 $5,446,432

Texas Ratio 10.0% 10.9% 13.8%

Net Income $524,223 $502,022 $438,684

Texas Ratio 10.5% 11.1% 12.1%

Net Income $8,630,156 $8,839,618 $7,278,578

Texas Ratio 2.0% 7.0% 40.7%

Net Income $1,703,607,000 $1,317,432,556 $1,494,565,333

Texas Ratio 10.9% 11.4% 14.3%

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5 REGIONAL BREAKDOWN

Source:

All Total Assets $2,262,026,107 $2,181,684,056 $2,059,606,226

Net Income $5,647,381 $7,053,053 $5,406,267

Texas Ratio 16.2% 18.0% 21.6%

Net Income $559,227 $561,014 $498,801

Texas Ratio 16.6% 18.4% 22.0%

Net Income $10,707,840 $12,737,590 $10,775,020

Texas Ratio 13.1% 13.8% 17.7%

Net Income $629,846,400 $837,384,133 $609,057,313

Texas Ratio 8.3% 9.1% 11.0%

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6 REGIONAL BREAKDOWN

Source:

All Total Assets $2,459,738,235 $2,370,536,510 $2,117,870,012

Net Income $8,109,736 $8,427,978 $7,315,819

Texas Ratio 13.3% 13.5% 16.4%

Net Income $794,221 $910,448 $702,016

Texas Ratio 14.9% 14.9% 17.9%

Net Income $28,023,464 $34,240,667 $32,525,000

C&I Lending Volume $1,073,385,973 $1,080,015,892 $1,007,882,082

Texas Ratio 6.7% 7.1% 9.5%

Net Income $238,618,000 $236,755,000 $192,137,000

Texas Ratio 2.7% 2.1% 2.8%

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7 KEY TAKEAWAYS

Key Takeaways for Business Owners

Key takeaways for Financial Professionals and Bankers

“Loan volume to businesses is up in the first quarter of 2015 compared to last year’s first quarter. C&I

lending is higher, as are loans to small businesses and commercial real estate. The average U.S. bank had

roughly $24 million more in C&I loans, $9 million more in small business loans, and $15 million more

in CRE loans.

Access to capital is in fairly strong shape for U.S. businesses. However, having the opportunity to take on

a loan doesn’t automatically mean that business owners should do so. Taking on debt can often do more

harm than good, particularly for smaller U.S. businesses.”

–

Brian Hamilton, Chairman of

Sageworks

“The state of banking in the first quarter is pretty positive. Earnings, in dollars, are up, Texas Ratios

are down, and banks are lending more to small and large businesses owners in the U.S. Net interest

margins are staying steady. These trends are true, for the most part, across different regions and asset

sizes.

We’ll be keeping our eyes on the earnings trends for mid-sized banks to make sure that this quarter’s slip

is an anomaly rather than a broader trend.” -Tim McPeak, Risk Management Consultant,

Sageworks, Financial Institutions Division.

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8 METRIC IN FOCUS: REAL ESTATE LENDING

In an examination of Call Report data filed so far this year, Sageworks analysts have identified the top 20 real estate bank lenders of the first quarter. Wells Fargo topped the list, which ranked all U.S. banks by total dollar amount of outstanding real estate loans in Q1 2015. As of the first quarter, Wells Fargo had more than $450 billion in outstanding real estate loans, making it the largest real estate lender by more than $100 billion.

Two other familiar names in the banking world, Bank of America and JP Morgan, were ranked second and third,

respectively, behind Wells Fargo. Each of them had more than $300 billion in outstanding real estate loans as of Q1 2015. Other standouts on the list were First Republic Bank and New York Community Bank. In addition to being among the highest real estate lenders based on dollar amount, these institutions also dedicated a significantly larger percentage of their overall loan portfolio to real estate than the other lenders on this list. “Most of the lenders on this list have massive overall loan and asset portfolios,” said James Noe, an analyst for Sageworks Bank Information. “Therefore, it’s also important to look at how much of the institution’s total loans are dedicated to real estate specifically, to get a full picture of how much they, from a relative standpoint, dedicate to real estate lending.”

The full list of the top real estate lenders as of Q1 2015 is included below.

Source:

Bank Name Real Estate Loans ($ Amount) Real Estate Loans (As % Total Loans)

WELLS FARGO BANK, NATIONAL ASSOCIATION (451965) $451,370,000,000 55.5%

BANK OF AMERICA, NATIONAL ASSOCIATION (480228) $341,555,000,000 39.9%

JPMORGAN CHASE BANK, NATIONAL ASSOCIATION (852218) $300,658,000,000 45.3%

CITIBANK, NATIONAL ASSOCIATION (476810) $160,251,000,000 27.4%

U.S. BANK NATIONAL ASSOCIATION (504713) $115,590,753,000 45.8%

PNC BANK, NATIONAL ASSOCIATION (817824) $83,550,699,000 40.2%

BRANCH BANKING AND TRUST COMPANY (852320) $69,577,742,000 58.6%

SUNTRUST BANK (675332) $57,236,116,000 42.1%

TD BANK, NATIONAL ASSOCIATION (497404) $54,414,067,000 47.5%

CAPITAL ONE, NATIONAL ASSOCIATION (112837) $53,660,488,000 38.5%

MUFG UNION BANK, NATIONAL ASSOCIATION (212465) $47,809,170,000 62.3%

MANUFACTURERS AND TRADERS TRUST COMPANY (501105) $41,795,280,000 62.8%

REGIONS BANK (233031) $39,292,807,000 49.9%

FIRST REPUBLIC BANK (4114567) $33,029,177,000 84.5%

CITIZENS BANK, NATIONAL ASSOCIATION (3303298) $32,499,020,000 42.6%

NEW YORK COMMUNITY BANK (694904) $31,883,279,000 97.6%

FIFTH THIRD BANK (723112) $31,081,262,000 33.8%

SANTANDER BANK, N.A. (722777) $30,431,911,000 58.4%

COMPASS BANK (697633) $29,895,156,000 50.9%

HSBC BANK USA, NATIONAL ASSOCIATION (413208) $29,540,091,000 38.5%

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About The Bank Information Report by Sageworks

The Bank Information Report is a quarterly update on the overall state of banking in the United States. The report includes information on U.S. banks overall, as well as breakdowns by region and asset size. We

The data for this report was researched through Sageworks Bank Information, a web-based data platform that includes data on all U.S. banks and credit unions. For more information on Sageworks Bank Information or to sign up for a free trial, visit bankinfo.sageworks.com.

About Sageworks

Sageworks is a financial information company that provides risk management, financial analysis and business valuation solutions to accounting firms and financial institutions. Visit www.sageworks.com to learn more.

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