All bank star-ratings are now based on June 30, 2019 financial data. (Credit union data will be updated in early September.) And, as a result, Bauer welcomes 104 banks to its top 5-Star category.
There are 40 fewer recommended banks this quarter than last, but that is due to industry consolidation, as the recommended percentage is virtually unchanged. The number of banks on Bauer’s Troubled and Problematic Report, those rated 2-Stars or below, has remained constant at 68 for the most recent three quarters.
It’s not enough to stem the tide, but six new banks opened for business during the first half of 2019. Eight de novos opened in 2018, so we’re on course to beat that with several still in various stages of the process.
Only one bank has failed since 2017. That was The Enloe State Bank, Cooper, TX, which failed on May 31, 2019. Former officials of Enloe didn’t just cook the books, they made a bonfire out of them on the conference table. The bank only had $36.7 million in assets, yet the FDIC estimates it will cost the DIF $27 million before all is said and done.
As we write this, the Quarterly Banking Profile has not yet been released. We will no doubt have more to say when it is. In the meantime, revisions have been made to the Volcker Rule—which was supposed to prohibit banks from proprietary trading.
Over 200 FDIC-Insured banks reported some amount of trading assets and/or trading liabilities at June 30, 2019 totaling over $900 billion. However, based on the final rule effective 7/22/2019, almost all are now exempt from the Volcker Rule. Exemptions include:
1) Any insured depository institution, and every entity that controls it, must have total consolidated assets equal to or less than $10 billion. And,
2) Total trading assets and liabilities of both the insured institution and the entities that control it must be less than 5% of its total consolidated assets.
While more “tweaking is to come” the final rule has already exempted all institutions except the holding companies listed on page 7 and the FDIC-insured banks controlled by those holding companies.