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BANKERS BANK CORRESPONDENT DAY WOODLAND COUNTRY CLUB MONDAY, JUNE 11, 2012 A SUPERVISORS PERSPECTIVE RANDALL L. ROWE BANK AND TRUST DIVISION SUPERVISOR.

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Presentation on theme: "BANKERS BANK CORRESPONDENT DAY WOODLAND COUNTRY CLUB MONDAY, JUNE 11, 2012 A SUPERVISORS PERSPECTIVE RANDALL L. ROWE BANK AND TRUST DIVISION SUPERVISOR."— Presentation transcript:

1 BANKERS BANK CORRESPONDENT DAY WOODLAND COUNTRY CLUB MONDAY, JUNE 11, 2012 A SUPERVISORS PERSPECTIVE RANDALL L. ROWE BANK AND TRUST DIVISION SUPERVISOR J. DERON THOMPSON REGIONAL FIELD SUPERVISOR INDIANA DEPARTMENT OF FINANCIAL INSTITUTIONS Indiana Department of Financial Institutions1

2 The Department of Financial Institutions 22 field staff examiners - 16 years average experience Employ 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 Institutions2

3 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 Institutions3

4 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 Institutions4

5 State Chartered institutions Performance Summary As of Deposits $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 Institutions5

6 Delivery Channels Brick and Mortar Branch Approvals ( 4 pending) Above totals include de novo and acquired branches Indiana Department of Financial Institutions6

7 Delivery Channels (continued) On line banking Mobile banking Remote Deposit Capture Indiana Department of Financial Institutions7

8 THE GREAT RECESSION December of 2007 to June of 2009 Longest and worst economic recession since the Great Depression October 2008 – TARP – Capital Purchase Program Revive Banking Sector and fight global credit crunch Initially TARP perceived as sign of strength – Ultimately became a negative for those who did not repay Indiana Department of Financial Institutions8

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11 Indiana Department of Financial Institutions11

12 Indiana Department of Financial Institutions12

13 Adversely Classified/Capital and ALLL Indiana Department of Financial Institutions13

14 Indiana Department of Financial Institutions14

15 Asset Quality Ratings Indiana Department of Financial Institutions

16 Indiana Bank Failures ( ) Irwin Union Bank, Columbus – Acquired by First Financial Bank, NA ( ) Integra Bank, Evansville – Acquired by Old National Bank ( ) SCB Bank, Shelbyville – Acquired by First Merchants Bank, NA 24 Bank Failures nationally in 2012 (as of May 18, 2012) Indiana Department of Financial Institutions16

17 Bank Failures Nationally Indiana Department of Financial Institutions17

18 Lessons Learned Concentrations of Credit – Especially CRE Reliance on non-core funding Increased balance sheet leverage – lower capital ratios Out of market lending Participation interests in out of territory CRE projects Private label mortgage backed securities Trust Preferred issues FNMA/FHLMC Preferred Stock Liberal underwriting and weak credit risk management Indiana Department of Financial Institutions18

19 Where are we today? More supervisory focus on large banks – TBTF SIFIs, Dodd Frank, CFPB Agency recognition of importance of community banks Regulatory burden could drive consolidation Excess balance sheet liquidity – inadequate loan demand or other satisfactory yielding assets Maintaining expertise in the compliance area Economic viability of rural markets Management and board succession Indiana Department of Financial Institutions19

20 Other Matters: ALLL – reserve releases (negative provisions) TAG – expires Section 993 A Dodd-Frank – Determination of Investment Grade Securities Stress Testing – Credit, liquidity, etc. Indiana Department of Financial Institutions20

21 Indiana Department of Financial Institutions21 Randall L. Rowe J. Deron Thompson Indiana Department of Financial Institutions 30 South Meridian, Suite 300 Indianapolis, Indiana 46204


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