Asset quality at Dakota banks continues upward even as bank numbers ebb

Amid positive employment developments and housing growth, asset quality at banks in North and South Dakota continue to improve. However, FDIC third quarter profiles of the states show that assets held by North Dakota banks diminished, and, while total assets in South Dakota banks increased, smaller banks in the state experienced a decrease in assets..The number of institutions in the two states continues to diminish. North Dakota has 88 banks, having lost two since 2011. South Dakota now has 76, down from 82 in 2011..Assets for North Dakota banks decreased in the 2013 third quarter to $24.3 billion from $27.3 billion in 2011, although assets have increased slightly since the end of the second quarter. Return on assets among banks in North Dakota increased to 1.38 percent from 1.08 percent at the end of 2011..Overall, South Dakota banks saw an increase in assets to $2.7 trillion from $2.5 trillion. However, banks with less than $100 million in assets experienced a decline to $1.9 billion from $2.1 billion at the end of 2011. The small bank figure provide a better picture of the state's industry since the larger number is mostly Citibank, N.A..South Dakota banks's return on assets saw a similar split. Overall, ROA for banks in the state increased to 1.20 percent from 1.10 percent in 2011. Banks with less than $100 million in assets, however, saw a decrease to 1.17 percent from 1.27 percent..Agricultural loans continue to dominate in both states, making up 307.49 percent of total risk-based capital at North Dakota banks and 247.11 percent of total risk-based capital at South Dakota banks. This is an increase for both states since 2011, when those numbers were 271.83 and 235.92, respectively..Commercial and industrial loans were the second-largest category of loans in the two states when considered as a percentage of total risk-based capital. North Dakota's 90.74 percent is an increase from 87.67 percent in 2011. South Dakota's concentration, however, dropped to 68.74 percent from 73.61 percent in 2011..Commercial real estate loans were also a key component, with lending volume at 78.29 percent of total risk-based capital for North Dakota banks and 61.03 percent of total risk-based capital for South Dakota banks. In both states, the majority of these loans were for nonresidential real estate..North Dakota's full FDIC third quarter profile can be found here, and South Dakota's here.