Number of MN banks declining, but assets growing stronger

As employment and housing indicators improve, asset quality among Minnesota's 364 banks continues to strengthen. However, the number of banks in the state is declining and there have been no new banks chartered in recent quarters..The state's FDIC Third Quarter Profile, released last month, shows a decline of 26 total institutions since 2011 when there were 390 banks in the state. Total assets at the end of the 2013 third quarter declined to $62.1 billion from $66.8 billion in 2011, although assets increased slightly from the end of the second quarter..Commercial real estate continues to be the dominant source of lending for Minnesota banks, with the state's median bank reporting commercial lending volume at 144.35 percent of total risk-based capital. That number was 157.58 percent of risk-based capital in 2011. Most of those loans are financing nonresidential real estate..Residential real estate also is an important source of loans, with the median bank reporting loans equaling 113.61 percent of total risk-based capital, but that is also down from 2011 when it represented 128.57 percent of risk-based capital..Agricultural loans make up another key lending opportunity for Minnesota banks, with loan volume equal to 72.19 percent of total risk-based capital..Return on assets grew to 1.03 percent from 0.75 percent in 2011, edging up from 1.00 percent at the end of the second quarter..Net interest margin dropped to 3.78 percent from 4.01 percent in 2011, although it has increased slightly from the second quarter..Minnesota's full third quarter profile can be found here.