Saturday, June 16, 2012
USA Banks Loan Charge-Offs Drop to 4-Year Low
The USA Banks Loan Charge-Off Rate of +1.17% for the quarter ended March 31, 2012 indicates the substandard loans on the books have been mostly worked off. Total Loans decreased by -0.8% from the prior QE December 31, 2011. However, banks are more risk-averse than before the 2008 USA financial system crisis and the Great Recession that officially ended the QE June 30, 2009. Therefore, Loan Charge-Offs should continue to decline as loan underwriting standards are more conservative. The Net Charge-Off Rate is still high compared to historical rates.
USA Banks Net Charge-Off Rate by Quarter The USA Banks Net Charge-Off Rate decreased to 1.17% for quarter ended March 31, 2012, which was the lowest since the QE March 31, 2008 at 0.99%. The Net Charge-Off Rate peaked at 2.89% for the QE December 31, 2009, during the USA financial system crisis.
USA Banks Net Charge-Off Rate by Segment For the 3 months ended March 31, 2012, the Net Charge-Off Rates by segments were:
All institutions +1.17%
Credit card banks +4.18%
International banks +1.48%
Agricultural banks +0.17%
Commercial lenders +0.76%
Mortgage lenders +0.95%
Consumer lenders +1.55%
Other specialized (< $1 billion total assets) +0.25%
All other (< $1 billion total assets) +0.37%
All other (> $1 billion total assets) +1.01%
Loan Losses Improve in All Major Loan Categories (FDIC Quarterly Banking Profile, May 24, 2012) Loan losses declined from year-ago levels for a seventh consecutive quarter. Net charge-offs (NCOs) totaled $21.8 billion in the first quarter, the lowest quarterly total in four years, and $11.7 billion (34.8 percent) less than in first quarter 2011. Charge-offs were lower in all major loan categories. The largest year-over-year declines were in credit cards, where NCOs fell by $4.3 billion (37.7 percent), in real estate construction and land loans, where NCOs were $1.8 billion (60.6 percent) lower, and in commercial and industrial (C&I) loans, where NCOs declined by $1.5 billion (44.4 percent).
USA Banks Return on Assets Rise to Post-Crisis High
FDIC Deposit Insurance Fund Balance at 10-Quarter High
FDIC Problem Bank List Decreases to 9-Quarter Low
$XLF $DIA $SPY $IWM $QQQ