The outlook for banks remains bleak, according to the latest numbers released by the Federal Deposit Insurance Corp.
Examining the FDIC's Quarterly Banking Report, issued Wednesday, Concept Capital banking analyst Jaret Seiberg highlighted some of the low-lights in a research note. He noted that rates of noncurrent loans increased from the end of 2008, net loan charge-offs are also up, and net interest margins are declining at most banks. Noncurrent loans rose 25% in the quarter to $59.2 billion, the highest quarterly increase in three years. Overall, noncurrent loans comprise 3.76% of all loans.
He also said that banks are less prepared to deal with looming problems. The ratio of loan loss reserves to noncurrent loans dropped to 66.5% from 74.8% in the fourth quarter. Loan loss reserves are funds set aside to cover the likely failure of specific problem loans. This is the 12th consecutive quarterly decline in this ratio and a 17-year low, he said. - William McConnell
See the FDIC's quarterly banking report
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