{"id":1461294,"date":"2024-03-07T17:25:00","date_gmt":"2024-03-07T22:25:00","guid":{"rendered":"https:\/\/bugaluu.com\/news\/?p=1461294"},"modified":"2024-03-07T17:25:00","modified_gmt":"2024-03-07T22:25:00","slug":"these-are-the-5-charts-the-fdic-does-not-want-you-paying-attention-to","status":"publish","type":"post","link":"https:\/\/bugaluu.com\/news\/these-are-the-5-charts-the-fdic-does-not-want-you-paying-attention-to\/1461294\/","title":{"rendered":"These Are The 5 Charts The FDIC Does Not Want You Paying Attention To"},"content":{"rendered":"

These Are The 5 Charts The FDIC Does Not Want You Paying Attention To<\/span><\/p>\n

\n

Washington’s “Problem Bank List” rose again last quarter,<\/strong> capping off a year when US lenders struggled to cope with higher interest rates and more overdue loans for commercial buildings and credit cards.<\/p>\n

Bad Banks Rising<\/h2>\n

The FDICs’ confidential tally of lenders<\/a> with with financial, operational or managerial weaknesses had grown by eight banks to 52<\/strong>, representing 1.1% of the institutions it oversees. The total assets held by those firms increased by $12.8 billion last quarter to $66.3 billion.<\/p>\n

<\/a><\/p>\n

Although the number of firms on the\u00a0FDIC\u2019s\u00a0list remains relatively low compared with historical highs, it continues an increasing trend that started early last year.<\/p>\n

Always-friendly Senator Liz Warren lambasted Fed Chair Jay Powell today, claiming that \u201cgreedy bank executives\u201d were behind bank failures,<\/strong> and the Fed needs to do its job of regulating those institutions.<\/p>\n

Powell responded by saying they\u2019ve reached out to banks with high levels of uninsured deposits and high levels of office real estate debt<\/strong>, adding that The Fed is examining whether they are \u201cbeing truthful\u201d with themselves.<\/strong><\/p>\n

With regard to being “truthful”, as we detailed previously, <\/a>many of the loans on banks’ books are dramatically mispriced (over-valued):<\/p>\n

“The worry now is that such firesales will set an example for other major investors seeking a way out of the turmoil too, forcing a wholesale crash in the Manhattan real estate market which until now had managed to avoid real price discovery.”<\/strong><\/em><\/p>\n

Warren responds by exclaiming that Powell has “gone weak-kneed” on bank regulation, concluding with this shot across the bow:<\/p>\n

\u201cthe American people need a leader at the Fed who has the courage to stand up to these banks.\u201d<\/strong><\/em><\/p>\n

Of course, The FDIC’s Quarterly Banking Profile would not be complete without the obligatory comment that ‘Overall, the\u00a0FDIC\u00a0said that the sector remains strong and resilient.’ <\/strong><\/p>\n

\u201cThe banking industry continued to show resilience after a period of liquidity stress in early 2023,\u201d\u00a0<\/strong>Martin Gruenberg, the head of the agency, said in a statement. <\/em><\/p>\n

He added that the industry faces significant risks that could affect credit quality, profits and liquidity. The\u00a0FDIC\u00a0chief flagged concerns around commercial real estate loans.<\/p>\n

Bank Incomes Plummeting<\/h2>\n

Aggregate net income for the 4,587 FDIC-insured commercial banks and savings institutions declined $30 billion (43.9 percent) from the prior quarter to $38.4 billion. <\/strong><\/p>\n

<\/a><\/p>\n

Higher noninterest expense<\/strong> (up $26.6 billion, or 18.9 percent), lower noninterest income<\/strong> (down $6.5 billion, or 8.8 percent), and higher provision expense<\/strong> (up $5.2 billion, or 26.5 percent) drove the decline in net income in the fourth quarter.<\/p>\n

Higher provision expense occurred as the industry built reserves, primarily for credit card and commercial real estate loans.<\/p>\n

Charge-Offs Are Accelerating (above pre-pandemic levels)<\/h2>\n

The industry\u2019s net charge-off rate increased 14 basis points from the prior quarter and 29 basis points from the prior year to 0.65 percent, 17 basis points above its pre-pandemic average.<\/p>\n

<\/a><\/p>\n

As an aside, The\u00a0FDIC\u00a0now estimates $20.4 billion in losses arising from the failure of both SVB and New York-based Signature Bank, up 25%<\/strong> from its $16.3 billion November estimate.<\/p>\n

The industry\u2019s net charge-off rate is 17 basis points above its pre-pandemic average.\u00a0<\/strong><\/p>\n

Nonfarm nonresidential commercial real estate loans also contributed to the increase in net charge-offs, particularly among non-owner occupied properties in which the net charge-off rate of 0.51 percent was the highest level since fourth quarter 2012.<\/p>\n

CRE Loan delinquencies soaring (highest since 2014)<\/h2>\n

Late payments on commercial properties that aren\u2019t owner occupied are at the highest level since the first months of 2014<\/strong>, Gruenberg, the\u00a0FDIC\u00a0chairman, said in his remarks.<\/p>\n

<\/a><\/p>\n

Powell says there will be bank failures from CRE troubles, but not at big banks,<\/strong> repeating an earlier comment that troubled CRE loans are manageable <\/strong>and more an issue for smaller and medium-sized banks.<\/p>\n

Credit-card delinquencies also soaring (highest since 2011)…<\/h2>\n

Credit card loans led the annual increase in net charge-off balances.<\/strong> Delinquent credit cards haven\u2019t been this high since the third quarter of 2011…<\/p>\n

<\/a><\/p>\n

The net charge-off rate on credit card loans was 4.15 percent, the highest rate for this portfolio reported by the industry since first quarter 2012.<\/p>\n

While credit cards and nonfarm, nonresidential commercial real estate loans drove the quarterly increase in the noncurrent rate, residential mortgages drove the quarterly increase in the share of loans 30-89 days past due.<\/strong><\/p>\n

But, apart from all that, as Powell said in the last two days: ‘the banking system is strong and resilient’.<\/strong><\/em><\/p>\n

And how do you think these charts will look as banks face an imminent shift to tougher capital and liquidity regulations.<\/p>\n<\/div>\n

Tyler Durden<\/a><\/span>
\nThu, 03\/07\/2024 – 12:25<\/span><\/p>\n

\u200bhttps:\/\/www.zerohedge.com\/markets\/these-are-5-charts-fdic-does-not-want-you-paying-attention<\/a>\u00a0<\/p>\n

\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"

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