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Tuesday, February 28, 2012

Banking Industry Continues to Gain Strength as Economy Improves

“Quarter after quarter, the banking industry continues to gain strength. Increasing loans, strong capital levels, sharply declining problem assets and an inflow of deposits mark a steady improvement in our industry’s financial performance.”

Increased Business Lending
“Banks continue to aggressively seek out business borrowers as companies consider expansion in an improving economic environment. Business lending was particularly strong, rising 13.6 percent compared to the same period a year ago. Commercial and industrial loans have now increased for six consecutive quarters, a milestone that reflects businesses’ growing optimism.”

Asset Quality and Problem Banks
“Asset quality took a major step forward in the fourth quarter, with problem loans rapidly becoming a thing of the past. This marks the seventh consecutive quarter that assets in nonaccrual status have declined. Charge-offs have fallen for eight straight quarters, reaching their lowest level since the first quarter of 2008. Bank failures have slowed considerably, and the number of problem banks continues to fall. The FDIC continues to rebuild reserves as banks -- which are solely responsible for all the agency’s expenses -- paid about $13.5 billion in premiums over the last year.”

Near-Record Capital
“The industry continues to put loan loses behind it and near-record capital ratios demonstrate a firm foundation of financial health. Banks have added over $223 billion in capital since 2008 when the financial crisis took hold. Total industry capital is now almost $1.6 trillion. Banks also have set aside more than $191 billion in reserves to cover possible loan losses. Capital plus reserves gives a total buffer protecting the industry of more than $1.76 trillion.”

Increased Deposits
“Banks saw a sharp increase in deposits as depositors around the world move money into the safety of U.S. institutions. U.S. banks remain the most secure place to keep your money, and this influx of deposits reflects continued confidence in our nation’s banking system.”

Strong Bank Earnings
"Banks are a reflection of the economy. A strong, growing and profitable banking sector is critical to our country’s vitality. The banking industry helps fuel economic growth, and the steady improvements in asset quality and earnings form a strong base that will propel lending in 2012 for businesses and consumers."

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