Tuesday, February 24, 2015

ABA Statement on FDIC’s Fourth Quarter Bank Earnings Report

“It was a strong year for America’s banking industry with significant increases in lending to both businesses and individuals. Community banks in particular showed dramatic improvements, which speak to strengthening economies in towns across America. The headline earnings disguise the robust improvements we’re seeing among banks of all sizes as institutions work to ensure businesses have the credit they need to expand and create jobs.”

Lending Grows Strongly for Banks in 2014

“Lending is on the rise, and we’re seeing strong improvements in business, consumer and real estate categories. Business lending saw a significant uptick, buoyed by a renewed appetite for expansion among small businesses. We’ve returned to a point where small businesses are confident in the economy, and banks are meeting their needs as they get back in the game.”

Banks See Solid Earnings

“Robust lending growth was the key driver of industry earnings in 2014. Expense control remains a high priority amid ever-rising regulatory costs, but has become more difficult as cost-cutting nears its limit and regulatory risk increases.”

Interest Rate Risk Remains Concern for Banks

“Banks remain sensitive to the increasing possibility that the Fed will begin to raise interest rates later this year, and are managing their risks accordingly. This is one of the many risks banks must manage as they work aggressively to meet their customers’ needs and make the loans that help drive our economy.”

Capital Keeping Pace with Industry Growth

“The industry has worked to aggressively build capital and liquidity over the last five years. The focus is now shifting toward putting capital to work in the form of loans and other investments in communities across the country. Total industry capital is now over $1.7 trillion, and with reserves banks have set aside for possible loan losses, there is a total buffer of more than $1.8 trillion protecting the industry from any economic circumstance that could arise.”

Deposit Insurance Fund Growing More Quickly than Anticipated

“The FDIC’s Deposit Insurance Fund grew over $8 billion in the fourth quarter to a total of nearly $63 billion dollars. This large quarterly increase is primarily due to failure costs being much lower than anticipated, which led to a recapture of funds that had been previously set aside to cover losses. The FDIC insurance fund is now larger than it has ever been, and will meet the congressionally mandated levels much sooner than had been expected. The Deposit Insurance Fund is paid for completely by the banking industry at no cost to taxpayers.”

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