Tuesday, November 29, 2016

ABA Statement on FDIC's Third Quarter Bank Earnings Report

WASHINGTON — “American banks continue to spur economic growth with another strong quarter of activity. Loan growth remained solid in the third quarter, helping to boost loan volume over the last year by nearly $600 billion. Deposit flows were strong, capital levels continued to rise and problem loans fell. Banks are well-positioned to meet the needs of customers seeking to manage their finances or expand their businesses.”

Lending at All-Time High
“Lending rose to an all-time high, with total lending reaching more than $9 trillion in the third quarter, helping to support jobs and communities. Small business loan growth was particularly strong at community banks, which reflects a broad-based improvement in economic conditions in many communities across the country. The outlook may be improving as businesses sense the potential for regulatory relief and lower taxes on the horizon. Small businesses often cite high taxes and government red tape as their company’s biggest concerns.”

Banks Expecting Rise in Rates
“Our expectation is that the Fed will raise rates in December as the economy continues to firm. Banks have been prepared for a rise in rates for some time and are managing that risk. The Fed has made it clear that any increase in the Federal Funds Rate will be gradual, ensuring that borrowing costs will remain low for the foreseeable future.”

Capital Levels Exceed the Most Stringent Regulatory Standards
“Bank capital levels are very strong. This solid footing provides the base for future economic growth, and provides the bulwark against any economic downturns that could arise. More than 99 percent of all banks are highly capitalized at levels far exceeding the most stringent regulatory standards. Total industry capital now stands at $1.87 trillion, up 5 percent compared to the same period a year ago and nearly 31 percent higher than at the end of the recession.”

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