NEW YORK ( TheStreet) -- The Federal Deposit Insurance Corporation reported that the banking system earned $42.2 billion in the second quarter of 2013, up 22.6% from the second quarter of 2012. The drivers of this improved profitability continue to be noninterest income and reduced loan loss provisions, not increased lending.
This morning I read a post on Seeking Alpha that indicated that the larger regional banks including
Bank of America
(WFC) have been experiencing reduced demand for mortgages due to rising interest rates. Bank of America announced plans to cut about 2,000 jobs from its mortgage origination business. JP Morgan expects to lose money on its mortgage operations in the second half of 2013. Wells Fargo expects its mortgage originations to decline by nearly 30% in the second half of the year. This slippage was already noticeable in the FDIC QBP for the second quarter of 2013.
Source: Courtesy of FDIC
For the third quarter in a row net interest income posted a year-over-year decline. The decline for the second quarter was $1.8 billion as interest income from loans and other investments. This implies that the banking system remains reluctant to lend as long as troubled assets remain on the books of many banks.A Review of the Sequential Mix of Real Estate Assets first quarter 2003 vs. second quarter 2013: Total Assets On Monday I wrote, JP Morgan Upgraded As Banking System Heals and indicated that JP Morgan reduced assets by $47.5 billion in the second quarter, which pulled total assets in the banking system down $14.8 billion sequentially. Residential Mortgages declined by $22.1 billion in the second quarter which is a sign that mortgage credit guidelines remain too tight, and that demand for mortgages have declined as rates rise. Nonfarm Nonresidential Real Estate Loans rose by $11.1 billion in the in the second quarter which is a sign that banks feel saver lending to builders of office buildings, strip malls, condos and apartments, rather than single-family homes.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV