FDIC Quarterly Banking Profile Shows Mixed Results
Family residential mortgages for one-to-four family properties on the books of our nation's banks fell by $386.5 billion to $1.859 trillion since the end of 2007, down 17.2%, including writedowns.
Non-farm non-residential commercial real estate loans are actually up 9.1% to $1.057 trillion at the end of Q1, but have been declining in eight of the past nine quarters. This category remains a source of additional potential writedowns.
. Construction and development loans have been the biggest category for loan write-offs due to the thousands of housing projects that were started and not completed during the bubble and are a source of additional writedowns. Since the end of 2007, C&D loans are down by $400.6 billion or 63.7%, but still high at $228.3 billion.
During the savings and loan crisis construction and development loans declined 54.7% from $216.6 billion at the end of 1988 to $98.1 billion at the end of 1992. Construction and development loans thus remain the number one cause of future bank failures among community banks. This explains why community banks are reluctant to lend to home builders.Home equity loans are another source of new writedowns, as these have declined by only 2.8% since the end of 2007 to $590.3 billion. Total real estate loans are down $715.6 billion or 16.1% since the end of 2007 and still total $3.73 trillion, which poses a concern for the banking system in the quarters ahead. My next article covering the FDIC Quarterly Banking Profile will analyze the categories of "other real estate owned," "notional amount of derivatives," and the Deposit Insurance Fund and insured deposits. I will also talk about noncurrent loans.
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 + 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