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FDIC Reports Positive Banking System Data

Insured Deposits: While the DIF is down 51.9% since the end of 2007 to $25.2 billion, insured deposits are up 68.9% to $7.25 trillion. As deposits grow the size of DIF must increase, which is another source of stress.

Reserves for Losses: The banking system has been reducing reserves for losses since it peaked at $263.1 billion beginning in Q2 2010. Now at $167.0 billion, reserves remain 64.2% above the level of 2007. This shows that there are additional bad assets that need to be unwound.

30-89 Day Past Due: As real estate loans began to default this category peaked at $157.9 billion in Q1 2009. Since the pace of bad loans has slowed this category has slowed to $87.0 billion in Q3 2012, down 21.6% since the end of 2007.

Noncurrent Loans: The peak in this bad loan category was $405.4 billion at the end of Q1 2010. While significantly lower today at $292.1 billion it's up $182.2 billion, or 165.8% since the end of 2007. This is another sign that the banking system continues to experience the effects of the great credit crunch.

In summary, while the banking system has been slowly but surely reducing exposures to bad real estate loans overall stress in the banking system remains. Tomorrow I will update my profiles for several stocks in the money center and regional banking industries.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

Richard Suttmeier has an engineering degree from Georgia Tech and a master of science from Brooklyn Poly. He began his career in the financial services industry in 1972 trading U.S. Treasury securities in the primary dealer community. In 1981 he formed the Government Bond Department at LF Rothschild and helped establish that firm as a primary dealer in 1986. Richard began writing market research in 1984 and held positions as market strategist at firms such as Smith Barney, William R Hough, Joseph Stevens, and Rightside Advisors. He joined www.ValuEngine.com in 2008 producing newsletters covering the U.S. capital markets, and a universe of more than 7,000 stocks. Richard employs a "buy and trade" investment strategy and can be reached at RSuttmeier@Gmail.com.
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