US problem banks at lowest level since 2007

By FinancialsFOXBusiness

Big bank bashing is still ‘politically popular:’ Former FDIC chair

Sheila Bair, former FDIC Chair, discusses the testimonies of big bank leaders -- including JPMorgan and Chase CEO Jamie Dimon -- on Capitol Hill this week, weighing in on what she views as the biggest missed opportunities in the questioning of those bank CEOs.

The number of U.S. banks deemed problematic by a key federal regulator decreased in the first quarter of 2019 to its lowest levels in over a decade.

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Currently, 59 banks are listed on the Federal Deposit Insurance Corporation’s confidential “problem bank" list, the smallest number since the first quarter of 2007, according to data released by the agency on Wednesday.

Lenders are added to the list if they have financial or operational weaknesses that could threaten its overall viability. In 2010, the list included over 800 banks.

Despite the decrease, chairman Jelena McWilliams called on financial institutions to pursue “prudent risk management in order to support lending through this economic cycle."

“With the recent stabilization of interest rate hikes, some institutions may face new challenges in lending and funding,” she said in a statement.

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Higher interest rates helped spur $60.7 billion in profits at U.S. banks in the first quarter of 2019, an 8.7 percent surge from the prior year. Alongside large financial institutions like JPMorgan Chase, net income at community banks increased nearly 10.1 percent to $6.5 billion, according to the FDIC.

Net interest income, or the spread between what a bank makes on a loan and how much it owes on the deposits, grew to $139.3 billion in the three months through March.

And while commercial and industrial loans increased in the quarter, credit card balances in the sector fell 4.8 percent to $860 billion.

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A top industry group touted the report as evidence that "the banking industry is healthy and poised to continue driving a robust U.S. economy."

"The solid base of bank earnings, capital, liquidity and quality assets provides a strong foundation that will serve the economy well moving forward," James Chessen, chief economist at the American Bankers Association, said in a statement.