Community bank lending during the financial crisis
The total volume of loans held by community banks peaked in 2008 and dropped during the financial crisis and Great Recession. Total loans bottomed out in 2011 and, as of December 2012, have only recovered to a level roughly 10 percent below their 2008 peak. During this period, both demand and supply factors undoubtedly played roles in the change in bank lending.
Agriculture Boom Continued 2013
U.S. agriculture has been booming in recent years with record farm incomes and double-digit percentage increases in cropland prices. However, farm income projections suggest a flattening, if not a reversal, of these trends. 2013 may prove to be a peak year, as analysts expect the agriculture sector to experience lower commodity prices, normal crop production and lower farm income over the next several years.
In-depth: can FASB get loan loss accounting just right?
The Financial Accounting Standards Board (FASB) recently released a proposal that would change the way financial institutions set aside funds to cover losses on loans, debt securities and other assets. Under current accounting rules, the allowance for loan and lease losses is based on incurred losses; the new model, if adopted, would require the allowance to be established for losses expected over the life of the loan based on current and future economic conditions, historical losses, and other factors.
Earliest indicator of bank failure is deterioration in earnings
In general, the reasons for bank failures today are the same as failures in the past.
What are the challenges that banks face to raise capital?
Investors remain available for offensive capital-raising but are scarce for defensive capital-raising.>
Will community bank returns on equity return to precrisis levels?
It is possible ROE will settle in at a lower-than-precrisis historical rate, leading to a resetting of performance expectations by community bank stakeholders.
Where housing markets lead in 2012, Eighth District economies are likely to follow
While some measures of Eighth District housing-market activity recently showed signs of life, it?s not clear yet if it is cause for cautious optimism in the economic outlook.
Recovery continues for banks in district, nation
Bank earnings were up moderately at the national level but were mixed in District states in the second quarter of 2012, while asset quality improved once again across all states. Overall, the District and national banking industries are in considerably better shape now than they were one year ago.
Rules and Regulations