Billion Dollar Bank Failure – Guaranty Bank of Wisconsin Closed by Feds

For the second week in a row a billion dollar bank was closed by regulators.  Last week it was First NBC Bank of New Orleans and today it was Guaranty Bank, Milwaukee, Wisconsin (doing business as Best Bank in Georgia and Michigan). Overwhelmed by bad loan, the Comptroller of the Currency shuttered Guaranty Bank and […]

Banks Have Just Lost Their Biggest Profit Center – What Will Replace Billions of Profits from Loan-Loss Releases?

During the past five years bankers have reaped billions of dollars in profits by simply making accounting entries instead of making loans. What was the biggest source of banking industry profit growth over the past five years?  As noted repeatedly in FDIC Quarterly Banking Profile reports, the biggest contribution to earnings growth has come from […]

Largest Bank Failure of 2014 – The National Republic Bank of Chicago

Illinois has been a tough place for banks this year.  A third of all bank failures during 2014 have occurred in Illinois and the collapse of The National Republic Bank of Chicago also gives Illinois the distinction of having the nation’s largest bank failure. The National Republic Bank of Chicago, Chicago, Illinois, (TNRBC) was shuttered […]

How Much Risk Are Banks Taking With Credit Card Lending?

Savers aren’t the only ones being hurt by the Federal Reserve’s suppression of interest rates.  The Fed’s zero interest rate policy has been a factor in the decline of banks’ net interest margins to a multi-decades low. According to the latest FDIC Quarterly Banking Profile the net interest for all banks for the quarter ending […]

What Is the Average Rate on a Bank Credit Card?

Credit cards have become an absolute necessity for most people despite the high rates charged on revolving loan balances.  Whether traveling anywhere in the world or just buying a cup of coffee at Starbucks, a credit card allows the purchaser a safe, convenient, and fast method of paying for a purchase. The use of both […]

Home Equity Loans – Why Banks and Borrowers Both Love Them

With interest rates at all time lows why wouldn’t banks love handing out home equity lines of credit (HELOC)?  Since HELOCs are all written as adjustable rate second mortgages any increase in interest rates translates into instantly higher profits for banks.  With a HELOC the borrower takes on interest rate risk as opposed to a […]

Housing Recovery Stalls as Old Rules for Recover No Longer Apply

The old rules for a strong housing market appear to have changed in a fundamental manner frustrating traditional analysts who have been predicting a housing recovery. In the latest Economic and Housing Market Outlook report, Freddie Mac examines three fundamental areas in the housing market that have not behaved as expected which has contributed to […]

Will Banks Get Burned on Huge Holdings of U.S. Treasuries?

With loan demand still tepid after over five years of unprecedented monetary stimulus by the Federal Reserve, banks need to invest trillions of dollars of deposits that they can’t lend out. Just as individual savers have been forced to take on more risk and go further out on the yield curve, banks have been forced […]

Increased Bank Profits Mainly Due to Lower Loan Loss Provisions – When Will Real Profits Increase?

On the surface the latest FDIC Quarterly Banking Profile reflects a recovering banking industry with robust profit growth.  For the fourth quarter of 2013 banks collectively reported net income of $40.3 billion which is a $5.8 billion or 16.9% increase from the previous year’s fourth quarter. Making the picture look even brighter is the fact […]

FDIC Reports Earnings Decline For Banks In Third Quarter

The Quarterly Banking Profile released by the FDIC showed that profits for the banking industry declined for the first time since the second quarter of 2009. FDIC insured commercial banks and savings institutions reported net income of $36.0 billion for the third quarter of 2013 which was a $1.5 billion (3.9%) decline from the previous […]