Based on Moody\u2019s market data, banks\u2019 non-performing loans stood at 5.0 percent of total loan assets at March 31, 2010.<\/p>\n
Moody\u2019s says U.S. rated banks have already charged off or written-down $436 billion of loans in 2008, 2009, and the first quarter of 2010. That leaves another $307 billion to reach the rating agency\u2019s full estimate of $744 billion of loan charge-offs from 2008 through 2011.<\/p>\n
In aggregate, the banks have recognized 60 percent of Moody\u2019s estimated total charge-offs and 65 percent of estimated residential mortgage losses, but only 45 percent of projected commercial real estate losses.<\/p>\n
In the first quarter of this year, the banking industry\u2019s collective annualized net charge-offs came to 3.3 percent of loans, versus 3.6 percent of loans in the fourth quarter<\/p>\n<\/div>\n
\n
of 2009, Moody\u2019s said. Despite two consecutive quarters of improvement in charge-offs, the ratings agency notes that the figures still remain near historic highs, dating back to the Great Depression.<\/p>\n
According to Moody\u2019s analysts, the decline in aggregate charge-offs was driven by commercial real estate improvement, which \u201cwe believe is likely to reverse in coming quarters,\u201d they said in the report. A similar commercial real estate decline was experienced in the first quarter of 2009 before charge-offs accelerated through the rest of the year.<\/p>\n
\u201cThe return to \u2018normal\u2019 levels of asset quality will be slow and uneven over the next 12 to 18 months,\u201d said Moody\u2019s SVP Craig Emrick.<\/p>\n
But Emrick added that \u201cAlthough remaining losses are sizable, they are beginning to look manageable in relation to bank\u2019s loan loss allowances and tangible common equity.\u201d<\/p>\n
U.S. banks\u2019 allowances for loan losses stood at $221 billion as of March 31, 2010, which is equal to 4.1 percent of loans, Moody\u2019s reported. Although this can be used to offset a sizable portion of remaining charge-offs, banks will still require substantial provisions in 2010, the agency said.<\/p>\n
Moody\u2019s says its negative outlook for the U.S. banking system is driven by asset quality concerns and effects on profitability and capital. The agency\u2019s ratings outlook is also influenced by the potential for a worse-than-expected macroeconomic environment, Moody\u2019s said.<\/p>\n
\u201cMore severe macroeconomic developments, the probability of which we place at 10 percent to 20 percent, would significantly strain U.S. bank fundamental credit quality,\u201d Moody\u2019s analysts wrote in their report.<\/p>\n
http:\/\/www.dsnews.com\/articles\/banks-have-recognized-60-of-expected-loan-charge-offs-moodys-2010-06-03<\/a><\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"By: Carrie Bay In its latest quarterly report on credit conditions of the U.S. banking system, Moody\u2019s Investors Service says banks\u2019 asset quality issues are \u201cpast the peak\u201d butcharge-offs and non-performers continue to eat away at profitability and sheer fundamentals. Based on Moody\u2019s market data, banks\u2019 non-performing loans stood at 5.0 percent of total loan […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[79],"tags":[165],"class_list":["post-541","post","type-post","status-publish","format-standard","hentry","category-articles","tag-reo-banks"],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/blog.nyonlinerealty.com\/index.php?rest_route=\/wp\/v2\/posts\/541"}],"collection":[{"href":"https:\/\/blog.nyonlinerealty.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blog.nyonlinerealty.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blog.nyonlinerealty.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/blog.nyonlinerealty.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=541"}],"version-history":[{"count":5,"href":"https:\/\/blog.nyonlinerealty.com\/index.php?rest_route=\/wp\/v2\/posts\/541\/revisions"}],"predecessor-version":[{"id":543,"href":"https:\/\/blog.nyonlinerealty.com\/index.php?rest_route=\/wp\/v2\/posts\/541\/revisions\/543"}],"wp:attachment":[{"href":"https:\/\/blog.nyonlinerealty.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=541"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blog.nyonlinerealty.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=541"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blog.nyonlinerealty.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=541"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}