We've now had four quarters of income growth. While it is still probably too early to declare victory, we're a lot closer to the end now than the beginning.
The large decrease in loan loss reserves is positive for two reasons. First, it indicates that loan performance is improving, which also indicates the economy is improving. Secondly, the decrease in loan loss reserves indicates there is less of a drag on earnings going forward.
Both return on assets and return on equity -- key measures of bank operations -- have bounced from their lows and are on the mend. Although these two figures have not reached pre-recession highs, the trend is clearly moving in the right direction.
The last three quarters have seen a continual decease in net charge offs and the quarterly change in non-current loans; both of these indicators are moving in the right direction.
On a quarterly basis, charge offs are clearly in a downtrend -- again, clearly, the right direction.
It appears the non-current loan rate has peaked -- albeit it at very high historical levels -- and is now on its way lower. It will be at least a year before we see this number approach anything like normal -- and probably longer.
Real estate construction loss rates also appear to have peaked -- although at high levels as well.
Residential real estate loan rates also appear to have peaked. Notice, however, that they appear to be remaining at high levels instead of dropping meaningfully.
