Wednesday, January 5, 2011

A Closer Look At Financial Institutions; $300 million to $1 billion

Let's continue out look at the nation's banks with a look at institutions

Net loan losses as a percentage of total loans appear to have peaked, but are still very high.

Commercial loan charge-offs are also high.

As a result of higher losses, banks are having to set aside near record amounts of funds for their loan loss reserves.

Finally, non-performing loans are near 25 year highs.

First, note return on average assets is low by historical norms, as is

Return on equity. In addition,

The net interest margin is also near low levels by historical standard.

So, like the smaller banks, the larger banks are getting hit by higher loan losses which is forcing them to set aside more funds for loan loss reserves. As for their money making side, we're seeing a low return on assets and equity and a low interest rate spread.