Coral Gables, Florida, June 22, 2022: BauerFinancial, Inc., the nation’s premier Bank and Credit Union rating firm, reports that net income at our nation’s banks dropped over 22% from a year ago. This, as banks find the need to bulk up on reserves (again) to cover for expected loan losses in coming months.
“As the Federal Reserve continues its campaign to tighten credit, we have to be ready for several things,” cautions Karen Dorway, president of BauerFinancial, “not the least of which is a rise in unemployment, which will pair precariously with the increasing rates on loans. ”
According to the Federal Reserve Bank of New York, housing debt increased by $249 billion in the first quarter 2022, student loan debt was up $14 billion during the quarter and auto debt increased by $11 billion. Credit cards were the only household debt category that went down ($15 billion) during the quarter. So far, loan quality looks good on these “household” categories. The percent sliding into “serious delinquency” (90 days or more past due) in the first quarter was down considerably from a year earlier.
However, while the majority of federally-insured banks and credit unions remain solid, at least so far, Bauer’s Troubled and Problematic Bank Report saw its first increase in number of banks since the third quarter of 2020. Similarly, Bauer’s Troubled and Problematic Credit Union Report now contains more institutions than it has since the third quarter of 2014.
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