Banking and Loan Charge Offs

Long-time readers will remember that I'm fond of the FRED site (click graphic to be transported there), and when I was doing my uber-nerd banking/mortgage/insurer/bond insurer research and boring you to death with that I would show you this stuff.

The following schedule shows the percentage of the Loan Loss Reserve to Total Loans. The current number has a ways to go still.



Now, have you heard one banking analyst talk about the above schedule? I think not. The last time I pulled this schedule out was to remind readers that when the analysts said about 16 mos ago that "loan losses are low" (1) we are at the peak of a cycle AND (2) that means that there is one place to go (like low unemployment rates). I'm tempted to say that with the crappy underwriting we are likely to see numbers that exceed the one from the recession in early 90's. Hard to know WHAT these numbers would look like if there were not so many of them sitting in REIT's as collateral for bondholders.

Here's another schedule that shows the Nonperforming loans that are over 90 days. The plus non-accruals refers to loans that are no longer accruing interest.


We'll look at these handy dandy schedules as the year wears on. If you have an interest, you will also want to look at what the banks are doing with the negative amortization on loans.