USA Financial System Assets Reported Improved in August 2012 Fed Report

August 27th, 2012
in econ_news, syndication

Criticized assets include all assets rated special mention, substandard, doubtful, and loss. Classified assets include assets rated substandard, doubtful, and loss.

Follow up:

Although credit quality improved over the past three years, the percentages of criticized and classified assets remain elevated at 10.6 percent and 7.0 percent, respectively, as weak economic conditions continue to impact businesses. The reduction in the criticized rate from 12.7 percent to 10.6 percent in 2012 is a result of an 8.1 percent decline in criticized loan volume and a 10.6 percent increase in the overall SNC portfolio. As in 2011, the reduction in the dollar volume of criticized assets is attributed to improved borrower operating performance, debt restructurings, bankruptcy resolutions, and greater borrower access to bond and equity markets.

Criticized assets declined by $26 billion to $295 billion (see Figure 2), an 8.1 percent decrease from last year. Criticized assets represented 10.6 percent of the portfolio, compared with 12.7 percent in 2011.2 Classified credits declined by $19 billion to $196 billion, an 8.8 percent decrease. Classified credits represented 7.0 percent of the portfolio, compared with 8.5 percent in 2011.

Credits rated special mention declined by $7.1 billion to $99 billion, a 6.7 percent decline. Special mention credits represented 3.6 percent of the portfolio, compared with 4.2 percent in 2011.

The volume of nonaccrual loans net of loss dispositions declined from $91 billion to $81 billion, an 11.1 percent decrease, and represented 2.9 percent of the portfolio, down from 3.6 percent in 2011.

Source: this is an except from the Federal Reserve Report entitled Credit risk in the shared national credit portfolio declines, but remains high

The interagency Shared National Credits (SNC) Review for 2012 indicates that credit quality improved for the third consecutive year for large corporate loans and loan commitments held by U.S. bank organizations, foreign bank organizations (FBO), and nonbanks, such as securitization pools, hedge funds, insurance companies, and pension funds.


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