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Press Releases |
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FOR IMMEDIATE RELEASE PR-91-2000 (12-20-2000) |
Media Contact:
Phil Battey (202) 898-7192 |
In a semi-annual report on risks in banking released today, analysts with the Federal Deposit Insurance Corporation (FDIC) identified several factors that have weakened the current economic expansion. Rising energy prices, high levels of corporate and household debt, tight labor markets and a weakening stock market all could portend slower economic growth and a more challenging environment for insured institutions. In the fourth quarter edition of the FDIC's Regional Outlook, analysts also report that while overall the banking industry remains strong, aggregate risk to insured institutions appears to be rising, as evidenced by a shifting over the past several years, in certain banking markets, of asset mixes toward commercial and industrial, commercial real estate, and construction and development loan categories, increasing concentrations in these traditionally higher-risk loan types. After nearly a decade of improving asset quality, the level of problem loans has begun to edge upward, but remains favorable compared with the late 1980s and early 1990s. In addition, this report discusses the growing reliance on non-core funding to support asset growth, heightened interest rate risk sensitivity at some institutions, and declining net interest margins. "It appears that insured institutions' high levels of profitability in recent years have been achieved, in part, by an increased appetite for risk," said FDIC Chairman Donna Tanoue. "More recently, there have been reports that some banks have begun to tighten credit standards." FDIC analysts note that insured institutions in selected banking environments may be exposed to increasing risk on several fronts, and that a combination of these exposures could create challenges for these institutions should economic growth slow significantly. These economic and banking trends are reflected in the following regional developments.
Congress created the Federal Deposit Insurance Corporation in 1933 to restore public confidence in the nation's banking system. The FDIC insures deposits at the nation's 10,101 banks and savings associations and it promotes the safety and soundness of these institutions by identifying, monitoring and addressing risks to which they are exposed. FDIC press releases and other information are available on the Internet via the World Wide Web at www.fdic.gov, and may be obtained through the FDIC's Public Information Center, 801 17th Street, NW, Washington, DC 20434, telephone 800-276-6003 or (703) 562-2200, or e-mail publicinfo@fdic.gov. |
Last Updated 12/20/2000 | communications@fdic.gov |