Federal Reserve Bank of San Francisco

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March 31, 2011

12th District banks continued to struggle, losing money on average in the 4Q10 with loan quality problems weighing heavily. The potential for higher losses on income property loans remain a concern, with 60% of District banks already having less-than-satisfactory CAMELS ratings. Yet, positive trends in capital, earnings, and asset quality (in general) provide reasons for optimism in 2011.