First Quarter 2013: Banking Recovery Continues Despite Margin Pressures


Federal Reserve Bank of San Francisco

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May 22, 2013

The First Glance 12L provides a first look at the financial performance of the 12th Federal Reserve District banks each quarter. The 1Q13 report, subtitled “Banking Recovery Continues Despite Margin Pressures”, examines trends and conditions related to banks headquartered in the 12th Federal Reserve District (nine western states). Banks are continuing to recover from the recent recession with steadily improved credit quality, capital positions and liquidity. Profitability, while still relatively weak, also has improved significantly in the past three years, although the recent improvement has been driven by reduced provisions for credit losses. Average pre-tax, pre-provision profitability (core profitability) has edged down in the District for the past two quarters as net interest margins have been pressured by the low interest rate environment. Profitability among District community banks (banks under $1B) has not recovered as much as it has for the larger banks. In addition to analyzing financial trends and conditions, the First Glance 12L report also includes a discussion of selected “Bank Supervisors’ Hot Topics.”