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ABA: The American Bankers Association
Statement

ABA Statement on FDIC's First Quarter Bank Earnings Report

“The latest FDIC quarterly bank earnings report shows that America’s banks remain strong and well positioned to continue helping the nation weather the significant economic shock caused by the COVID-19 pandemic. Banks entered this crisis with robust capital and strong liquidity, and they are working tirelessly to help households and businesses recover financially and reignite the economy.

“Prudent risk management measures were largely responsible for sharply lower industry earnings in the first quarter as banks provisioned for the anticipated impact of the coronavirus on their loan portfolios. While the industry’s asset quality was strong prior to the pandemic, the sudden downturn is challenging businesses across the country and making it more difficult for them to repay loans. Banks continue to help business customers through the current crisis, including distributing millions of Paycheck Protection Program loans. With significantly higher loan-loss reserves, banks remain well prepared for the evolving outlook. Nearly all banks – 99.8% – have capital ratios that exceed the most rigorous regulatory standards.

“As the FDIC indicated, banks are positioned to continue supporting the economy. Deposit growth in the quarter was strong, with consumers and businesses safeguarding their money in federally insured banks during this period of economic uncertainty. Business lending increased as a number of companies drew on existing lines of credit to make it through tough times, while consumer lending slowed as people were careful about taking on new debt and banks tightened their underwriting standards. Multi-family residential lending rose in the first quarter, although real estate lending overall lagged as expected during these times.

“With the economic outlook uncertain, banks will continue a disciplined approach to risk management so they can further support their customers and spur the nation’s economic recovery.”

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About the American Bankers Association

The American Bankers Association is the voice of the nation’s $21.1 trillion banking industry, which is composed of small, regional and large banks that together employ more than 2 million people, safeguard $17 trillion in deposits and extend nearly $11 trillion in loans.

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Mike Townsend

(202) 663-5471

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