American Bankers Association Issues Statement on FDIC Quarterly Banking Profile

WASHINGTON, May 27 -- The American Bankers Association issued the following statement on May 26, 2021, by Robert Strand, senior economist of economic policy and research, on the Federal Deposit Insurance Corporation's quarterly banking profile:

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"Today's FDIC report shows that banks of all sizes continue to serve as a source of strength for economic recovery from the COVID-19 recession.

"In addition to helping businesses and consumers navigate evolving conditions, banks continued to demonstrate their own resiliency.

"Consumer and business financial health turned out better than expected in the quarter, as stimulus payments and other government assistance helped Americans meet their financial obligations.

"As a result, banks were able to recapture loan loss reserves, yielding the first-ever recorded quarter of overall negative provisioning. This generated a rise in net income in the first three months of the year.

"Business lending rose slightly over the previous quarter, particularly for PPP and commercial real estate loans, and auto lending also increased as COVID restrictions were lifted and more people looked to travel.

"However, total bank lending slipped 0.4% in the first quarter, mostly due to low inventory in the housing market and the fact that many consumers paid down credit card balances and home equity lines of credit. Financial institutions are prepared to boost lending as the recovery gains strength and demand for loans grows.

"People continue to seek the safety of FDIC-insured bank accounts, with deposits up 3.6% in the first quarter and 26.9% in the five quarters since the onset of the pandemic.

"America's banks remain fundamentally strong and poised to support the economy moving forward."