chart showing that banks set their loan loss provisions low

Banks bet heavily in the third quarter that the worst of the pandemic recession was behind them, lowering their loan loss provisions to a level slightly lower than a year ago when weighted by assets.

The FDIC Quarterly Banking Profile released Tuesday showed banks provided $14.4 billion for loan losses in the three months ending Sept. 30, up 3.5% from 2019’s third quarter in absolute terms. However, the provision was an annualized 0.27% average assets, down from 0.30% in 2019’s third quarter.

Moreover, the third-quarter provision was down sharply from $52.7 billion in the first quarter and $61.9 billion in the second quarter.

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Jim DuPlessis

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