Minnesota banks reported mixed performance in the first quarter of 2012, based on data from the 366 commercial banks in the state.
As is often the case in the first quarter, the Federal Reserve Bank of Minneapolis reported, asset quality declined and profits improved. Year-over-year loan growth remains negative, but less so. Most measures are considerably better than a year ago, the bank reported.
“Compared with last year at this time, Minnesota banks reported stronger asset quality, improved profitability and continued capital growth,” said Ron Feldman, senior vice president of Supervision, Regulation and Credit at the Federal Reserve Bank of Minneapolis, in a news release.
Consistent with seasonal patterns, we saw asset quality get worse, while profit growth was strong. I continue to foresee improvement in Minnesota banking conditions for 2012.”
While the year-over-year change in the amount of outstanding loans remained negative at the end of March, it improved materially from year-end 2011. Loan growth stood at -2.5 percent at the end of 2011. Minnesota banks reported a median rate of -1.3 percent as of the first quarter.
The level of problem loans compared with the resources banks have to cover loan losses worsened by more than 1 percentage point since year-end, consistent with the typical trend in the first quarter, the bank reported. Compared with last year at this time, the measure fell by nearly 5 percentage points to less than 14.5 percent.
Profitability measured by the median return on average assets increased to above 0.9 percent for Minnesota banks. Strong improvement in profits is typical of the first-quarter pattern driven by lower provisions. Liquidity and capital also improved from year-end.