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WGA Releases Q2 2024 Bank Outlook
Whalen Global Advisors LLC (WGA) has issued the latest edition of The IRA Bank Book for Q2 2024. The report provides over 30 pages of charts and commentary on the US banking industry's financial health. Notably, the analysis highlights several key areas of concern and interest.
The report discusses the composition of industry revenue and earnings, noting a decline in net interest margin in Q1 2024. However, an upsurge in fee income has resulted in better overall performance compared to Q4 2023.
Additionally, new charts illustrate the various components of commercial real estate (CRE) loans, showing increased loss rates and severities, particularly in multifamily loans. These loss rates surpass those of a decade ago and continue to rise.
The report also addresses the considerable duration risk hidden in US banks' books. Since 2008, banks have shifted securities to "held to maturity," masking duration risk. Unrealized losses on COVID-era securities remain problematic, potentially impacting bank solvency if long-term interest rates rise to Q3 2023 levels or higher.
R. P.
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