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Delinquencies inch higher and net charge-offs jump in Q4'17

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Delinquencies inch higher and net charge-offs jump in Q4'17

Credit quality at U.S. banks and thrifts remained healthy in the fourth quarter of 2017, but net charge-offs and delinquencies continued ticking higher.

The percentage of loans 30-plus days past due or in nonaccrual status rose to 1.89% of total loans as of Dec. 31, 2017, a 2-basis-point increase from the prior quarter, but a 23-basis-point decrease from the year-ago quarter. Aggregate delinquent loans and leases increased by 2.8% during the fourth quarter to $183.99 billion, driven primarily by a $3.93 billion increase in delinquent one- to four-family loans and a $3.03 billion increase in delinquent consumer loans.

Net charge-offs also ticked higher in the fourth quarter, hitting $13.18 billion, compared to $10.99 billion in the third quarter and $12.12 billion in the fourth quarter of 2016. Net charge-offs tend to spike in the fourth quarter, but this was still the highest nominal amount since the second quarter of 2013. Net charge-offs as a percentage of average loans also increased for 11 of the 25 largest banks and thrifts year over year in the fourth quarter.

The increase in net charge-offs was driven primarily by a $2.66 billion increase in consumer loan NCOs. However, the largest relative increases happened in commercial real estate and commercial-and-industrial, where NCOs jumped 67.3% and 66.5% year over year, respectively.

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Click here to access a template containing key performance metrics, credit quality, balance sheets and income statements for banks and credit unions.

Commercial banks, savings banks and savings & loan associations report information on past-due and nonaccrual loans on call report Schedule RC-N, which can be accessed under the Regulatory Financials section of a company's page on the MI website or in MI Excel-add in tool.