Large Bank Supervision Forum 2023

Internal Use Only

Internal Use Only

Q4 Summary • Influx of liquidity from COVID • Record NIM •

NIM improved at a slower pace than the prior quarter as deposit costs increased

• Deposits declined for a third consecutive quarter • Strong profitability • still greater than earnings prior to the pandemic • Increasing provision expense reflect continued loan growth and economic uncertainty that may affect future credit quality • Banks continued to report a higher proportion of assets with maturities longer than three years • Interest rates are crushing securities values • Banks trying to deploy that liquidity, while also trying to manage liquidity risk caused by security portfolio • Liquidity cited as a concern for Fed and FDIC Risk staff • Started with having it in the bank • Now making loans • Is loan making too aggressive? • Loan to deposits up across the board • Is this coming on backs of their customers? • CSBS predictive analytics, number of high-risk banks has doubled • Liquid assets to total assets is coming back down