Harry Terris

Growth in commercial and industrial loans accelerated to a torrid 18% annual rate in the fourth quarter, Fed estimates indicate. Total loan growth fell to a 3.5% rate, however, as a slowdown at big banks was only partially offset by a pickup at small banks.

The re-emergence of a sharp seasonal dip in payment rates late last year was mirrored by a jump in credit card borrowing. The percentage of balances that cardholders pay off each month is still higher than during the mortgage boom, however, when large numbers of borrowers drew on home equity to pay other debts.

So-called direct banks have become a favored avenue out of the shadow financial system, and into the federal safety net, for household names like General Electric, American Express and Discover.

In an industry in need of new sources of revenue, some banks have built insurance brokerage operations that account for 40% or more of their total noninterest income. Most banks have not followed, however, and the business remains a minor sideline nationally.

Wall Street analysts failed to anticipate the severity of the collapse in bank earnings in 2008 and 2009, and then underestimated the strength of the rebound last year. For what it’s worth, forecasts in late 2011 registered the most skepticism over the two-year outlook in more than four years.

An outrush of deposits from foreign bank operations in the U.S. has forced them to cut their balance sheets by a fifth since midyear, but they still managed a 3% increase in business loans.

About a third of the institutions with the 25 highest ratios of foreclosed properties to tangible equity at Sept. 30 have since failed. Simultaneous craters in capital and jumps in repossessed real estate were typical, as were high levels of soured construction and development loans.

Corporate cash hoards hit yet another high in the third quarter, but the image of firms as skinflints is misleading. Corporations have been borrowing, and borrowing from banks, as they have been restocking inventories.

Borrowing ticked down in the third quarter, but so did personal income and property values, and household assets took a big blow from the drop in stock prices. That left three key measures of household financial stability – debt to net worth, mortgage debt to owner’s equity, and debt to disposable income - either flat or worse.

Banks launched later in the decade, whose ramps to profitability lagged their predecessors’, provide a cautionary tale about headwinds that can emerge in an unstable economy, and the dangers of piling into a strategy based on brokered deposits and real estate lending.

The roughly 800 banks opened since 2002 have failed at about twice the industrywide pace. But some, including a few that have been repurposed as rollup vehicles, have prospered. The tables here rank the best and worst performers among the de novos of the past decade.

Most people did not observe Bank Transfer Day, a survey found, but customers who follow through on plans to close accounts could still sting banks.

While B of A nips and tucks as it struggles to meet new capital requirements, JPMorgan Chase bemoans the severity of the rules from a position of relative strength, and hints at the rationale for the behemoths to dismantle themselves.

Anemic household expenditures this year heightened anxiety that the economy would stall out, but growth in spending on plastic has remained healthy. An increased appetite for big-ticket items among households that are surviving the malaise probably explains much of the phenomenon.

Receiving Wide Coverage ...Occupying Hearts and Minds: The papers took a stab at weighing the future of the Occupy Wall Street protests in the daylight of a "cleared and power washed" Zuccotti Park. The Times said "questions endure about whether…the movement might lose momentum or drift into irrelevancy" without its central piece of street theater. But some organizers "acknowledged that the crackdowns by the authorities in New York and other cities might ultimately benefit the movement, which may have become too fixated on retaining the territorial footholds." Wall Street Journal, New York Times

Through fever waves of populist anger including the Occupy Wall Street protests, there has been no sign that disgusted customers are draining the giant banks of their deposits.

Lower borrowing costs under the government’s refinancing program for underwater homeowners mean lower interest payments for investors, and banks are the biggest holders of agency mortgage bonds.

Banks are looking to slash infrastructure that had been built for growth, but not all have bloat in their payrolls. In fact, compensation is now a smaller portion of revenue at companies like Capital One than it was before the recession.

As banks labor to raise capital seawalls, underwater home equity loans continue to wash against their foundations - at Wells Fargo, such assets are equal to nearly half of capital. Most of the loans are within initial periods where borrowers are required to make only monthly interest payments.

Recent predictions of the demise of branch banking can sound like the premature eulogies that have been floated since the advent of the Internet, but data suggests that a fundamental shift may be underway.