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News Release 2014-145 | October 28, 2014

Loan Growth Doubles in Community Banks and Thrifts in the Northeastern District, OCC Reports

NEW YORK—The Office of the Comptroller of the Currency (OCC) today reported improving conditions among community national banks and federal savings associations (FSAs) supervised by the OCC's Northeastern District that stretches from Maine to South Carolina.

Connecticut, Delaware, the District of Columbia, eastern Kentucky, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, North Carolina, Pennsylvania, Rhode Island, South Carolina, Vermont, Virginia, and West Virginia comprise the OCC's Northeastern District.

Loan growth among banks and FSAs in the 16 states and Washington, D.C. in the district more than doubled to 4.4 percent as of June 30, 2014, from 2 percent a year earlier. The tri-state New York City Metropolitan region (New York, New Jersey, and Connecticut) saw 7 percent growth, the highest loan growth rate in the OCC's Northeastern District.

"Loan growth for OCC-supervised banks and FSAs in the district centers upon multifamily, commercial, and automotive loans," said Kristin Kiefer, Acting Deputy Comptroller for the OCC's Northeastern District. "Additionally we see banks and FSAs expanding their product lines available to bank customers, which, if done in a safe and sound manner also helps to drive loan growth."

The OCC reported that at the end of June, 85 percent of the 339 banks and FSAs in the district had a composite rating of 1 or 2—the top ratings on the five-point scale used to rate an institution's health. These strong overall ratings reflect steadily improving conditions over the past several years, an OCC official said during a call with regional reporters.

The OCC reported that asset quality continues to improve across the district with problem assets and net loan losses declining. The median return on average assets remains near recent lows because of declining non-interest income, despite improving net interest margin and lower provision expenses.

While the OCC sees overall conditions improving, the agency noted that strategic vulnerabilities exist as banks and FSAs focus on loan growth, higher profit margin products and services, and cost cutting measures and initiatives to improve earnings. Approximately 12 percent of district institutions have high strategic risk; 43 percent of the district's banks have increasing strategic risk.

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