Banks bet heavily in the third quarter that the worst of the pandemic recession was behind them, lowering their loan loss provisions to a level slightly lower than a year ago when weighted by assets.
The FDIC Quarterly Banking Profile released Tuesday showed banks provided $14.4 billion for loan losses in the three months ending Sept. 30, up 3.5% from 2019's third quarter in absolute terms. However, the provision was an annualized 0.27% average assets, down from 0.30% in 2019's third quarter.
Moreover, the third-quarter provision was down sharply from $52.7 billion in the first quarter and $61.9 billion in the second quarter.
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