The IRA Bank Book | Outlook Q2 2022

May 29, 2022 | Premium Service | With this issue of The Institutional Risk Analyst, we introduce a new format for our quarterly review of the US banking industry. By popular demand, we are now publishing The IRA Bank Book in PowerPoint, making the charts easier to read and forcing your dutiful publisher to be very concise. Subscribers may share the IRA Bank Book within your organization.

In this issue, we describe the migration of the banking industry back to 2019 levels of operating income. Why did bank stocks out-perform perform in 2021? Because the banking industry spent much of the year repatriating $60 billion in loan loss reserves taken in 2020 back into income. Why did financial stocks soar in 2021? Due to GAPP adjustments to income because of COVID and the FOMC's radical asset purchases which suppressed credit costs.

Now we go the other way on the financial roller coaster. The special adjustments to GAAP income are behind us and many asset classes remain rather considerably over-valued, like loans and mortgage servicing assets. This prepares the world of financials for a year of rising funding costs and credit expenses, falling asset prices and eventually, hopefully, higher asset and equity returns after the nuclear winter of quantitative easing or QE.

Source: FDIC

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The IRA Bank Book for Q2 2022

The IRA Bank Book (ISBN 978-0-692-09756-4) is published by Whalen Global Advisors LLC and is provided for general informational purposes. By accepting this document, the recipient thereof acknowledges and agrees to our copyright and the matters set forth below in this disclaimer. Whalen Global Advisors LLC makes no representation or warranty (express or implied) regarding the adequacy, accuracy or completeness of any information in The IRA Bank Book. Information contained herein is obtained from public and private sources deemed reliable. Any analysis or statements contained in The IRA Bank Book are preliminary and are not intended to be complete, and such information is qualified in its entirety. Any opinions or estimates contained in The IRA Bank Book represent the judgment of Whalen Global Advisors LLC at this time, and is subject to change without notice. The IRA Bank Book is not an offer to sell, or a solicitation of an offer to buy, any securities or instruments named or described herein. The IRA Bank Book is not intended to provide, and must not be relied on for, accounting, legal, regulatory, tax, business, financial or related advice or investment recommendations. Whalen Global Advisors LLC is not acting as fiduciary or advisor with respect to the information contained herein. You must consult with your own advisors as to the legal, regulatory, tax, business, financial, investment and other aspects of the subjects addressed in The IRA Bank Book. Interested parties are advised to contact Whalen Global Advisors LLC for more information.