Delinquency Rates Drop at Commercial Banks

Delinquencies on loans held by U.S. banks show a somewhat more encouraging trend than observed in the rest of the market. The most recent Federal Reserve data on delinquencies at the 100 largest U.S. banks reveal a promising downward trend thus far in 2003. The chart below displays delinquency rates on three categories of loans (credit cards, mortgage loans, other consumer loans) for 11 quarters through the second quarter of 2003. The data have been adjusted for seasonal factors. Delinquent loans are those that are past due 30 days or more accruing interest as well as those in a non-accrual status measured as a percentage of end-of-period loans.

Delinquencies on residential mortgage loans have been declining steadily since the second quarter of 2001. Credit card loans, in contrast, remained stubbornly above 4.5%, peaking at 4.8% in the fourth quarter of 2002, before declining in the first two quarters of this year.

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