Interesting. Hopefully I read this first chart correct, help me if you know more.
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Percent of loan-loss reserve assets that exceed nonperforming loans (blue) and percent of loans that are nonperforming (red).
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Periodically, usually due to rising interest rates or worsening economic conditions, banks call in their loans. They reduce loan origination and, for the most part, stop rolling-over loans. The value of their loss reserves then increases relative to their total loans (which is decreasing). Interesting.
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Loans Loss Reserve to Total Loans.
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