The Federal Reserve Bank of Chicago's supervision group follows current and emerging risk trends on an ongoing basis. This Risk Perspectives newsletter is designed to highlight a few current risk topics and some potential risk topics on the horizon for the Seventh District and its supervised financial institutions. The newsletter is not intended as an exhaustive list of the current or potential risk topics and should not be relied upon as such. We encourage each of our supervised financial institutions to remain informed about current and potential risks to its institution. 

Current Risk Topics

• Third Quarter 2014 District Bank Performance: Seventh District banks continued to report record profits during the third quarter on a dollar volume basis, driven by improvements in interest income and cost of funds.
• Q4 2014 Earnings Predictions: Analysts are not as optimistic about expected fourth quarter earnings. Pressure on net interest margin is expected to continue as rates remain at historical lows.
• Commercial Real Estate: Despite continued strong fundamentals in multifamily markets – including the persistence of low vacancy rates – institutions should monitor the apartment sector’s growing construction pipeline.
• Deposit Modeling: In the years subsequent to the financial crisis, indeterminate maturity deposit levels at financial institutions have grown substantially as depositors have sought the relative safety and liquidity offered by FDIC insured accounts.
• Money Market Reform Impact: On July 23, 2014, the Securities and Exchange Commission (SEC) issued their final amendments governing publicly offered money market mutual funds (MMFs).