Is It Smart To Start A Bank Now?

I have spoken about this before and thought that it is b/c you borrow money at practically zero and lend it out at much higher rates.  Also, you are much more diligent in your underwriting and are making “smarter” loans.  In theory this makes sense but an article from The Wall Street Journal shows something different.  However, it does concentrate on banks who have been around for awhile with bad loans on their balance sheets. 

“For banks, even free money may have its drawbacks.

A key part of the bank-recovery story is that this interest-rate environment will let certain banks enjoy big margins on loan portfolios.

The Federal Reserve’s zero-interest-rate policy was expected to fatten those margins as banks funded themselves at low rates and lent at higher ones. Funding was going to get a boost at banks amassing new deposits, either from weaker rivals or through acquisitions.

But the numbers suggest a less-compelling story. While margins have been respectable, they are hardly knocking the cover off the ball. Banks with over $10 billion in assets had a net interest margin, or NIM, of 3.21% in the first quarter, according to SNL Interactive. That is below 3.4% in the fourth quarter and under the 3.34% average since 2000.”