The “middling to strong improvement” that Minnesota's community banks enjoyed last year will continue in 2013, but at a slower pace, the Federal Reserve Bank of Minneapolis said Thursday, the Star Tribune reports.
The Fed forecasts slower profit growth in part because banks are running out of room to boost earnings by setting aside less in reserves to cover ailing loans, the newspaper reports.
Uncertainty about broader economic forces could hurt profit boosts, the Pioneer Press reports. "I don't think it's going to be huge. I think it'll be steady as we go," said Ron Feldman, senior vice president of the Minneapolis Federal Reserve.
Profits and loan growth both increased at Minnesota's 360 community banks in 2012, MPR reported. But both indicators were lagging long-run trends and may not return to historic levels.