In this Monday, July 13, 2015 photo, people walk past a Wells Fargo ATM in New York. Wells Fargo reports quarterly financial results on Tuesday, July 14, 2015. (AP Photo/Mark Lennihan)
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U.S. banks are setting aside more money to cover bad loans to energy companies after oil prices plunged over the last year, raising the possibility that deteriorating loans could start to weigh on their earnings, some analysts said.Loan credit quality for U.S. banks has been improving since the financial crisis. In the first quarter, 2.49 percent of loans on banks' books were delinquent, the lowest level since the fourth quarter of 2007, according to the Federal Reserve, which hasn't released second quarter data. Executives from both JPMorgan Chase & Co. and Wells Fargo & Co. told investors last week, when posting earnings, that they were increasingly concerned about loans to oil and gas companies.Texas bank Comerica Inc set aside three times as much money to cover bad loans as analysts had expected, sending the regional bank's shares lower by more than 6 percent after the bank reported earnings Friday. However, as KBW's Cannon said, the total money the bank has provisioned for bad loans over time is even smaller – just about 1.2 percent.While noting "asset quality deterioration" in the energy loan portfolios of Wells Fargo and JPMorgan, Moody's analyst Joseph Pucella wrote that the exposure of those banks is "comparatively small".
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