JPMorgan: Banks added MBS, munis in 4Q while dumping Treasurys, agency debt
The securities portfolios of banks rose by 3% in the fourth quarter, as the lenders added mortgage-backed securities and municipal bonds while shedding Treasurys, agency debt and asset-backed securities. Amy Hsi of JPMorgan Securities Inc. said MBS holdings at domestic banks rose by more than $50 billion last year with all the activity in the second half and essentially evenly split between the third quarter and fourth quarter. The level of residential mortgages increased by more than $10 billion in the fourth quarter, she said. (Click on chart to expand.) Total deposits at all American banks climbed 2% during the fourth quarter to $7.4 trillion, according to JPMorgan Securities. "Some growth in loan holdings could indicate that securities purchases could be lower; however, we find that historically securities purchases continued to grow for some time after loan growth picks up," JPMorgan analyst Hsi said in the financial services giant's weekly note on securitized products. JPMorgan said the Fannie Mae and Freddie Mac pass-through holdings in available-for-sale and health-to-maturity accounts rose by $30 billion in the final quarter of 2010, and Ginnie Mae pass-through holdings climbed by $980 million. Banks also added some $24 billion of agency collateralized-mortgage obligations during the period. Write to Jason Philyaw.