U.S. Bank Earnings Plunge to Second-Lowest Level Since 1991
By Alison Vekshin
Aug. 26 (Bloomberg) -- U.S. bank and thrift earnings from April through June tumbled to the second-lowest level since 1991, as lenders added to their reserves for mounting loan losses, the Federal Deposit Insurance Corp. said.
FDIC-insured lenders reported net income of $4.96 billion, down from $36.8 billion in the same quarter a year ago, the agency said today in its quarterly report on the banking industry released in Washington. The agency reported 117 ``problem banks'' in the period up from 90 in the first quarter.
``By any yardstick, it was another rough quarter for bank earnings,'' FDIC Chairman Sheila Bair said in a statement. ``But the results were not unexpected as the industry coped with financial market disruptions, the housing slump, worsening economic conditions and the overall downturn in the credit cycle.''
The world's largest banks and securities firms have announced more than $500 billion in asset writedowns and credit losses since 2007 linked to declines in mortgage-backed securities.
Nine banks have failed this year, including California- based mortgage lender IndyMac Bancorp Inc., the third-largest federally insured institution to be seized by U.S. regulators. The FDIC is running a successor institution, IndyMac Federal Bank FSB, while it seeks a buyer.
Second-quarter earnings fell from $19.3 billion in the previous quarter. It was the second-lowest net income reported since the fourth quarter of 1991 behind the fourth quarter of 2007, the agency said.
Funds set aside to cover loan losses quadrupled to $50.2 billion from $11.4 billion in the year-earlier quarter. The agency in October will consider a plan to replenish the deposit insurance fund, Bair said in the release.
Lenders on the FDIC's ``problem list'' increased 30 percent to 117 in the quarter from the previous three months, the report said.
To contact the reporter on this story: Alison Vekshin in Washington at avekshin@bloomberg.net.
Last Updated: August 26, 2008 14:46 EDT |
