Banking


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The banking industry’s struggles continued in the first quarter of 2008 as total income dropped to $19.3 billion compared with $35.6 billion in the first quarter of 2007, according to the FDIC Quarterly Banking Profile .

Much of the earnings drop at FDIC-insured commercial banks and savings institutions was attributed to a jump in loanloss provisions, which increased from $9.2 billion in the first quarter of 2007 to $37.1 billion in the first quarter of 2008. The FDIC’s “Problem List” grew from 76 to 90 institutions in the first quarter. Total assets of problem institutions grew from $22.2 billion to $26.3 billion.

The report is available at www.fdic.gov .

Record provisions for loan losses contributed to combined losses of $617 million for the nation’s thrifts in the first quarter of 2008, according to the Office of Thrift Supervision. This was an improvement from an $8.75 billion loss in the fourth quarter of 2007, but was down from net income of $3.61 billion in the first quarter of 2007. Loan-loss provisions were a record $7.6 billion in the first quarter and a combined $16.6 billion in the past three quarters.

OTS Director John Reich said he has “been urging managers of OTS-regulated thrift institutions to be aggressive in setting aside provisions for expected loan losses. This forceful response to the housing market crisis continues to depress industry earnings, but it also strengthens institutions to withstand future challenges.”

Mortgage originations were down 20% from the fourth quarter and 21% compared with the year-ago period. Delinquencies also continued to increase compared with both prior periods.

The full report, with highlights and charts, is available at www.ots.treas.gov/docs/7/778020.html .

 

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