Amid surging loan losses and a rapid rise in noncurrent loans, profits at the nation’s banks fell to their second-lowest level since 1990 in the third quarter of 2008. The latest issue of the FDIC’s Quarterly Banking Profile said industry income fell to $1.7 billion, a 94% drop from $28.7 billion in the third quarter of 2007. Loan-loss provisions tripled from the prior-year period, jumping from $16.8 billion to $50.5 billion.
Bad loans continued to pile up with net charge-offs increasing for the seventh straight quarter. The $27.9 billion in net charge-offs in the third quarter was up 156.4% from the prior-year period. Two-thirds of those charge-offs consisted of loans secured by real estate. Noncurrent loans and leases (those 90 days or more past due or in nonaccrual status) increased to $184.3 billion by the end of the quarter, an increase of $21.4 billion (13.1%) from the previous quarter and an increase of $101.2 billion (122%) over the past 12 months.
The complete Quarterly Banking Profile is available at www.fdic.gov.