Magazine article American Banker

Losses Up at NY Savings Banks; Deficit Doubles to $47.8 Million after Summer Rate Peak

Magazine article American Banker

Losses Up at NY Savings Banks; Deficit Doubles to $47.8 Million after Summer Rate Peak

Article excerpt

NEW YORK -- Losses at the 71 state-chartered savings banks in New York State more than doubled in the third quarter of 1984 as a result of the summer's higher interest rates.

The $47.8 million deficit compares to a $20.9 million second-quarter loss, according to figures released Wednesday by the New York State Banking Department. The institutions improved slightly over their losses of $51.5 million during the third quarter of 1983.

The Bowery Savings Bank of New York City, the largest of the state-chartered savings bank with $5.4 billion in assets, continued to post the largest losses with a deficit of $25.1 million during the quarter that ended Sept. 30. Bowery lost $9.3 million during the quarter that ended June 30, despite a one-time profit item of $9.3 million.

Bowery's net worth again fell below 1% of assets. At the present rate of losses, Bowery's capital would run out in two quarters.

Emigrant Savings Bank, also of New York City, was the second biggest money loser. It lost $9 million in the third quarter, compared to a loss of $2.9 million in the second quarter, which included nonrecurring income of $3.7 million.

"The level of losses directly relates to the interest-rate sensitivity of the institutions," said Vincent Tese, state banking commissioner. "Some institutions are more rate-sensitive than others -- and that includes the Bowery."

Interest rates on five-year U.S. Treasury securities, for example, climbed to a peak of 13.56% in June from an average rate of 11.18% during 1983. …

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