Newspaper article Sarasota Herald Tribune

Where Lenders Stand Today, after Lows of Great Recession

Newspaper article Sarasota Herald Tribune

Where Lenders Stand Today, after Lows of Great Recession

Article excerpt


financial institutions hit $365 million in the third quarter, a 25 percent jump from a year ago.

But one out of every five of those banks and thrifts is still losing money, and the state banking industry continues to lag the nation.

However, the latest results reflect more improvement from the bottom of the recession. State banks lost $6.4 billion, and 58 of them failed, from 2008 through 2011.

Twenty-one percent of Florida's 200 institutions were in the red as of Sept. 30, down from 31 percent in 2012 and 49 percent in 2011, says new data from the Federal Deposit Insurance Corp.

Just 8.6 percent of the nation's banks were unprofitable in the third quarter, so Florida has more recovering to do.

Still, the state's third-quarter profits were up from $296 million in the second quarter and from $292 million one year earlier.

Meanwhile, the nation's 6,891 financial institutions earned $36 billion in the third quarter, a nearly 4 percent decline over the comparable 2012 period.

It was first time in 17 quarters that earnings registered a year- over-year decline.

The FDIC pinned the slide primarily on JPMorgan Chase -- though it did not name the bank directly -- following a marked increase in litigation costs. The nation's largest bank reached a $4.5 billion settlement with investors last month, the latest in a series of legal entanglements over sales of mortgage-backed securities.

Lower revenue from reduced mortgage activity and lower gains on asset sales also contributed to the reduction in earnings.

Half of the insured institutions reported year-over-year profit growth, while half showed declines.

"Most of the positive trends we have been seeing in industry performance continued in the third quarter," said FDIC Chairman Martin J. Gruenberg. "Fewer institutions reported quarterly losses, lending grew at a modest pace, credit quality continued to improve, more banks came off the 'Problem List,' and fewer banks failed."

The agency's list of troubled banks shrunk from 553 to 515 during the quarter. The total is down from its peak of 888 in early 2011. Six banks failed in the third quarter, including one in Florida, which was half of last year's pace. …

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