Newspaper article THE JOURNAL RECORD

U.S. Banks Report Slim Profits for 1990

Newspaper article THE JOURNAL RECORD

U.S. Banks Report Slim Profits for 1990

Article excerpt

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WASHINGTON (AP) - Commercial bank profits rose slightly in 1990 but the improvement masked a spreading sickness in the industry caused by deteriorating real estate markets, the government said Wednesday.

The nation's 12,338 banks earned $16.6 billion in 1990, a 6.5 percent improvement over the previous year's profits of $15.6 billion, the Federal Deposit Insurance Corp. said.

But, profits started the year high and have declined for three consecutive quarters as banks recognized increasingly heavier losses on real estate lending.

Banks earned $1.4 billion in the final three months of 1990, down 62 percent from $3.7 billion in the July-September period and 31 percent from $2 billion in the last three months of the previous years. Earnings were $5.4 billion in the second quarter and $6.2 billion in the first three months.

FDIC Chairman L. William Seidman told reporters that the deterioration of banks lags the decline of the economy in general and he saw little hope of immediate improvement even if the recession ends soon.

``There's not much in here that says the first quarter of 1991 won't be bleak,'' he said.

However, he said ``the rate of slide has lessened'' and said, ``I want to emphasize that banks' ... problems are not comparable to those we found in the S&Ls.''

Congress has been debating legislation raising the taxpayer cost of the S&L bailout to $80 billion. The industry-financed bank insurance fund has been dwindling but so far has been able to pay for failures. Seidman, however, has proposed a plan to borrow $30 billion that would leave taxpayers vulnerable if banks were unable to pay it off.

Separately, the FDIC reported the country's 473 savings banks - a hybrid institution common in the Northeast that is half bank and half savings instition - lost $2.4 billion in 1990. That is more than three times the 1989 loss of $773 million. …

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