Newspaper article THE JOURNAL RECORD

Real Estate Woes Wound West Coast Banks

Newspaper article THE JOURNAL RECORD

Real Estate Woes Wound West Coast Banks

Article excerpt

WASHINGTON (AP) _ After devastating financial institutions in Texas and the Northeast, plummeting commercial real estate values are starting to crunch banks on the West Coast, the government said Tuesday.

Nationally, 12,072 commercial banks earned $4.3 billion in the July-September period, compared with $4.6 billion in the second quarter and $3.6 billion in the third quarter of 1990, according to the Federal Deposit Insurance Corp.

Banks in Oklahoma combined for a profit of $64 million for the third quarter, up 20.7 percent from $53 million for the third quarter of 1990.

California's 485 banks reported a $74 million loss in the third quarter compared with an $859 million profit a year earlier.

It marked the worst performance by California banks since the second quarter of 1987, when several large banks in the state absorbed big losses on loans to Third World countries.

In addition, nearly one in four California banks reported cumulative losses in the first nine months of this year, about double the national average.

"Everything that went wrong in New England is now going wrong in California," said economist Paul Getman of Regional Financial Associations in West Chester, Pa. "It's a very serious situation because California's banking assets dwarf New England's."

California's banks hold 10 percent of the industry's assets.

The figures suggest that banks hard hit by real estate problems in the Northeast may be on the verge of a recovery. Massachusetts banks turned in their best performance in two years, earning a modest $62 million.

Connecticut and New Jersey banks continued to lose money but at a markedly slower rate than the past few quarters.

California banks are suffering from a bust in commercial real estate, the same problem that ravaged Texas in the late 1980s and has plagued the Northeast and the Washington, D.C., area for the past two years.

The percentage of real estate loans in delinquency in the state jumped to 6.3 percent in the third quarter from 5. …

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