Bad loans abound
The second quarter was not a good one for much of the U.S. banking industry. Profits plummeted 86.5 percent to the second-lowest quarterly total since 1991, the Federal Deposit Insurance Corp. reported this week.
The biggest factor was higher loan-loss provisions, which totaled $50.2 billion. That’s more than four times the $11.4 billion quarterly total of a year ago.
Losses tied to bad loans also put a hurt on many banks, the FDIC noted in its Quarterly Banking Profile:
Loan losses registered a sizable jump in the second quarter, as loss rates on real estate loans increased sharply at many large lenders. Net charge-offs of loans and leases totaled $26.4 billion in the second quarter, almost triple the $8.9 billion that was charged off in the second quarter of 2007. The annualized net charge-off rate in the second quarter was 1.32 percent, compared to 0.49 percent a year earlier. This is the highest quarterly charge-off rate for the industry since the fourth quarter of 1991.
Things are better in Oklahoma, with a few notable exceptions (as we’ll be reporting in The Oklahoman soon).
Don Mecoy
Business Writer
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Interesting graphs, very clear. When do you think things will recover? Economies sometimes need a tricky period in order to shake off dead wood, and become more efficient. In the long run it makes us stronger, but the difficulties for people at the time is very unfortunate.