Although the 8,099
FDIC-insured banks and savings institutions in the US reported
total net profits of $2.8 billion in the third quarter – compared
with a $4.3 billion loss in the previous three months – that was
about the only positive indicator contained in the FDIC’s quarterly
banking profile.
The $2.8 billion profit was skewed by a small
number of lenders posting investment-banking relating profits.
Overall, more than one-in-four institutions (26.4 percent) posted a
loss in the third quarter while mid-tier banks (with total assets
between $1 billion to $10 billion) lost $1.76 billion overall.
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The latest quarterly report stated that:
• Banks on the FDIC’s ‘problem list’
reached 552, up from 416 at the end of June, around 7 percent of
all institutions, with combined assets of $345.9 billion. Both the
number and assets of ‘problem’ institutions are at the highest
level since the end of 1993;
• The FDIC itself fell into the red
with a $8.2 billion deficit (after allowing for $38.9 billion set
aside to cover estimated losses from bank failures in 2010);
• Charge-offs across the banking
sector rose to 2.71 percent (the highest figure since 1984), up
from 2.56 percent in the second quarter and 1.43 percent
year-on-year;
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By GlobalData• Write-offs totaled $50.8 billion
in Q3, $22.6 billion more than a year ago; and
• Three new banks set up shop in the
quarter, the smallest since World War Two.
FDIC chairman Sheila Bair said the industry
was unlikely to report a profit in the fourth quarter in part
because lenders will write off more toxic loans before the
year-end.
Fee changes to hit income in
2010
Looking ahead to fiscal 2010, a
significant number of US banks will also take a hit on their fee
income from changes to overdraft and card charges. Bank of America
has estimated its amended fees structure will slash overdraft
revenue by $200 million per quarter while Wells Fargo has disclosed
that its fee cuts will cost it $300 million in 2010.
Earlier this year, JPMorgan Chase estimated
that the introduction of the CARD Act, separate legislation aimed
at reducing consumer debt, will cut its card-related fee income by
$700 million a year.
