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Florida banks follow national trend by losing money in the second quarter

Florida's commercial banks lost a combined $587 million in the second quarter, bringing year-to-date losses to $775 million, the Federal Deposit Insurance Corp. said.

And the red ink is spreading around the country, with 28 percent of all insured institutions reporting a net loss in the quarter, up from 18 percent a year earlier.

Nationally, commercial banks and savings institutions insured by the FDIC lost $3.7 billion in the second quarter compared with profits of $7.6 billion in the first quarter and $4.7 billion a year ago.

"While challenges remain, evidence is building that the U.S. economy is starting to grow again. Banking industry performance is — as always — a lagging indicator," FDIC Chairwoman Sheila Bair said. "The banking industry, too, can look forward to better times ahead. But, for now, the difficult and necessary process of recognizing loan losses and cleaning up balance sheets continues to be reflected in the industry's bottom line."

The FDIC said institutions posted $424 million in net operating income even after having to pay a special assessment of $5.5 billion to bolster the FDIC's insurance fund. But one-time losses and other items totaling $4.1 billion pulled the industry into negative territory.

The FDIC's insurance fund has been so depleted by the epidemic of collapsing financial institutions that analysts warn it could sink into the red by the end of this year.

That has happened only once before — during the savings-and-loan crisis of the early 1990s, when the FDIC was forced to borrow $15 billion from the Treasury and repay it later with interest.

Times staff writer Jeff Harrington contributed to this report.

Florida banks follow national trend by losing money in the second quarter 08/27/09 [Last modified: Thursday, August 27, 2009 9:46pm]
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