Struggling banks give FDIC ‘heartburn’

May 30, 2008 @ 2:42 pm

By Andrew Coen

The U.S. banking industry had one of its most negative quarters in recent memory and its struggles are likely to continue for the remainder of the year, the Federal Deposit Insurance Corp. warned.

Commercial banks and savings institutions insured by the FDIC reported a net income of $19.3 billion in the first quarter, a 46% decline from the year-ago period, according to the regulator.

Loan-loss reserves increased 18%, or $18.5 billion, for the largest quarterly increase in more than two decades.

The coverage ratio, which measures a company’s ability to cover debt obligations, fell for the quarter from 93 cents to 89 cents in reserves for every $1 of non-current loans, the lowest level since 1993.

“This is a worrisome trend,” Sheila C. Bair, chairwoman of the FDIC, said in a statement. “It's the kind of thing that gives regulators heartburn.”

Given the financial troubles forecasted for the rest of the year, Ms. Bair said the FDIC is urging the financial services firms it regulates to make sure they have enough reserves to cover expected losses.

0
Comments

What do you think?

View comments

Recommended for you

Featured video

Events

The power of automation

With good data and great workflow processes, advisers can outpace the competition. Junxure's Robert DeFrancis offers some strategies for success.

Latest news & opinion

Nontraded REITs to post worst sales since 2002

The industry is on track to raise just $4.4 billion, well off the $19.6 billion it raised just four years ago, as new regulations hinder sales.

Broker protocol for recruiting a boon for clients

New research finds advisers whose firms have joined the agreement take better care of customers.

Meet our 2017 Women to Watch

Introducing 20 female financial advisers and industry executives who are distinguished leaders, advancing the business of providing advice through their creativity and hard work.

Raymond James executives call on industry to keep broker protocol

Also ask firms to pay for the administration of the protocol to 'ensure its longevity and relevance.'

Senate committee approves tax plan but full passage not assured

Several Republican senators expressed reservations about the bill, and the GOP cannot afford too many defections.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print