Banks insured by the Federal Deposit Insurance Corp. saw their profits drop by 94 percent in the third quarter compared to the same period a year ago.
FDIC-insured banks reported net income of $1.7 billion for the quarter. Last year, FDIC-insured banks reported third quarter net income of $28.7 billion.
FDIC Chairman Sheila Bair said the income crash is the result of “profound problems in our financial markets.” The FDIC said the profit drop could be attributed primarily to banks making much greater provisions for loan losses.
The industry also reported $7.6 billion in losses on sales of securities and other assets during the quarter. In the third quarter of 2007, the industry reported $77 million in gains on the sale of securities.
Nine FDIC-insured banks, most famously Washington Mutual Bank, failed during the quarter, the most since the third quarter of 1993.
The FDIC said community banks are beginning to feel the stresses felt by the banking industry as a whole, but said community banks should remain a steady source of credit for “Main Street America.”
