More Banks In Trouble

[MichaelC 160]

Govt says banks on "problem list" rose 30% in second quarter.

 

U.S. Says Banks on `Problem List' Rose 30% in Quarter (Update2)

 

By Alison Vekshin

 

Aug. 26 (Bloomberg) -- The U.S. Federal Deposit Insurance Corp. said its ``problem list'' of banks increased 30 percent in the second quarter to the highest total in five years as more commercial real-estate loans were overdue.

 

The list had 117 banks as of June 30, up from 90 in the first quarter and the highest since mid-2003, the agency said today in its quarterly report without naming any institutions. FDIC-insured lenders reported net income of $4.96 billion, down 87 percent from $36.8 billion in the same quarter a year ago.

 

``More banks will come on the list as credit problems worsen,'' FDIC Chairman Sheila Bair said at a news conference in Washington.

 

Regulators are adding to the list as bank assets, liquidity and other fiscal measures weaken. Nine banks have failed this year, including California-based mortgage lender IndyMac Bancorp Inc., which the FDIC is running as a successor institution, IndyMac Federal Bank FSB.

 

IndyMac's failure will cost the U.S. deposit insurance fund about $8.9 billion, exceeding a $4 billion to $8 billion estimate, said Diane Ellis, the associate director of financial- risk management. The FDIC discovered additional insured deposits and had time to value the assets, Ellis said.

 

Second-Lowest Earnings

 

Second-quarter earnings fell from $19.3 billion in the previous quarter, driven by higher provisions for loan losses, the FDIC said. It was the second-lowest net income reported since the fourth quarter of 1991 behind the $600 million reported in the fourth quarter of 2007, the agency said.

 

``The results were pretty dismal, and we don't see a return to the high earnings levels of previous years any time soon,'' Bair said.

 

Funds set aside by banks to cover loan losses more than quadrupled to $50.2 billion from $11.4 billion in the year- earlier quarter.

 

Loans 90 days or more overdue, deemed troubled by the FDIC, jumped 20 percent to $162 billion from $136 billion in the first quarter, the FDIC said. Real-estate loans accounted for almost 90 percent of the rise in the past three quarters, the agency said.

 

The deposit insurance fund fell 14 percent to $45.2 billion and the reserve ratio, or balance divided by insured deposits, was 1.01 percent. The FDIC is required to shore up the fund when the ratio falls below 1.15 percent.

 

Higher Premiums

 

The agency in October will consider a plan to replenish the account that will likely include an increase in the premiums charged banks, Bair said.

 

A greater share of the increase will be shifted to ``riskier institutions so that safer institutions won't be unduly burdened,'' she said.

 

Lenders on the ``problem list'' had assets of $78.3 billion at the end of the second quarter, triple the $26.3 billion in the first quarter, the agency said. The FDIC said IndyMac's assets represented $32 billion of the increase.

 

Many banks on the list have high levels of commercial real- estate loans, especially in construction and development loans, said John Corston, the FDIC's associate director of large bank supervision. The number of problem institutions will continue to rise, he said.

 

``Problem institutions continue to be scattered across the country,'' Corston said. ``However, we expect to see some migration to areas experiencing the greatest stress.''

 

Regulators rate banks based on their asset quality, earnings, liquidity and other fiscal measures. Banks are ranked on a numerical scale, with 1 being the highest and 5 the lowest. A rating of 4 or 5 places a bank on the ``problem'' list.

 

The FDIC is a Washington-based bank regulator that insures deposits at 8,451 institutions with $13.3 trillion in assets.

 

To contact the reporter on this story: Alison Vekshin in Washington at avekshin@bloomberg.net.

 

Last Updated: August 26, 2008 18:09 EDT

[West Coast Girl 1]

Hey,

 

Us Canucks have gotten hit badly too!

 

Here's the article that was in today's Vancouver Sun's Newspaper!

 

However, this is just one of our top 4 banks that have been burnt!

 

CIBC (Canadian Imperial Bank of Commerce) was hit the hardest!

 

The other Canadian banks that have been effected are:

 

RBC (Royal Bank of Canada)

TD-Canada Trust (Toronto Dominion Bank)

 

http://www.canada.com/vancouversun/news/bu...a2-eabdc37a37d3

 

 

BMO Q3 profit down 21 per cent

 

Share drop triggers at least one analyst downgrade to 'sell'

John Greenwood, Canwest News Service

Published: Wednesday, August 27, 2008

 

TORONTO -- Hit by losses on U.S. home loans and deteriorating credit markets, Bank of Montreal posted steeply lower third-quarter earnings, pushing the shares lower and triggering at least one analyst downgrade.

 

"The largest surprise came from the significantly higher-than-anticipated level of provisions related largely to impairments in the bank's corporate U.S. real estate portfolio," said Dundee Securities analyst John Aiken, who reduced his rating on the shares from "neutral" to "sell."

 

"With concerns that we cannot see the end to real estate woes in the United States, this material increase in credit related headwinds will weigh on BMO's valuation over the coming months," Aiken said in a note to clients.

 

Canada's fourth-largest bank reported a net profit of $521 million, or 98 cents a share, down 21 per cent from the same period last year. Revenue moved up 7.5 per cent to $2.75 billion.

 

Due to its significant U.S. operations, BMO has been made vulnerable to the collapsing U.S. housing market. But it has also suffered losses from its off-balance sheet entities, such as Links Financial and Parkland, structured investment vehicles in the United States that have come back to haunt the bank in the wake of the credit crunch.

 

"Obviously [bMO's earnings] came in much lower than we expected," said Mario Mendonca, an analyst at Genuity Capital Markets.

 

BMO has so far taken back about $850 million of assets related to Fairway, an asset-backed paper trust, and provisioned for losses up to about half that amount. "We think there are more charges to come," Mendonca said.

 

Provisions for credit losses were $484 million, and the biggest chunk of those were "unusually elevated," according to the bank, because of the inclusion of $247 million related to two corporate accounts exposed to the U.S. mortgage meltdown.

 

"The impact of the deterioration in the U.S. housing market has affected our results, and while uncertainty exists, we are confident in the earnings capacity of the core franchise," said Bill Downe, the bank's chief executive.

 

 

© The Vancouver Sun 2008

[Doug Pretorius (ON) 9]

You know, I just noticed something. With names like: "Imperial", "Royal", and "Dominion" it's no wonder our banks lord it over us!

[West Coast Girl 1]

You know, I just noticed something. With names like: "Imperial", "Royal", and "Dominion" it's no wonder our banks lord it over us!

 

I agree with you Doug, as well as them being GREEDY bastards too!

 

Not sure when they got on the US Real Estate bandwagon, but they sure aren't as savvy as us Canadian investors as a whole!

 

Why the hell did they not consult with us (YOU AND ME) before funneling all that money into the US Real Estate market??

 

I work for the Government, but do you think that they will listen to me (until it's too late)????

 

WCG

[MichaelC 160]

I see our evil plan to destroy the Canadian banking system is working. It all started by selling vastly overpriced condos in Miami Beach to unsuspecting Canadian investors, lured by glossy brochures of bikini clad bimbos and swaying palm trees. Simple, but effective. Now that we have you people on your knees, let's talk about the price you're charging us for a barrel of Canada's finest petroleum.

[Doug Pretorius (ON) 9]

let's talk about the price you're charging us for a barrel of Canada's finest petroleum.

Psst, don't forget about the maple syrup.

[MichaelC 160]

let's talk about the price you're charging us for a barrel of Canada's finest petroleum.

Psst, don't forget about the maple syrup.

Hehe. You're right! A pint of maple syrup costs more than a gallon of gasoline. Time to crush the Loonie.

[Doug Pretorius (ON) 9]

I wouldn't say that too loud, MC. The Mennonite Maple Syrup Mafia has ears everywhere! And I can assure you they can get to anyone, anywhere, with their sticky, sugary, goodness.