Bank Earnings Dive in 4Q

Federally insured banks and thrifts have reported earnings of $5.8 billion for the fourth quarter, an 84% drop from those of a year earlier, as turmoil in the credit and mortgage markets produced large trading loses, record-high loss provisions, and the largest increase in noncurrent one- to four-family loans in 17 years, according to the Federal Deposit Insurance Corp. Noncurrent loans (90 days or more past due) rose by $26.9 billion, or 32.5%, in the fourth quarter, and residential and commercial real estate loans accounted for more than 80% of the increase. Noncurrent one- to four-family loans grew by $11.1 billion, or 31.7%, in the fourth quarter, and chargeoffs were up $1.3 billion, or 144%. The percentage of noncurrent one- to four-family loans rose from 1.57% in the third quarter to 2.06% in the fourth quarter -- the highest level in 17 years. Meanwhile, noncurrent construction and development loans increased by $8.4 billion, or 73.2%, in the fourth quarter. The FDIC is keeping a close eye on housing, CRE, credit card, and small business loan portfolios. "All of these are showing signs of stress, as weakness in the housing market continues," FDIC Chairman Sheila Bair said.