Commercial banks and savings institutions originated $162 billion of single-family loans through retail outlets in the third quarter, a 22% jump from 2Q, according to new figures released by the Federal Deposit Insurance Corp.
The agency also reported that banks experienced $7.1 billion of loan buybacks and indemnifications in the quarter, a 34% drop from the prior period.
Despite the improvement in repurchases, FDIC chairman Sheila Bair warned banks and thrifts to be cautious because the foreclosure crisis could increase the buy-back risk for seller/servicers.
FDIC reported that banks and thrifts under its purview earned $14.5 billion in the third quarter, a 33% drop from 2Q. A year ago, FDIC-regulated institutions posted a $2 billion profit.
"Credit performance has been improving, and we remain cautiously optimistic about the outlook," FDIC chairman Sheila Bair said. But she noted that lower loan loss provisioning is "driving" earnings and warned banks to be cautious in reducing reserves and paying dividends.
Banks are required to report origination data to FDIC if they have more than $1 billion in assets or originated north of $10 million of one- to four-family loans in a given quarter.
