Turmoil Clouds Record Earnings Report

Federally insured banks and thrifts achieved record earnings in the second quarter but economic turmoil in Russia and Asia is expected to dampen future growth, FDIC Chairman Donna Tanoue said Tuesday.Ms. Tanoue said international activities have, on average, contributed roughly 12% to bank earnings since 1994. How the economic slump in overseas markets affects bank and thrift earnings will not be fully known until December, the FDIC chairman said. "But at this point, we are not forecasting another earnings record for the third quarter," Ms. Tanoue added. Ms. Tanoue's comments come as bank earnings reached a record high for the sixth consecutive quarter. Bank profits totaled $16.1 billion in the second quarter -- an increase of $1.5 billion year over year -- while thrifts posted record earnings of $2.8 billion. It is not yet clear what type of impact overseas investments will have on banks' mortgage lending activities. However, a further examination of FDIC data shows that banks held a record $741 billion in single-family, residential mortgages on their balance sheets at the conclusion of the second quarter.