Bank, thrift earnings fall 24.7%

Earnings at U.S. banks and thrifts tumbled 24.7% in the third quarter from a year earlier to a level not seen since late 2002 as institutions set aside more money to cover expected loan losses.

Weighing heavily on earnings, loan-loss provisions more than doubled to $16.6 billion from $7.5 billion, surging to a 20-year high, the Federal Deposit Insurance Corp. said Wednesday.

The latest figure for loan-loss provisions represents the highest level since the second quarter of 1987, when it was $23.8 billion, according to the FDIC.

In another sign that banks still face problems with the ability of borrowers to repay loans, payments late 90 days or more grew for the sixth straight quarter.

Noncurrent loans and leases totaled $83 billion in the third quarter, up 23.8% from the second quarter and up 57.9% from the third quarter of 2006, according to FDIC data.

“Third quarter was not a particularly good one for banks and thrifts,” FDIC Chairwoman Sheila Bair said.

She said weaknesses in the residential real estate and financial markets took a heavy toll on banks, adding that the troubled credit market would worsen before it improved.