Foreclosed Houses in Missouri Pushed Up Bank Losses
Banks in Missouri suffered losses in the second quarter as the high number of foreclosed houses across the state pressured the banks to increase their reserves and their write offs for delinquent loans.
Commercial banks in the state reported a total loss of $67 million during the second quarter this year. In contrast, these banks gained a total of $152 million during the second quarter of 2008.
Savings and loans institutions however posted profits in the second quarter. They earned $11 million, which is a big contrast to their $8 million loss in the second quarter of last year.
As the number of foreclosures continued to put pressure on the financial sector, banks in Missouri made 1.27-percent write-offs on loans and leases in the second quarter. This marked a 0.62 percent from the total write-offs in the second quarter of 2008. The percentage of delinquent loans rose to 2.7 percent, so they also stepped up their reserves for future losses in bad loans, allocating a total of $395 million.
Despite the profits posted by thrifts, they also stepped up their write-offs for bad loans and leases, writing off 1.98 percent. This marked a rise from the 0.64 percent in the same quarter of 2008. They reported 3.7 percent of their total assets as nonperforming and allocated $185.3 million for their reserves for delinquent loan losses. Their loan loss reserves one year ago were only $75 million.
Of the 321 total of commercial banks in the state in the second quarter, 22 percent posted losses, a significant increase from the 14 percent in the second quarter last year. The percentage of commercial banks posting increased profits dropped to 30 percent, a sharp decrease from 45 percent one year ago and nearly 34 percent in the first quarter. A total of six banks closed over the year.
Of the 28 Missouri thrift institutions, 25 percent reported losses in the second quarter this year, a rise from the 20 percent in the same quarter last year. In contrast, the percentage of thrift institutions which posted increased profits rose to 46 percent compared to 43 percent during the second quarter of 2008. Two thrifts closed their operations over the year.
On a positive note, Missouri commercial banks and thrifts increased their deposits, with commercial banks increasing their deposits to $117.6 billion from $109.7 billion in last year’s second quarter. Thrifts meanwhile increased their deposits to $9.3 billion, a stunning increase of 66 percent.
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