September 02, 2009

Banks across the nation lost a combined $3.7 billion in the second quarter, compared with a combined profit of $4.8 billion in the same period a year ago.The nation's banks' combined provisions for loan losses grew to $66.9 billion in the quarter, a 32 percent increase from the $50.4 billion in losses in the second quarter of 2008.

"Deteriorating loan quality is having the greatest impact on industry earnings as insured institutions continue to set aside reserves to cover loan losses," said Sheila Blair, chair of the Federal Deposit Insurance Corp. (FDIC). "Of all the major earnings components, the amount that insured institutions added to their reserves for loan losses was, by far, the largest drag on industry earnings compared to a year ago."