May 29, 2009

Bad loans are continuing to take a heavy toll on the banking industry, according to the latest report from the Federal Deposit Insurance Corporation.The FDIC announced on Wednesday that commercial banks and other savings institutions reported net income of $7.6 billion in the first quarter of 2009, down 60.8 percent from the $19.3 billion that was reported in the first quarter of 2008.Higher loan-loss provisions, increased goodwill write-downs and reduced income from securitization activities were all cited as reasons for the decline.

"Banks are making good efforts to deal with the challenges they're facing, but today's report says that we're not out of the woods yet. As I see it, we're now in the cleanup phase for the banking industry. It will take some more time," said FDIC chair Sheila Bair in a statement.The FDIC noted that three out of five insured institutions reported lower income in the first quarter of 2009, while one in five were said to be unprofitable.