In Brief: 13% More Banks in the Red in 2d Quarter

The number of banks that lost money in the second quarter increased 13% from the year earlier, according to a report from Veribanc Inc. of Wakefield, Mass.

In its analysis of Federal Reserve Board data, Veribanc found that 463 of the nation's 9,534 banks failed to turn a profit in the quarter ended June 30. In the second quarter of 1997, 409 banks had lost money.

"This is the first time we've seen a trend in the wrong direction in years," said Warren G. Heller, research director of Veribanc.

Mr. Heller cited the lingering crisis in Asia as a chief factor for the increase in the number of unprofitable banks. With demand for American goods diminishing, U.S. firms that rely on Asian exports are borrowing less. Falling commodity prices have also hurt farmers and the banks that lend to them, he said.

The report also found that 20 banks fell below federal capital standards at midyear, up from 12 the year before.

All but six of the 463 unprofitable banks had less than $3 billion of assets, and the vast majority-391, or 84.4%-have less than $100 million.

Texas, with 51, had the most unprofitable banks, followed by California, 39; Florida, 30; and Illinois, 29.

For reprint and licensing requests for this article, click here.
MORE FROM AMERICAN BANKER