Two Ohio Banks Report Big Losses

Tuesday, July 22, 2008
Topics: Economy, Other
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Two of Ohio's biggest banks reported their first losses in years yesterday thanks in part to ongoing turmoil in the nation's credit markets. ideastream®'s Mhari Saito reports that just last summer, Ohio's third largest bank, KeyCorp, had racked up a $334 million dollar profit in the second quarter.

Ah, what a difference a year makes. For the second quarter of 2008, KeyCorp is reporting a net loss of over $1 billion dollars or $2.70 a share.

The bank is insulated from subprime loan troubles but is selling off portfolios of loans it made to homebuilders at a heavy loss - taking only 53 cents on the dollar. KeyCorp spokesman Bill Murschel says the bank also set aside substantial cash in case it loses an appeal of a tax dispute.

Murschel says, “the two actions could be best described as fortifying ourselves for a tough environment.”

Ohio’s second largest bank, Fifth Third, lost far less: $202 million last quarter.

While part of that is due to a tax charge, the Cincinnati bank is also dealing with a spike in bad loans. The amount of money Fifth Third says it won’t get paid back more than tripled over the last year. More than half of that debt comes from bad mortgages, home equity lines and construction loans to companies and residential borrowers. Fifth Third’s CEO says he expects to turn things around next quarter. National City’s 2nd quarter earnings come out Thursday. 

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This feature is part of the series Mortgage Meltdown.