Fifth District Bank Performance 1989

Abstract

The final four years of the 1980s were difficult for banks in the U.S. Between 1986 and 1988 problems in the agricultural and oil sectors led to losses and numerous bank failures. The nation’s largest banks suffered losses as income was set aside in 1987 and 1989 to deal with problems in portfolios of loans to less developed countries (LDCs). Losses in real estate loan portfolios, due to weak real estate markets, had a significant negative effect on bank earnings in 1989. In addition, concerns for future bank earnings were raised by regulators and bank analysts because of banks’ increased lending for highly leveraged corporate takeovers.