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Deteriorating loans slashed bank profits by almost 30 percent in the third quarter and the earnings outlook for this quarter remains "bleak", federal regulators said Tuesday.

Commercial banks' profits tumbled by $1.6 billion in the July-September period to $3.75 billion, the Federal Deposit Insurance Corp. said in its quarterly banking report.

The slide was due mainly to bad real estate loans, particularly in the East, FDIC Chairman William Seidman told a news conference. The quality of other loan assets also showed signs of deteriorating in the period, he said.

Some 89 percent of the banks were profitable in the quarter and small banks looked particularly good, he said.

But large banks -- those with assets of over $1 billion -- suffered the most from poor earnings and asset quality, said the FDIC, which insures deposits at commercial banks and savings institutions.

"Overall the outlook for the fourth quarter has to be bleak," Seidman said. Besides real estate loans, banks also experienced more problems with business and consumer loans.

In addition, the FDIC said one in three savings banks insured by the fund is losing money.

Banks' commercial loan losses totaled $1.9 billion in the third quarter and the amount of loans that were delinquent rose by $1.2 billion to $24.6 billion, the agency said.

Consumer loan delinquencies rose by $1.7 billion, or 10.4 percent, in the quarter. Consumer loan losses for the first nine months of the year totaled $5.1 billion, 20 percent ahead of last year's pace, the agency said.

Seidman said he expects the FDIC to lose about $4 billion this year. That is much higher than the $3 billion in losses the FDIC had previously estimated. Some of the increase was attributed to setting aside money to cover losses from bank failures expected in early 1991.

The banking industry's woes are taking their toll on the insurance fund and Seidman said it may need to be refinanced.

The commercial bank deposit insurance fund stood at about $13 billion at the end of 1989, he said.

"We need the (recapitalized) fund as soon as we can agree to put it in place," Seidman said. "It's not an emergency, but I think it will give assurance . . . that the taxpayer is not going to be assessed for this."

Taxpayers are picking up the tab for the savings and loan bailout, which is expected to cost some $500 billion when interest costs are taken into account.

On top of real estate loan problems, consumer loans are experiencing higher delinquencies.

The FDIC for the first time provided a separate accounting for the 479 savings banks insured by the commercial bank fund.

Savings banks lost $771 million in the third quarter and $1.2 billion for the first nine months of the year. That compares with a loss of $772 million for all of 1989.

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