Bad loans totaling nearly $12 billion caused U.S. banks to post nearly a 12 percent drop in third-quarter profits.

        The nation's commercial banks earned $17.4 billion, down $1.9 billion from $15.5 billion in the third quarter of 2000, according to the Federal Deposit Insurance Corp.

        The decline came as banks set aside $11.6 billion to cover the costs of anticipated loan losses, primarily caused by lingering effects of the recession and the Sept. 11 terrorist attacks.

        The extra money banks deposited also represented the largest quarterly addition to reserves since 1990. Fee income, a growing and stable source of banks' profits in recent years, also fell $500 million or 1.3 percent from last year's third quarter.

        Many U.S. banks — including those with sizeable Tristate operations — have posted quarterly declines in profits this year tied to the weaker economy and terrorist attacks.

        Still, banks are in a stronger position to weather the economic downturn, regulators say. The reason: They have higher levels of reserves — helped by several consecutive years of banner profits in the past five to seven years — than during the previous recession of the early 1990s.
       

Credit-card usage expected to be slow

        Interest rates have steadily dropped this year, but credit-card usage this holiday shopping season is expected to rise only about 7 percent, a new report says.

        Consumers are expected to charge $121.4 billion by Christmas, up from $113.7 billion last year and the weakest growth in dollar volume since 1991, according to Cardweb.com, which tracks credit-card rates.

        Zero-percent introductory rates being offered for up to a year by credit-card issuers — plus the rate on bank credit cards dipping to a record 14.48 percent — will help spur usage despite a slowdown in the overall economy.

        The average U.S. household is expected to ring up just over $1,150 in credit-card charges between now and Christmas.
       

Funds for housing allocated to 3 banks

        Three Tristate banks will receive more than $800,000 in financing to help provide housing for area residents.

        That funding is among the $10.4 million being issued through the Federal Home Loan Bank of Cincinnati's affording housing program granted to 30 financial entities to help build or rehabilitate 1,302 affordable housing units in Ohio, Kentucky and Tennessee.

        Local uses of the funds:

        • Fifth Third Bank will get $590,000 to help with 20 owner-occupied homes and 45 rental units.

        • Provident Bank will receive $130,000 to renovate 16 rental units.

        • Kentucky Federal Savings and Loan Association in Covington will use $89,000 to help build 13 owner-occupied homes.

        The FHLB of Cincinnati is a $59 billion regional credit bank that provides housing financing and financial services to more than 750 lenders.
       

Firstar underwrites Goodwill projects

       Firstar Bank, one of the Tristate's largest banks, has underwritten a $14 million line of credit for Ohio Valley Goodwill Industries.

        The bonds will be used to renovate Goodwill's 137,000-square-foot facility and build an 80,000 square-foot production center in Woodlawn.

        Contact Jeff McKinney at 768-8499; fax 564-6991; or e-mail jmckinney@enquirer.com.

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