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Martin Gruenberg

Litigation, Mortgage Demand Weigh on Bank Profits

Profits at U.S. banks fell 3.9% in the third quarter amid litigation costs and waning mortgage demand, according to the Federal Deposit Insurance Corporation.The banking regulator said Tuesday that the nation's commercial banks and savings institutions reported combined net income of $36 billion, a decline of $1.5 billion compared to the year-ago period. The results also checked in below the previous quarter's $38.1 billion, which was revised downward from $42.2 billion.It was the first year-over-year drop for U.S. banks since the second quarter of 2009. The decline was largely a result of a $4 billion increase in litigation expenses at one unnamed institution, the FDIC noted.Weaker demand for mortgages also weighed on earnings, as rising interest rates dampened refinancing activity. Banks did benefit from wider net interest margins.Lower loan-loss provisions, or funds set aside to cover loans deemed uncollectible, were also a positive in the third quarter. Banks set aside $5.8 billion...

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