Profits Fall for Home Sales

[Jan 16, 2008.]

M & T Bank Corporation is reporting that 4th quarter profits fell 70% because of additional losses on home sales.

The company was actually one of the initial lenders to report that homeowners in general were defaulting on loans - not just those homeowners who had risky subprime loans.

M&T Bank Corp. reports that net income for the quarter, which ended December 31st, dropped to $64.9 million, or 60 cents per share. That's significantly down from the $213.3 million or $1.88 a share the previous year.

Non-performing loans amounted to $447 million. That represents 0.93% of the total loans as of December 31st. That's compared to $224 million or 0.52% the year before.

Loans that were past due 90 days or more and that were accruing interest amounted to $77 million at year's end. That's down from $111 million the previous year.

The nation is in the throes of the worst housing slump in some 16 years. Foreclosure rates have been skyrocketing, and there are fears that they could continue to escalate as rates readjust to higher levels on adjustable-rate mortgages.

The crisis began in the subprime market, which consists of loans that are extended to individuals with shaky credit histories. Numerous homeowners were unable to repay their loans, resulting in widespread foreclosures. As a result, financial institutions began tightening standards for home loans, making it more difficult for prospective homeowners to purchase houses. Home sales then lagged, prices plummeted, and a nationwide housing crisis resulted.

Congress and the President have attempted to extend relief to beleaguered homeowners, but some analysts wonder whether the effort represents too little, too late. The housing situation has also become a key issue in the 2008 campaign for President, with candidates sparring over who is best-equipped to deal with the crisis. The housing crisis is not expected to abate until at least the middle of this year.

Julie Ann Amos
January 16th 2008

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