Charge-offs in Q1 Much Higher than Last Year

The Federal Deposit Insurance Corporation (FDIC) reported last week that charge-offs in nearly all loan categories at U.S. banks in the first quarter of 2007, including a 29.2 percent increase in credit card charge-offs.

The FDIC’s Quarterly Banking Profile for Q1 2007 showed that while the country’s banks had set aside more for bad debt in the fourth quarter of 2006, the increase in net charge-offs from Q1 2006 to this year’s first quarter was $2.7 billion, or 48.4 percent. In the first quarter of this year, banks charged-off a net total of $8.1 billion.

Total net credit card charge-offs came in at $3.75 billion, a 29.2 percent increase over the amount charged-off in Q1 2006. The FDIC does note that credit card charge-offs last year were lower than usual, however.

Net commercial charge-offs were up a whopping 78.6 percent. But the largest increase was felt in the residential mortgage market where net charge-offs were up a staggering 93.2 percent from a year ago.