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US 'problem' banks list swells to 884

Wednesday 23 February 2011 - by Will Henley

Another 24 banks were added to the Federal Deposit Insurance Corporation's secret list of "problem" banks last quarter.

According to the regulator, the number of banks on the danger list swelled from 860 to 884 in the three months to December 2010, with their total assets reaching $390bn (€284bn).

It also reported on Wednesday that 30 institutions failed in the fourth quarter, bringing the total for the year to 157.

Commercial banks and savings institutions as a whole however made $21.7bn (€15.8bn) in profit in Q4, marking something of an overall recovery for the banking sector.

Offering small comfort to failing banks, FDIC chairman Sheila Bair however noted that the rate of increase in "problem" banks had declined in each of the past four quarters.


She also highlighted that the total amount of "problem" institution assets was below the $403bn (€293bn) reported at the end of 2009.

Bair said: "As we have repeatedly stated, we believe that the number of failures peaked in 2010, and we expect both the number and total assets of this year's failures to be lower than last year's."

The $21.7bn (€15.8bn) profit for the last quarter marks a $23.5bn (€17.1bn) upswing on the $1.8bn (€1.3bn) net loss the industry reported in the fourth quarter of 2009 and relates to financial institutions insured by regulator the Federal Deposit Insurance Corporation.

Almost two-thirds of all institutions (62 per cent) reported improvements in their quarterly net income on the previous year.

"Overall, 2010 was a turnaround year with four straight quarters of positive earnings," said Bair.

"We are encouraged not only by the rising trend in total industry net income, but also by the fact that a substantial majority of insured institutions are participating in this trend."


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