Tuesday, August 23, 2011

USA Problem Bank List Continues Extremely High (Chart) *Slight decrease reported by FDIC*

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FDIC Quarterly Banking Profile

Numbers of “Problem” Banks and Bank Failures Decline (FDIC, August 23, 2011) The number of insured commercial banks and savings institutions reporting quarterly financial results declined to 7,513, from 7,574 in first quarter 2011. Two new charters were created to absorb failed institutions during the second quarter, while 39 institutions were absorbed by mergers, and 22 insured institutions failed. This is the smallest number of failures in a quarter since first quarter 2009. The number of institutions on the FDIC’s “Problem List” declined for the first time since third quarter 2006. At the end of the second quarter, there were 865 “problem” institutions, down from 888 at the end of the first quarter. Total assets of “problem” institutions  declined from $397 billion to $372 billion. The number of full-time equivalent employees reported by insured institutions - 2,104,698 - was 12,124 (0.6 percent) higher than in first quarter 2011.

FDIC Problem Banks by Quarter The FDIC problem bank list dipped slightly to 865 at June 30, 2010 from 888 at March 31, 2011 and 884 at December 31, 2010. The total problem banks remain elevated. The total assets of the problem banks from the year-ends 2004 through 2010 were $28B, $7B, $8B, $22B, $159B, $403B, $390B, respectively. The total assets of the current (6/30/2011) 865 problem banks is $372 billion, or an average of $430 million in total assets per problem bank. The FDIC reports the total problem banks on a quarterly basis.
Date, Total Problem Banks
12/31/05: 52
3/31/06: 48, 6/30/06: 50, 9/30/06: 47, 12/31/06: 50
3/31/07: 53, 6/30/07: 61, 9/30/07: 65, 12/31/07: 76
3/31/08: 90, 6/30/08: 117, 9/30/08: 171, 12/31/08: 252
3/31/09: 305, 6/30/09: 416, 9/30/09: 552, 12/31/09: 702
3/30/10: 775, 6/30/10: 829, 9/30/10: 860, 12/31/10: 884
3/31/11: 888, 6/30/11: 865

Conclusion As can be seen from the chart above, the FDIC problem banks list by quarter peaked at the QE March 31, 2011 at 888, with a slight decrease to 865 for the most recent quarter reported, QE June 30, 2011. The total continues extremely high, well over 800 for 5 consecutive quarters, which indicates more bank failures to come. If the problem list has in fact peaked and continues a downtrend, then bank failures will also decrease accordingly over time. Bank failures and the related charts of total failures and cost to the FDIC Deposit Insurance Fund are posted weekly on this blog.

About the FDIC

Congress created the Federal Deposit Insurance Corporation in 1933 to restore public confidence in the nation's banking system. The FDIC insures deposits at the nation's 7,575 banks and savings associations and it promotes the safety and soundness of these institutions by identifying, monitoring and addressing risks to which they are exposed. The FDIC receives no federal tax dollars – insured financial institutions fund its operations.

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