Saturday, December 22, 2012
FDIC Problem Banks List Decreases to 3-Year Low
The FDIC problem banks list decreased by 38 to 694 at September 30, 2012 for the 6th consecutive quarterly decline and a 3-year low. The total continues very high, but has dropped below 700 after 11 consecutive quarters above. If the problem banks list has in fact peaked and continues a downtrend, then bank failures will also continue decreasing accordingly over time. Bank failures and the related charts of total failures and cost to the FDIC Deposit Insurance Fund are posted as occurring on this website.
There were 7,181 financial institutions reporting and the problem banks list of 694 represents 9.66% of the total and a 11-quarter low. This is down from 10.10% in the prior QE 6-30-12 and down from the peak of 10.72% for the QE 3-31-11. In a healthy economy and banking system, less than 1% of financial institutions are on the problem banks list and this can be as low as 0.50% (1/2 percent).
FDIC Problem Banks by Quarter The FDIC problem banks list peaked at 888 at March 31, 2011. The total problem banks remain elevated but is decreasing. The problem banks list has decreased 6 consecutive quarters, after increasing 18 consecutive quarters (from Q4 2006 through Q1 2011). The total assets of the problem banks from the year-ends 2004 through 2011 (in billions) were $28, $7, $8, $22, $159, $403, $390, and $319, respectively. The total assets of the current (9/30/2012) 694 problem banks is $262 billion, or an average of $378 million in total assets per problem bank. The FDIC reports the total problem banks on a quarterly basis.
Failures Fall to Lowest Level Since the End of 2008 (FDIC Quarterly Banking Profile, December 4, 2012) The number of insured institutions reporting financial results declined from 7,245 to 7,181 in the quarter. Mergers absorbed 49 insured institutions, and 12 institutions failed. This is the smallest number of failures in a quarter since fourth quarter 2008. For a fifth consecutive quarter, no new charters were added. The last time a start-up bank opened was in fourth quarter 2010. The number of institutions on the FDIC’s “Problem List” fell from 732 to 694, while assets of “problem” banks declined from $282.4 billion to $262.2 billion. This is the smallest number of “problem” institutions since third quarter 2009. The number of full-time equivalent employees at insured financial institutions declined by 2,352 (0.1 percent) from the previous quarter.
$XLF $DIA $SPY $IWM $QQQ $MACRO $FED