Friday, March 8, 2013

FDIC Problem Banks List Decreases for 7th Consecutive Quarter

The FDIC problem banks list decreased by 43 to 651 at December 31, 2012 for the 7th consecutive quarterly decline and a 13-quarter low. The total continues very high, but has dropped below 700 after 11 consecutive quarters above. The problem banks list has peaked and continues a downtrend and bank failures also continue decreasing accordingly. 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 7,083 financial institutions reporting and the problem banks list of 651 represents 9.19% of the total and a 12-quarter low. This is down from 9.66% at the prior QE 9-30-12 and down from the peak of 11.72% 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 7 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 2012 (in billions) were $28, $7, $8, $22, $159, $403, $390, $319, and $238, respectively. The total assets of the current (12/31/2012) 651 problem banks is $238 billion, or an average of $366 million in total assets per problem bank. The FDIC reports the total problem banks on a quarterly basis.

Quarterly Failures Decline to 4 ½ Year Low (FDIC Quarterly Banking Profile, February 26, 2013) In the fourth quarter, the number of insured commercial banks and savings institutions reporting financial results fell from 7,181 to 7,083. During the quarter, 88 institutions were merged into other banks, and eight insured institutions failed. This is the smallest number of failures in a quarter since second quarter 2008. For the sixth quarter in a row, no new reporting institutions were added. The year 2012 is the first in FDIC history that no new reporting institutions were added, and the second year in a row with no start-up de novo charters (the three new reporters in 2011 were all charters created to absorb failed banks). The number of institutions on the FDIC’s “Problem List” declined for a seventh consecutive quarter, from 694 to 651. Total assets of “problem” institutions fell from $262 billion to $233 billion. During the fourth quarter, insured institutions increased the number of their employees by 4,259 (0.2 percent).


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