FDIC REPORTS 552 " PROBLEM BANKS " AS OF SEPT. 30, 2009 / THE WALL STREET JOURNAL ( HIGHLY RECOMMENDED READING )

November 24, 2009, 10:00 AM ET


FDIC Reports 552 ‘Problem Banks’ As of Sept. 30, 2009.


The Federal Deposit Insurance Corp. released its quarterly report on the condition of the banking industry, and the data through Sept. 30 showed growing strains on a number of institutions. Here are some quick takeaways:

1) The FDIC’s deposit insurance fund fell to negative $8.2 billion at the end of the third quarter, a decrease of $18.6 billion. This is in part because of a $21.7 billion provision for future bank failures. The negative balance will soon be boosted by a new FDIC program bringing in $45 billion in prepaid fees from banks.

2) The number of “problem” banks, which are at a greater risk of failure, rose to 552 in the third quarter, up from 416 at the end of the second quarter.

3) The total assets of the problem banks rose to $345.9 billion, up from $299.8 billion.

4) Based on the FDIC’s data showing the number of problem banks and the total assets of the problem banks, the average size of a problem bank at the end of September was $627 million, down from $721 million at the end of June (this could be in part due to the fact that several regional banks failed in the third quarter).

5) Fifty banks failed in the third quarter, the most since the fourth quarter of 1992, when 55 banks failed.

6) The quarterly decline in loan balances was the largest on record. Total loan and lease balances fell by $210.4 billion in the third quarter, the most since the FDIC began reporting the data in 1984.

7) Only three new banks were chartered in the third quarter, the lowest level of new banks in one quarter since World War II.

8) Growth in operating revenues and an appreciation in securities values helped offset higher loan loss provisions and push the banking sector to a slight profit of $2.8 billion.

9) There were 8,099 FDIC insured banks at the end of September, down from 8,195 at the end of June.

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