Thursday, February 26, 2009

FDIC Report Shows That More Banks Pop Up On "Problem List"

At year-end, 252 insured institutions with combined assets of $159 bln were on the FDIC's "Problem List." These totals are up from 171 institutions with $116 bln in assets at the end of the third quarter, and 76 institutions with $22 bln in assets at the end of 2007.

Expenses associated with rising loan losses and declining asset values overwhelmed revenues in the fourth quarter of 2008, producing a net loss of $26.2 bln at insured commercial banks and savings institutions. This is the first time since the fourth quarter of 1990 that the industry has posted an aggregate net loss for a quarter.

High expenses for loan-loss provisions, sizable losses in trading accounts, and large writedowns of goodwill and other assets all contributed to the industry's net loss. A few very large losses were reported during the quarter—four institutions accounted for half of the total industry loss—but earnings problems were widespread. Almost one out of every three institutions (32%) reported a net loss in the fourth quarter.

Only 36 percent of institutions reported year-over-year increases in quarterly earnings, and only 34 percent reported higher quarterly ROAs


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