Banks’ profits climb, but more go on FDIC’s ‘problem list’
The banking industry’s bottom line continued to improve in the fourth quarter, but the number of troubled institutions also climbed, regulators said.
The more than 7,600 commercial banks and savings institutions whose deposits are backed by the Federal Deposit Insurance Corp. turned in an aggregate profit of $21.7 billion for the last three months of 2010, the agency reported Wednesday.
That compared with a $1.8-billion loss in the fourth quarter of 2009, marking the sixth straight quarter of year-over-year improvements in bank results.
FDIC chief Sheila Bair said 62% of U.S. banks and thrifts reported improved profits in the fourth quarter, with community banks struggling more than larger banks.
“Overall, 2010 was a turnaround year,” Bair said.
The number of banks on the FDIC’s “problem list,” however, rose to 884 at the end of December, up from 860 at the end of September. That means that 1 in 9 U.S. banks and thrifts is considered to be at risk of collapse.
Nonetheless, the FDIC has said it expects the number of failures to decline this year, and it reiterated that forecast Wednesday. The agency said this month that its satellite office in Irvine, set up to handle failed banks in the Western U.S., will close next year.
Thirty insured institutions failed in the fourth quarter, bringing the total for 2010 to 157. That followed 140 failures in 2009, 25 in 2008 and three in 2007. No banks failed in 2005 or 2006.
The FDIC doesn’t release the names of individual banks on its problem list, just a quarterly total. Most institutions on the list eventually raise new capital, get their losses under control and do not fail.
