In the FDIC’s Quarterly Banking Profile released this morning, it said that the number of what are considered “problem” banks has grown from 305 as of March 31 to 416 as of June 30; a huge increase by any measurement used. This is the highest number of problem banks identified since June 30, 1994.
At the end of 2008, there 252 financial institutions labeled as problem banks, while at the close of 2007 there were 76.
The assets held in these “problem” banks also surged from $220 billion to $299.8 billion over the last quarter, which is the highest level since December 31, 1993, said the report.
No banks that are considered as problem banks were identified by the Federal Deposit Insurance Corporation, as per their usual practice, although we get to see the bottom of the barrel every Friday.
Bad loans continue to increase in number
This quarter was also the worst in many years for loans, as those that are more than 90 days past due or in nonaccural status are at their highest levels in 26 years for FDIC insured financial institutions.
Close to $49 billion in loans that were uncollectible were charged off during the quarter, and increase for $26.4 billion a year ago.
FDIC Chairman Sheila Bair said, “Deteriorating loan quality is having the greatest impact on industry earnings as insured institutions continue to set aside reserves to cover loan losses. Of all the major earnings components, the amount that insured institutions added to their reserves for loan losses was, by far, the largest drag on industry earnings compared to a year ago.”
As far as commercial paper backed by assets, losses were almost 10 times more than they were last year, coming in at $3.6 billion, in contrast to only $366 million a year ago.
