May 27, 2009

FDIC: Banks ‘not out of woods yet’

The Federal Deposit Insurance Corp.'s list of banks in trouble grew from 252 to 305 in the first quarter, the federal regulator said Wednesday.

Twenty-one FDIC-insured banks failed in the quarter, the highest number since the fourth quarter of 1992, the regulator said.

During the quarter, 20 percent of the FDIC-insured banks failed to make a profit, while 60 percent reported a lower net income compared to the first quarter a year ago.

The FDIC said banks under its jurisdiction posted a net income of $7.6 billion in the first quarter, a 60.8 percent drop compared to the same period a year ago.

The first quarter results are telling us that the banking industry still faces tremendous challenges, said FDIC Chairman Sheila Bair in a statement.

Today's report says that we're not out of the woods yet, she said, noting troubled loans continue to accumulate.

On the positive side, Bair said net interest income increased and non-interest revenue at larger banks also made gains.