Insured banking institutions reported earnings of $21.6 billion in the second quarter of 2010, up significantly from the year-ago loss of $4.4 billion and marks the highest quarterly earnings since third quarter 2007, the Federal Deposit Insurance Corp. reported today.
In its second-quarter update, though, the FDIC also reported that its “Problem List” of troubled institutions increased from 775 to 829 during the quarter. But the total assets of these “problem” banks fell from $431 billion to $403 billion. Banks on this list could be more likely to fail, but the vast majority are not expected to be seized. So far this year, 118 banks have failed and the current rate is expected to pass last year’s total of 140 failures.
Despite the addition of 54 institutions to the problem list, the FDIC reported some overall improvements, particularly in reduced loan-loss provisions and slightly lower charge-offs for federally-insured banks.
“Insured institutions added $40.3 billion in provisions to their loan-loss allowances in the second quarter,” the FDIC reported. “While still high by historic standards, this is the smallest total since the industry set aside $37.2 billion in first quarter 2008 and is $27.1 billion (40.2 percent) less than the industry’s provisions in second quarter 2009.”
Net charge-offs totaled $49 billion in the second quarter, a $214 million, or 0.4 percent, decline from a year earlier and the first year-over-year decline since fourth quarter 2006. Charge-offs were lower than a year ago in most major loan categories, except for credit cards and real estate loans secured by nonfarm nonresidential properties.
The amount of loans and leases that were non-current, or 90 days or more past due or in non-accrual status, decreased by $19.6 billion (4.8 percent) during the second quarter. This is the first quarterly decline in non-current loans since first quarter 2006.
See the FDIC’s full second-quarter 2010 report.
