Banks on FDIC Problem List Up 36%

Today the FDIC reported the number of "insured institutions" (banks) that are on their "Problem List" as of the end of June 2009 grew 36% to 416. This is the highest number in 15 years. On March 31, 2009 there were only 305 insured institutions on the list.

• Total assets of "problem" institutions increased during the quarter from $220.0 billion to $299.8 billion, the highest level since December 31, 1993.

The FDIC also reported reserves totaling $42 billion with $32 billion already committed to future closures leaving "only" $10B for troubled banks that have yet to fail.

• Total reserves of the Deposit Insurance Fund (DIF) stood at $42 billion.
  
• The contingent loss reserve, which totaled $28.5 billion on March 31, rose to $32.0 billion as of June 30, reflecting higher actual and anticipated losses from failed institutions.
  
• Additions to the contingent loss reserve during the second quarter caused the fund balance to decline from $13.0 billion to $10.4 billion.
  
• Combined, the total reserves of the DIF equaled $42.4 billion at the end of the quarter.

FDIC hairman Sheila Bair had some words of optimism in the press release:

• "While challenges remain, evidence is building that the U.S. economy is starting to grow again."
  
  
• "The banking industry, too, can look forward to better times ahead."
  
  
• "But, for now, the difficult and necessary process of recognizing loan losses and cleaning up balance sheets continues to be reflected in the industry's bottom line."
  
  
• "The FDIC was created specifically for times such as these. No matter how challenging the environment, the FDIC has ample resources to continue protecting depositors as we have for the last 75 years. No insured depositor has ever lost a penny of insured deposits...and no one ever will."