On Tuesday, the FDIC released its Quarterly Banking Profile for the quarter ended December 31, 2009. FDIC Chairman Sheila Bair commented that, “Consistent with a recovering economy, we saw signs of improvement in industry performance.” However, she noted that, “recovery in the banking industry tends to lag behind the economy, as the industry works through its problem assets.”
Highlights in the Quarterly Banking Profile included:
- FDIC-insured commercial banks and savings institutions reported an aggregate profit of $914 million for the quarter, compared to a $38.7 billion net loss in the fourth quarter of 2008.
- Over half of all institutions reported increases in their quarterly net income as compared to the fourth quarter of 2008. Further, full-year net income for FDIC-insured institutions increased from $4.5 billion in 2008 to $12.5 billion in 2009. Nonetheless, full-year net income for 2009 was substantially lower than historical norms. For example, full-year net income in 2007 was $100 billion.
- Indicators of the quality of assets held by FDIC-insured institutions continued to deteriorate during the fourth quarter. Although the FDIC pointed out that the pace of this deterioration had slowed for three consecutive quarters, noncurrent loans and leases totaled $391.3 billion at year end, or 5.37% of the industry's total loans and leases.
- The total assets of FDIC-insured institutions fell for a fourth consecutive quarter. For fiscal year 2009, total industry assets decreased by $731.7 billion (5.3%), which is the largest percentage decrease since the creation of the FDIC.
- At year end 2009, there were 702 insured institutions on the FDIC's "Problem List," up from 552 at the end of the third quarter, the highest number in nearly 20 years. In addition, the total assets of "problem" institutions increased during the quarter from $345.9 billion to $402.8 billion.
- The FDIC's liquid resources available to fund bank liquidations increased to $66 billion, from $23 billion at September 30, 2009, due mainly to the mandatory prepayment of three years' worth of deposit assessments, which generated nearly $46 billion.