Banks earned more money, cut their direct holdings of mortgages and boosted their securitized assets, according to the latest quarterly gauge of bank profitability. The number of federally insured banks has fallen by more than 2,000 institutions during the past decade. Since peaking a quarter century ago, the total is down by more than 10,000.
Residential assets at banks that are insured by the Federal Deposit Insurance Corp. finished the first quarter at $1.834 trillion, according to the FDIC’s Quarterly Banking Profile. Home-loan holdings retreated from $1.898 trillion at the end of December and $1.887 trillion at the same point in 2010.
Home-equity lines-of-credit owned by banks also eased, to $0.624 trillion from $0.637 trillion. HELOC assets were $0.660 trillion in the first-quarter 2010.
A more serious dent was made in construction-and-development assets, which were cut to $0.296 trillion from $0.321 trillion and were $0.418 trillion a year prior.
As banks reduced their one- to four-unit residential holdings, they increased their investments in mortgage-backed securities to $1.5192 trillion from $1.485 trillion three months earlier. MBS holdings were just $1.387 trillion a year earlier.
Real estate construction financing assets were down $25.9 billion from the end of last year.
The non-current delinquency rate — reflecting loans at least 90 days past due or in non-accrual status — on residential loans rose to 7.61 percent in the first quarter from 7.52 percent in the fourth quarter. The default rate was 7.98 percent during the same period last year.
HELOC delinquency was 1.79 percent, improving from 1.87 percent the prior quarter but up from the first-quarter 2010’s 1.77 percent.
Net income at FDIC-insured institutions was $29 billion, rising for the seventh consecutive quarter. It was the single best quarter for the sector since the second-quarter 2007.
The FDIC said that only one new institution was added to the group of reporting banks. At the same time, 56 were absorbed by mergers and 26 more failed — bringing the number of insured banks to 7,574 versus 7,658 reported as of the end of last year and the 7,934 that reported for the first-quarter 2010.
The latest count included 6,453 commercial banks and 1,121 savings institutions. Seven hundred of the first-quarter count had an asset concentration in mortgages.
A decade ago, there were 9,822 banks reporting. Based on the oldest available FDIC data back to 1984, bank count peaked at 18,083 in the first-quarter 1986.
Much of the recent contraction is the result of 322 bank failures between 2008 and 2010. This year’s failed-bank count is on track to come in around a third lower than 2010.
Problem institutions rose to 888 banks with $397 billion in assets from three months earlier when the number was 884 banks with associated assets of $390 billion.
The FDIC said that the number of problem institutions was at the highest level since March 1993’s 928.
But the regulator also noted that the net increase of only four problem institutions during the latest three-month period was the smallest increase in three-and-a-half years.
FDIC-insured institutions employed 2,092,877 people as of the first-three months of 2011. The figure grew from the fourth quarter’s 2,086,582. In the first-quarter 2010, banking industry headcount was 2,027,245.
