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Bank Earnings, Delinquency Higher

Bank Earnings, Delinquency Higher$7.6 billion Q1 earnings at FDIC-insured institutions

May 27, 2009

By staff

Quarterly earnings increased at institutions insured by the Federal Deposit Insurance Corporation. But so did delinquency.Total assets at FDIC-insured institutions were $13.542 trillion on March 31, lower than $13.843 trillion on Dec. 31 but higher than $13.369 trillion a year earlier, according to the Quarterly Bank Profile for the first-quarter 2009 released today.

Assets included $2.045 trillion in residential mortgages, $0.674 trillion in home-equity lines-of-credit and $0.210 trillion in multifamily financing. Construction and development loans outstanding ended the period at $0.567 trillion.

Delinquency of at least 30 days was 9.11 percent on residential loans as of March 31, soaring from 7.91 percent in the fourth quarter. Home-equity loan delinquency increased to 3.53 percent from 3.39 percent, and multifamily lates rose to 3.82 percent from the fourth quarter’s 2.92 percent.

“As I see it, we’re now in the cleanup phase for the banking industry,” FDIC Chairman Sheila C. Bair said in the report. “It will take some more time. But in the end, we’ll have a stronger banking industry that’s better able to meet the demand for credit as the economy recovers.”

The FDIC insured 8,246 banks and thrifts in the first quarter, down from 8,305 three months earlier. A year earlier, 8,484 banks were insured. The latest count included 836 firms that had asset concentrations in residential mortgages of more than 50 percent.

FDIC-insured banks earned an aggregate of $7.6 billion in the first quarter, improving from revised fourth-quarter losses of $32.1 billion but worse than a revised $19.3 billion profit a year prior.

The FDIC said earnings were the highest of the past four quarters.

Income at just institutions with a majority concentration of mortgage assets was $1.4 billion. Nearly 22 percent of all institutions were unprofitable.

There were 21 FDIC-insured institutions that failed in the first quarter, “the largest number of failed institutions in a quarter since the fourth quarter of 1992.” The number of institutions on the FDIC’s problem list increased to 305 from 252.

Aggregate headcount at U.S. banks was 2,114,527, down from the fourth quarter’s 2,151,758.

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