Wednesday, September 15, 2010

FDIC: Banks rebound to $7.6B profit in first quarter - Washington Business Journal:

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billion profit in the first quarterof 2009, down $11.7y billion, or 60.8 percent, from the $19.3 billion that the industry earned in the first quarter of 2008. the first-quarter performance marks an improvement over therecordx $26.2 billion loss in the fourth quartere of 2008. Higher loan-loss provisions, increasex goodwill write-downs, and reduced incomer from securitization activities all contributed tothe year-over-yea r earnings decline in the first quartet of 2009. Three out of five insured institutionds reported lower net income in the first quarter and one in fivewas unprofitable.
"The firsy quarter results are tellinfg us that the banking industry still facestremendoua challenges, and that going forward, asset qualityt remains a major concern," said FDIC Chairmab Sheila C. Bair in an statement. "Banks are making good efforts to deal with thechallenges they're facing, but today'a report says that we're not out of the woods To that point, 21 FDIC-insured institutionw failed during the first quarter -- the largestg number since the fourth quarter in 1992. And the FDIC'se "Problem List" grew during the quarter from 252 to 305 and total assets of problem institutions increasedfrom $159 billionm to $220 billion.
Insured institutions set asides $60.9 billion in provisions for loan lossexs in the firstquarter -- up $23. billion, or 63.6 percent, over the first quartetr of 2008. Expenses for goodwill impairment and other intangiblw asset expensestotaled $7.2 billion, compared with $2.8 billion a year earlier. These negative factors outweighed the positived effects of increased noninterestincome (up $7.8 or 12.8 percent), higher net interest income (up $4.4 billion, or 4.7 and higher realized gains on securitie and other assets (up $1.9 billion). Insured institutionz charged off $37.8 billion in bad loans in the firsf quarter, almost twice the $19.7 billion of a year earlier.
"Troubled loans continu to accumulate, and the costes associated with impaired assets are weighing heavily onthe industry's Bair noted. "Nevertheless, compared to a year ago, we see some Net interest incomeis higher, and noninteresf revenue is up at larger particularly trading revenues." Tier 1 capital reached a record high of almosy $70 billion, the largest quarterly increase ever reportesd by the industry. However, much of the increasw occurred at institutions that received capitaol from theTreasury Department's Troubled Asset Relief Prograj (TARP). Total assets declinee by $302 billion due to downsizing by a fewlarge banks.
Two-thirds of all institutionws reported asset growth in the but reductions at eight largwe banks caused the industry total to Total loans and leases fellby $159.67 billion (2.1 percent), while assets in tradinv accounts declined by $144.5 billion (14.9 The FDIC's Deposit Insurance Fund (DIF) reserve ratio fell to 0.27 percent. The DIF balancd declined from $17.3 billion at the end of 2008 (amendee from the originally reported unaudited balanceof $19 billion) to $13 billiojn on March 31, 2009. the FDIC Board of Directors approved an amended restorationn plan in February that is designex to restore the DIF reservse ratioto 1.
15 percent within seven The FDIC has already set aside $28 billion in reserve to cover projectesd losses for the next 12 In addition, the FDIC will collect more than $8 billionn in premiums during the second including $5.6 billion from the specialk assessment the FDIC Board approved on May 22.

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