FDIC's First Quarter Report - Number of Problem Banks Increase to 305

The FDIC released its first quarter report on the banking industry. As you might expect, there was a big increase in the number of banks in the FDIC's problem list, and the FDIC's Deposit Insurance Fund (DIF) reserve ratio fell again. On the positive side, the banks had a net income of $7.6 billion in Q1 compared to a net loss of $26.2 billion in Q4 2008. Here are a few interesting excerpts from the FDIC press release:

• FDIC's Problem List grew during Q1 from 252 to 305 institutions, and total assets of problem institutions increased from $159 billion to $220 billion
• 21 banks failed in Q1 (the largest number since Q4 of 1992)
• Total insured deposits increased by $82 billion (1.7%) in Q1. Deposits were up 3.5% in Q4 and 9% over the last 12 months
• DIF balance declined during Q1 by $4.3 billion, to $13 billion on March 31
• DIF reserve ratio declined from 0.36% to 0.27% in Q1
• Net income was $7.6 billion in Q1, a decline of $11.7 billion (60.8%) from $19.3 billion in Q1 2008
• 3 out of 5 banks reported lower net income in Q1 and 1 in 5 was unprofitable
• Non-interest income increased by $7.8 billion (12.8%)

Deposits continue to rise. In the last year, insured deposits have grown by 9%. I wonder how much of this is due to the new higher coverage limit. But even considering this, deposits have gone up substantially, and this has put downward pressure on deposit rates as banks are taking in more deposits than they can put to use through loans. Also note the increase of non-interest income. I wonder how much of this is due to higher fees.

In addition to the quarterly report, the FDIC updated its database with the banks' financial data for the end of the first quarter. Ratings services like BauerFinancial and Bankrate.com use this data for their star ratings. Recent ratings had been based on 12/31/08 data. Their new ratings based on 3/31/09 data should be out soon.

For more discussion of the quarterly report, refer to this CNN article.

Edit 5/30/09: Corrected the next ratings date.