The number of troubled banks tracked by the Federal Deposit Insurance Corp. fell in the April-June quarter, the first quarterly drop in five years. But growth in bank earnings slowed, a sign that the financial industry is feeling the effects of a weak economy.
The FDIC said Tuesday that there were 865 banks on its confidential "problem" list in the second quarter, or roughly 11.5 percent of all federally insured banks. That was down from 888 in the January-March quarter and the first decline since mid-2006. Those are banks considered to have low capital cushions against risk.
The FDIC also said the banking industry earned $28.8 billion in the second quarter, up from $20.9 billion in the same period last year. That marked the eighth straight quarter that earnings rose from the previous year. But it was the smallest gain in the past seven quarters.
While the industry as a whole has continued to show signs of improvement, many banks are still struggling.