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Taking the Temperature of the Nations Banks

February 24, 2011

Huffington Post reports:

The number of banks at risk of failing made up nearly 12 percent of all federally insured banks in the final three months of 2010, the highest level in 18 years.

The Federal Deposit Insurance Corp said Wednesday that the number of banks on its confidential “problem” list rose to 884 in the October-December quarter, up from 860 in the previous quarter. Those are banks rated by examiners as having very low capital cushions against risk.

Twenty-two banks have failed so far this year. And more banks are at risk, even as the FDIC reported the industry’s highest earnings as a group since the financial crisis hit three years ago.

Only a small fraction of the 7,657 federally insured banks – about 1.4 percent with assets of more than $10 billion – are driving the bulk of the earnings growth. They are the largest banks, including Bank of America Corp., Citigroup Inc., JPMorgan Chase & Co. and Wells Fargo & Co.

The big banks accounted for about $20.6 billion of the industry earnings of $21.7 billion in the fourth quarter. The total earnings compared with a net loss of $1.8 billion in the same quarter of 2009. The agency said bank earnings were buoyed in the latest quarter by reduced charges for soured loans.

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