WASHINGTON – The number of troubled banks surged to 416, the highest since 1993 in the second quarter, while assets held by those banks also soared 36% to $300 billion, the FDIC reported yesterday.
The growing number of troubled banks–the FDIC has shuttered 81 so far this year–has eaten into the FDIC Insurance Fund’s Reserves, lowering them to $10.4 billion, from $13 billion at the end of the first quarter.
Banks insured by the FDIC swung to a total quarterly loss of $3.7 billion, compared to the second quarter last year when they reported a total profit of $4.8 billion. More than 28% of all insured institutions reported a net loss in the second quarter, compared with 18% in the year-ago quarter. As a result, the average return-n-assets, or ROA, for FDIC-insured banks was negative 0.11% for the second quarter, compared to positive 0.14% for the same period last year.
The FDIC’s report came a day after the Office of Thrift Supervision said the number of troubled S&Ls rose to 41 at the end of the second quarter, from 30 at the end of the first quarter, and just 17 a year ago.
Net charge-offs continued to rise, to a record high. Insured institutions charged-off $48.9 billion in the second quarter, compared to $26.4 billion a year earlier. The annualized net charge-off rate in the second quarter was 2.55%, eclipsing the previous quarterly record of 1.95% reached in the fourth quarter of 2008.
That compares to a charge-off rate of 1.15% for credit unions.
The delinquency rate for banks rose for the 13th straight quarter to 4.35%, from 3.76% at the end of the first quarter.
For credit unions, the delinquency rate rose to 1.58%, from 1.44% in the first quarter.
The $22.5 billion, or 85.3%, year-over-year increase in net charge-offs for banks was led by loans to commercial and industrial (C&I) borrowers, which increased by $5.3 billion, or 165%. Net charge-offs of credit card loans were $4.6 billion, up 84.5%, and the annualized net charge-off rate on credit card loans reached a record 9.95% in the second quarter. Net charge-offs of real estate construction and development loans were up by $4.2 billion, or 117%.
