WASHINGTON — The number of problem banks jumped by 36% in the second quarter, hitting 416, while assets held by such banks also saw a whopping increase, rising 36% to $300 billion, the Federal Deposit Insurance Corp. said Thursday.
In its quarterly profile, the agency's data shows the banking industry's losses are likely to continue rising. The FDIC set aside $11.6 billion during the quarter for expected failures, as the Deposit Insurance Fund sunk to $10.6 billion. In total, the FDIC has now set aside $32 billion for expected losses, and the ratio of reserves to insured deposits now stands at its lowest point in well over a decade, at 0.22%.
The banking industry took a $3.7 billion loss during the second quarter, which the FDIC attributed to higher loss provisions. Institutions added $70 billion in loan loss provisions during the second quarter, up more than 20% from a year earlier.
Institutions charged off $48.9 billion in the quarter, nearly double the quarterly total a year earlier.
The average noncurrent loan rate also set a new record, rising to 4.35% from 3.76% in the first quarter. That was the highest level in the 26 years since the data has been kept.
The number of troubled banks rose by 111 in the quarter, and assets held by those banks jumped by $180 billion.