The nation’s banks continued to show improvement in the third quarter of 2010 as industry profits totaled $14.5 billion; quarterly loan-loss provisions were the lowest since the fourth quarter of 2007; and the amount of noncurrent loans and leases fell for a second consecutive quarter, according to the FDIC’s Quarterly Banking Profile, Third Quarter 2010.
Other troubling trends in the industry continued, however, as 41 institutions failed during the quarter, and 31 more banks landed on the FDIC’s “Problem List.”
The earnings compared with $2 billion in the year-ago period. The provisions for loan losses ($34.9 billion) were $28 billion (44.5%) less than insured institutions set aside in the year-ago period.
Net income was less than the first ($17.7 billion) and second ($21.4 billion) quarters of 2010, a shortfall that was caused by a $10.4 billion goodwill impairment charge taken by one large institution, Bank of America. Almost two-thirds (63.3%) of all institutions reported higher year-over-year net income; fewer than one-fifth (18.9%) of all institutions lost money in the quarter, the lowest percentage since the second quarter of 2008.
The amount of loans and leases that were noncurrent (90 days or more past due or in nonaccrual status) declined by $8.3 billion (2.1%) in the third quarter, after an $18.9 billion (4.6%) decline in the second quarter. Prior to the second quarter, the industry’s noncurrent loan balances had risen for 16 consecutive quarters.
The 41 bank failures in the third quarter brought the total number of failures for the first nine months of 2010 to 127. The number of insured institutions on the FDIC’s “Problem List” increased from 829 to 860 during the quarter, the most that have made the list since March 31, 1993, when 928 were on the list. Problem institutions are ones considered at risk of failure. Total assets of problem institutions declined for the second quarter in a row, from $403.2 billion to $379.2 billion.
The Quarterly Banking Profile for the quarter ending Sept. 30, 2010, is available at tinyurl.com/26ljzmb.
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