FDIC Reports Rise In List Of Problem Banks While Industry Profits Tumble

November 25, 2008 7:55 p.m. EST

Washington, DC (AHN) - The Federal Deposit Insurance Corp. announced Tuesday that its list of problem banks rose from 117 to 171 in the third quarter.

The FDIC insures roughly 8,500 banks so the problem list only represents a small percentage of total institutions covered. However, the watch list has not been this large since 1995.

Banks on the list are not revealed, but the FDIC said assets help by institutions on the list totaled $115.6 billion, up from $78.3 billion in the second quarter. The figure does show evidence that smaller regional and thrift banks make-up the bulk of banks on the watch list as the number is somewhat low to have any of the nation's large banks listed.

The FDIC's deposit insurance fund fell to $34.6 billion in the third quarter from $45.2 billion last quarter. The drop was due to the failure of nine banks during the quarter, the most since the third quarter of 1993.

Additionally, The FDIC reported total earnings third quarter earnings for its insured financial institutions. Earnings were down 94 percent to $1.7 billion from $28.7 billion in the same quarter last year.

"We've had profound problems in our financial markets that are taking a rising toll on the real economy. Today's report reflects these challenges," said FDIC Chairman Sheila C. Bair, in a press release.

The FDIC said higher provisions for loan losses were the main catalyst for the fall in bank earnings.