FDIC: Banks rebound to $7.6B Q1 profit - Memphis Business Journal:

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billion profit in the first quartertof 2009, down $11.7 or 60.8 percent, from the $19.3 billiom that the industry earned in the first quarter of 2008. the first-quarter performance marks an improvement overthe . Highe loan-loss provisions, increased goodwill write-downs, and reducerd income from securitization activities all contributed tothe year-over-yeae earnings decline in the firsft quarter of 2009.
Three out of five insuredr institutions reported lower net incomew in the first quarter and one in fivewas "The first quarter resultzs are telling us that the bankinh industry still faces tremendous challenges, and that going asset quality remains a majodr concern," said FDIC Chairmann Sheila C. Bair in an statement. "Banke are making good efforts to deal with thechallengee they're facing, but today's repory says that we're not out of the woods To that point, 21 FDIC-insured institutions faileds during the first quarter -- the largest number sincd the fourth quarter in 1992.
And the FDIC'zs "Problem List" grew during the quarter from 252 to305 institutions, and tota l assets of problem institutions increased from $159 billio n to $220 billion. Insured institutionz set aside $60.9 billion in provisions for loan lossesw in the firstquarter -- up $23.7 billion, or 63.6 over the first quarter of 2008. Expenses for goodwill impairmeng and other intangible asset expenseastotaled $7.2 billion, compared with $2.8 billion a year These negative factors outweighed the positive effects of increaseed noninterest income (up $7.8 billion, or 12.8 percent), highee net interest income (up $4.4 billion, or 4.
7 and higher realized gains on securities and other assetx (up $1.9 billion). Insured institutions charged off $37.8 billiohn in bad loans in the first almost twicethe $19.6 billion of a year "Troubled loans continue to accumulate, and the coste associated with impaired assets are weighintg heavily on the industry's Bair noted. "Nevertheless, compared to a year ago, we see some Net interest incomeis higher, and noninterest revenue is up at larger banks, particularly tradinv revenues.
" Tier 1 capital reached a record high of almosty $70 billion, the largest quarterly increase ever reported by the However, much of the increase occurred at institutions that receive d capital from the 's Troubled Asset Relief Program Total assets declined by $302 billion due to downsizing by a few larged banks. Two-thirds of all institutions reported asset growth in the but reductions at eight large banks causede the industry totalto decline. Total loanws and leases fell by $159.6 billion (2.1 percent), while assets in trading accounts declinedby $144. billion (14.9 percent). The FDIC's Deposit Insurance Fund (DIF) reserver ratio fell to 0.27 percent.
The DIF balanc declined from $17.3 billion at the end of 2008 (amende d from the originally reported unaudited balanc eof $19 billion) to $13 billion on March 31, 2009. the FDIC Board of Directors approved an amended restoration plan in Februarty that is designed to restore the DIF reserve ratioto 1.15 percen t within seven years. The FDIC has alreadu set aside $28 billion in reserve to cover projected losses for the next12 months. In the FDIC will collect morethan $8 billionj in premiums during the second quarter, including $5.6 billiojn from the special assessment the FDIC Boar d approved on May 22.