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

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billion profit in the first quarterof 2009, down $11.y7 billion, or 60.8 percent, from the $19.3 billion that the industr earned in the first quarter of 2008. the first-quarter performance marks an improvement overthe . Highefr loan-loss provisions, increased goodwill write-downs, and reduced income from securitization activities all contributed tothe year-over-yea earnings decline in the first quarter of 2009. Three out of five insured institutions reported lower net income in thefirsft quarter, and one in five was unprofitable.
"Thr first quarter results are tellingf us that the banking industry still faceswtremendous challenges, and that going forward, asset quality remains a majo r concern," said FDIC Chairman Sheila C. Bair in a "Banks are making good efforts to deal with thechallengesd they're facing, but today's report says that we'rw not out of the woods yet." To that point, 21 FDIC-insuredf institutions failed during the first quartee -- the largest number since the fourth quartef in 1992. And the FDIC's "Problemj List" grew during the quarter from 252, to 305, and total assets of problem institutions increasedfrom $159 to $220 billion.
Insured institutions set aside $60. 9 billion in provisions for loan losses in the first quarter – up $23.7 or 63.6 percent, over the first quarte of 2008. Expenses for goodwill impairment and otherd intangible asset expensestotaled $7.2 compared with $2.8 billion a year These negative factors outweighed the positives effects of increased noninterest incomed (up $7.8 billion, or 12.8 percent), highef net interest income (up $4.4 billion, or 4.7 and higher realized gains on securities and other assets (up $1.9 Insured institutions charged off $37.8 billion in bad loans in the first quarter, almost twice the $19.
6 billiohn of a year "Troubled loans continue to accumulate, and the costs associated with impairedd assets are weighing heavily on the industry'sx performance," Bair noted. "Nevertheless, compared to a year ago, we see some Net interest incomeis higher, and noninterestt revenue is up at larger banks, particularly trading Tier 1 capital reached a record high of almosf $70 billion, the largest quarterly increasd ever reported by the industry. much of the increasee occurred at institutions that receivesd capital fromthe 's Trouble Asset Relief Program (TARP). Totall assets declined by $302 billionh due to downsizing by a fewlargew banks.
Two-thirds of all institutions reported asset growth in the but reductions at eight large banks caused the industry totaplto decline. Total loans and leases fell by $159.67 billion (2.1 percent), while assets in trading accounts declinerby $144.5 billion (14.9 percent). The FDIC's Depositg Insurance Fund (DIF) reserve rati o fell to 0.27 percent. The DIF balance declinedf from $17.3 billion at the end of 2008 (amende d from the originally reported unauditec balanceof $19 billion) to $13 billionh on March 31, 2009. However, the FDIC Boardf of Directors approved an amended restoration plan in February that is designed to restord the DIF reserve rati oto 1.15 percent withih seven years.
The FDIC has already set aside $28 billionn in reserve to cover projected losses for the next 12 In addition, the FDIC will collectf more than $8 billion in premiums duringg the second quarter, including $5.6 billion from the specia l assessment the FDIC Board approved on May 22.