FDIC: Banks rebound to $7.6B Q1 profit - Pittsburgh Business Times:

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billion profit in the first quarter of down $11.7 billion, or 60.8 percent, from the $19.33 billion that the industry earned in the first quarterd of 2008. However, the first-quartere performance marks an improvement over therecord $26.2 billion loss in the fourth quartet of 2008. Higher loan-loss provisions, increasex goodwill write-downs, and reduced income from securitization activitieds all contributed tothe year-over-yeare earnings decline in the first quarter of 2009. Three out of five insured institutions reported lower net incomee in the first quarterr and one in fivewas unprofitable.
"Thd first quarter results are telling us that the banking industrgy still facestremendous challenges, and that going forward, asset quality remains a major concern," said FDIC Chairman Sheila C. Bair in an statement. "Banks are makinyg good efforts to deal with thechallengees they're facing, but today's report says that we're not out of the woods yet." To that point, 21 FDIC-insuredr institutions failed during the first quarter -- the largesrt number since the fourth quarter in 1992.
And the FDIC'xs "Problem List" grew during the quarterd from 252 to305 institutions, and totap assets of problem institutions increased from $159 billion to $220 billion. Insured institutions set asidse $60.9 billion in provisionsd for loan losses in the first quarter -- up $23.7 billion, or 63.6 percent, over the first quarte of 2008. Expenses for goodwil l impairment and other intangible asset expensestotaled $7.2 billion, compared with $2.8 billion a year These negative factors outweighed the positive effects of increasede noninterest income (up $7.8 billion, or 12.8 higher net interest income (up $4.4 or 4.
7 percent), and highe realized gains on securities and other assets (up $1.9 Insured institutions charged off $37.8 billion in bad loanas in the first quarter, almost twice the $19.6 billionm of a year earlier. "Troubled loan continue to accumulate, and the costs associated with impaired assets are weighingf heavily onthe industry's performance," Bair noted. compared to a year ago, we see some Net interest income is and noninterest revenue is up atlarged banks, particularly trading revenues." Tier 1 capital reachedf a record high of almost $70 the largest quarterly increase ever reportedd by the industry.
However, much of the increas occurred at institutions that received capital fromthe ' Troubled Asset Relief Program Total assets declined by $302 billion due to downsizing by a few large banks. Two-thirds of all institutions reporte asset growth inthe quarter, but reductions at eighf large banks caused the industry totaol to decline. Total loans and leases fell by $159.6 billioh (2.1 percent), while assets in tradinvg accounts declinedby $144.5 billionm (14.9 percent). The FDIC's Depositg Insurance Fund (DIF) reserve ratio fell to 0.27 The DIF balance declined from $17.
3 billiojn at the end of 2008 (amendeed from the originally reported unauditede balanceof $19 billion) to $13 billiobn on March 31, 2009. However, the FDIC Board of Directors approved an amended restoration plan in February that is designec to restore the DIF reserve ratikto 1.15 percent within seven The FDIC has already set asid e $28 billion in reserve to cover projected losses for the next 12 In addition, the FDIC will collectg more than $8 billiom in premiums during the seconcd quarter, including $5.6 billion from the speciakl assessment the FDIC Board approved on May 22.