Banks earned $7.6B in 1Q after record loss in 4Q
Business Law
The nation's banks turned a profit in the first quarter, but the number of problem banks jumped to more than 300, the government said Wednesday.
The Federal Deposit Insurance Corp. said higher trading revenues at big banks helped the industry earn a $7.6 billion profit in the January-March period, compared with a record loss of $36.9 billion in the fourth quarter. The profit was 61 percent below the $19.3 billion earned in the year-ago period and followed the first quarterly loss in 18 years.
U.S. banks and thrifts set aside $60.9 billion in the first quarter to cover potential loan losses, up from $36.2 billion a year earlier.
The number of troubled banks jumped to 305, the highest number since 1994 during the savings and loan crisis, from 252 in the fourth quarter, according to the FDIC.
Thirty-six federally-insured institutions already have failed and been shut down by regulators this year, extending a wave of collapses that began in 2008. This year's tally compares with 25 in all of 2008 and three in 2007.
The failures sliced the amount in the deposit insurance fund to $13 billion in the first quarter, the lowest level since 1993. That compares with $17.3 billion a year earlier.
"Troubled loans continue to accumulate" and the costs to banks from soured loans "are weighing heavily on the industry's performance," FDIC Chairman Sheila Bair said. "Nevertheless, compared to a year ago, we see some positives."
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