The FDIC's 3rd quarter earnings report showed bank profits are up and the banking industry is on more secure footing than last year. One small problem, though: the FDIC's list of banks at risk of failure has grown from 829 in the second quarter to 860 in the third quarter, the highest level since the savings and loan crisis of the early '90s.
It's not surprising so many institutions are struggling. Banks, especially smaller regional banks, have been hit hard by the double whammy of foreclosure crises in both residential and commercial real estate in the past three years.
That being said, most of the news in the quarterly report was fairly positive:
Almost two-thirds of all institutions (63.3 percent) reported improvements in their quarterly net income from a year ago, but nearly one in five institutions (18.9 percent) had a net loss for the quarter. The average return on assets (ROA), a basic yardstick of profitability, rose to 0.44 percent, from 0.06 percent a year ago.
In the FDIC's quarterly statement, Chairman Sheila Blair expressed optimism:
"The industry continues making progress in recovering from the financial crisis. Credit performance has been improving, and we remain cautiously optimistic about the outlook," said FDIC Chairman Sheila C. Bair. "Lower provisions for loan losses are driving bank earnings by allowing a larger share of revenues to reach the bottom line."
Still, optimism won't help you if you have uninsured deposits at a bank that fails. That's why it's important to keep in mind the FDIC insurance limits of $250,000 per person, per institution for deposit accounts. You can use the FDIC's Electronic Deposit Insurance Estimator to verify your accounts are insured.
And while the FDIC keeps their problem banks list secret, if you'd like some insight into how your bank is doing, check out Bankrate's Safe & Sound Star Ratings. They collect information on banks' capital adequacy, asset quality, profitability and liquidity and boil it down to a simple rating between 1 and 5 stars.
What do you think? Are you worried about your bank?