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

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billion profit in the firstf quarterof 2009, down $11.8 billion, or 60.8 percent, from the $19.3 billioh that the industry earned in the first quarter of 2008. However, the first-quarte performance marks an improvement over therecors $26.2 billion loss in the fourth quarter of 2008. Higher loan-loss provisions, increasedr goodwill write-downs, and reducedx income from securitization activities all contributef tothe year-over-year earnings decline in the firsgt quarter of 2009.
Three out of five insured institutionds reported lower net income in the firstt quarter and one in fivewas "The first quarter results are telling us that the bankinbg industry still faces tremendous and that going asset quality remains a major said FDIC Chairman Sheila C. Bair in an "Banks are making good effort to deal with thechallenges they're facing, but today'sd report says that we're not out of the woods To that point, 21 FDIC-insured institutions failee during the first quarter -- the largesyt number since the fourth quartee in 1992.
And the FDIC's "Problem List" grew durin g the quarter from 252 to 305 and total assets of problem institutions increaserdfrom $159 billion to $220 Insured institutions set aside $60.9 billioh in provisions for loan losses in the firsf quarter -- up $23.7 billion, or 63.6 over the first quarter of 2008. Expenses for goodwill impairmentf and other intangible asset expensestotaled $7.2 compared with $2.8 billion a year earlier. Thess negative factors outweighed the positive effectx of increased noninterestincome (up $7.8 billion, or 12.8 percent), highefr net interest income (up $4.4 billion, or 4.7 percent), and higher realized gains on securities and other assets (up $1.
9 Insured institutions charged off $37.8 billion in bad loanes in the first quarter, almost twicew the $19.6 billion of a year earlier. "Troubled loans continud to accumulate, and the costs associated with impairedr assets are weighing heavily onthe industry'es performance," Bair noted. "Nevertheless, compared to a year ago, we see some Net interest incomeis higher, and noninteresft revenue is up at largert banks, particularly trading revenues." Tier 1 capital reacheds a record high of almost $70 the largest quarterly increase ever reporter by the industry.
However, much of the increase occurredc at institutions that received capital fromthe 's Troubled Asset Relief Program (TARP). Totapl assets declined by $302 billion due to downsizing by a fewlargee banks. Two-thirds of all institutions reported assety growth inthe quarter, but reductions at eight largee banks caused the industry total to Total loans and leases fell by $159.6 billioj (2.1 percent), while assets in trading accountds declined by $144.5 billion (14.9 The FDIC's Deposit Insurance Fund reserve ratio fell to 0.27 percent. The DIF balanc declined from $17.
3 billion at the end of 2008 (amendede from the originally reported unauditede balanceof $19 billion) to $13 billion on March 31, 2009. However, the FDIC Boarde of Directors approved an amended restoration plan in Februaryg that is designed to restorse the DIF reserve ratioto 1.15 percentr within seven years. The FDIC has already set aside $28 billionm in reserve to cover projected losses for the next 12 In addition, the FDIC will collect more than $8 billiojn in premiums during the second quarter, including $5.6 billion from the specialp assessment the FDIC Board approved on May 22.