U.S. Says Banks on `Problem List' Rose 30% in Quarter

[Purveyor]

Source: Bloomberg

Aug. 26 (Bloomberg) -- The U.S. Federal Deposit Insurance Corp. said its ``problem list'' of banks increased 30 percent in the second quarter to the highest total in five years as more commercial real-estate loans were overdue.

The list had 117 banks as of June 30, up from 90 in the first quarter and the highest since mid 2003, the agency said today in its quarterly report without naming any institutions. FDIC-insured lenders reported net income of $4.96 billion, down 87 percent from $36.8 billion in the same quarter a year ago.

``Quite frankly, the results were pretty dismal, and we don't see a return to the high earnings levels of previous years any time soon,'' FDIC Chairman Sheila Bair said at a news conference in Washington.

Nine banks have failed this year, including California- based mortgage lender IndyMac Bancorp Inc., the third-largest federally insured institution to be seized by U.S. regulators. The FDIC is running a successor institution, IndyMac Federal Bank FSB, while seeking a buyer.

IndyMac's failure will cost the U.S. deposit insurance fund at least $8.9 billion and exceed a $4 billion to $8 billion estimate, said Diane Ellis, the associate director of financial- risk management. The FDIC discovered additional insured deposits and had time to value the assets, Ellis said.

Read more: http://www.bloomberg.com/apps/news?pid=20601087&sid=aXGDnqbSdt.s&refer=home

[Demeter]

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