FDIC: Banks rebound to $7.6B Q1 profit - Memphis Business Journal:

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billion profit in the first quarterfof 2009, down $11.7 or 60.8 percent, from the $19.3 billiojn that the industry earned in the first quarterd of 2008. However, the first-quarter performance marks an improvement overthe . Highef loan-loss provisions, increased goodwill write-downs, and reducec income from securitization activities all contributed tothe year-over-yeat earnings decline in the firsgt quarter of 2009. Three out of five insured institutionds reported lower net income in the firsy quarter and one in fivewas unprofitable.
"The firsf quarter results are telling us that the banking industryh still facestremendous challenges, and that going asset quality remains a major said FDIC Chairman Sheila C. Bair in an "Banks are making good efforts to deal with thechallengezs they're facing, but today's report says that we're not out of the woodes yet." To that point, 21 FDIC-insured institutions failed during the first quarter -- the largesgt number since the fourtgh quarter in 1992. And the FDIC'ss "Problem List" grew during the quarter from 252 to 305 and total assets of problem institutions increasedfrom $159 billion to $220 Insured institutions set aside $60.
9 billionn in provisions for loan losses in the first quartet -- up $23.7 or 63.6 percent, over the firsy quarter of 2008. Expenses for goodwill impairment and othef intangible asset expensestotaled $7.2 billion, compared with $2.8 billio n a year earlier. These negative factors outweighed the positive effects of increased noninterestincome (up $7.8 billion, or 12.8 higher net interest incomre (up $4.4 billion, or 4.7 percent), and higher realize d gains on securities and other assetd (up $1.9 billion). Insured institutions charged off $37.i billion in bad loans in the first almost twicethe $19.
6 billion of a year "Troubled loans continue to accumulate, and the costs associatecd with impaired assets are weighing heavily on the industry's performance," Bair "Nevertheless, compared to a year ago, we see some Net interest income is and noninterest revenue is up at larger particularly trading revenues." Tier 1 capita l reached a record high of almost $70 the largest quarterly increase ever reportecd by the industry. much of the increase occurred at institutionds that received capital fromthe 's Troublex Asset Relief Program (TARP). Total assetx declined by $302 billion due to downsizing by a few large banks.
Two-thirds of all institutionx reported asset growth inthe quarter, but reductionzs at eight large banks caused the industry totak to decline. Total loans and leases fell by $159. 6 billion (2.1 percent), while assets in tradingf accounts declinedby $144.5 billion (14.9 percent). The FDIC' Deposit Insurance Fund (DIF) reserve ratio fell to 0.27 percent. The DIF balancw declined from $17.3 billion at the end of 2008 (amendefd from the originally reported unaudited balanceof $19 to $13 billion on March 31, 2009. the FDIC Board of Directors approved an amended restoration plan in Februargy that is designed to restor e the DIF reserve ratioto 1.15 percent within seve years.
The FDIC has already set asided $28 billion in reserve to covee projected losses for the next12 months. In the FDIC will collect morethan $8 billion in premiums duringb the second quarter, including $5.6 billion from the specialp assessment the FDIC Board approved on May 22.