PRESS RELEASE
Federal Deposit Insurance Corporation Each Depositor insured to at least $250,000
August 27, 2009
Media Contact:
Andrew Gray (202) 898-7192
angray@fdic.gov
Congress created the Federal Deposit Insurance Corporation in 1933 to restore public confidence in the nation's
banking system. It promotes the safety and soundness of these institutions by identifying, monitoring and addressing
risks to which they are exposed. The FDIC receives no federal tax dollars — insured financial institutions fund its
operations.
FDIC press releases and other information are available on the Internet at www.fdic.gov, by subscription electronically
(go to www.fdic.gov/about/subscriptions/index.html) and may also be obtained through the FDIC's Public Information
Center (877-275-3342 or 703-562-2200). PR-153-2009
FDIC-Insured Institutions Lost $3.7 Billion in the Second Quarter of 2009
Total Reserves of the Deposit Insurance Fund Stood at $42 Billion
FOR IMMEDIATE RELEASE
Commercial banks and savings institutions insured by the Federal Deposit Insurance
Corporation (FDIC) reported an aggregate net loss of $3.7 billion in the second quarter
of 2009, a decline of $8.5 billion from the $4.8 billion in profits the industry reported in
the second quarter of 2008. Insured institutions earned $424 million in net operating
income during this latest quarter even after a special assessment of $5.5 billion to
bolster the FDIC's insurance fund. However, one-time losses and other items totaling
$4.1 billion pulled the industry results into negative territory.
"While challenges remain, evidence is building that the U.S. economy is starting to grow
again," said FDIC Chairman Sheila Bair. "Banking industry performance is -- as always -
- a lagging indicator. The banking industry, too, can look forward to better times ahead.
But, for now, the difficult and necessary process of recognizing loan losses and cleaning
up balance sheets continues to be reflected in the industry's bottom line."
Chairman Bair went on to say, "The FDIC was created specifically for times such as
these. No matter how challenging the environment, the FDIC has ample resources to
continue protecting depositors as we have for the last 75 years. No insured depositor
has ever lost a penny of insured deposits...and no one ever will."
Provisions for loan losses totaled $66.9 billion in the quarter, an increase of $16.5 billion
(32.8 percent) over the second quarter of 2008. Extraordinary losses stemming from
writedowns of asset-backed commercial paper totaled $3.6 billion, compared to
extraordinary losses of $366 million a year earlier. Noninterest expenses were $1.7
Federal Deposit Insurance Corporation Each Depositor insured to at least $250,000
August 27, 2009
Media Contact:
Andrew Gray (202) 898-7192
angray@fdic.gov
Congress created the Federal Deposit Insurance Corporation in 1933 to restore public confidence in the nation's
banking system. It promotes the safety and soundness of these institutions by identifying, monitoring and addressing
risks to which they are exposed. The FDIC receives no federal tax dollars — insured financial institutions fund its
operations.
FDIC press releases and other information are available on the Internet at www.fdic.gov, by subscription electronically
(go to www.fdic.gov/about/subscriptions/index.html) and may also be obtained through the FDIC's Public Information
Center (877-275-3342 or 703-562-2200). PR-153-2009
FDIC-Insured Institutions Lost $3.7 Billion in the Second Quarter of 2009
Total Reserves of the Deposit Insurance Fund Stood at $42 Billion
FOR IMMEDIATE RELEASE
Commercial banks and savings institutions insured by the Federal Deposit Insurance
Corporation (FDIC) reported an aggregate net loss of $3.7 billion in the second quarter
of 2009, a decline of $8.5 billion from the $4.8 billion in profits the industry reported in
the second quarter of 2008. Insured institutions earned $424 million in net operating
income during this latest quarter even after a special assessment of $5.5 billion to
bolster the FDIC's insurance fund. However, one-time losses and other items totaling
$4.1 billion pulled the industry results into negative territory.
"While challenges remain, evidence is building that the U.S. economy is starting to grow
again," said FDIC Chairman Sheila Bair. "Banking industry performance is -- as always -
- a lagging indicator. The banking industry, too, can look forward to better times ahead.
But, for now, the difficult and necessary process of recognizing loan losses and cleaning
up balance sheets continues to be reflected in the industry's bottom line."
Chairman Bair went on to say, "The FDIC was created specifically for times such as
these. No matter how challenging the environment, the FDIC has ample resources to
continue protecting depositors as we have for the last 75 years. No insured depositor
has ever lost a penny of insured deposits...and no one ever will."
Provisions for loan losses totaled $66.9 billion in the quarter, an increase of $16.5 billion
(32.8 percent) over the second quarter of 2008. Extraordinary losses stemming from
writedowns of asset-backed commercial paper totaled $3.6 billion, compared to
extraordinary losses of $366 million a year earlier. Noninterest expenses were $1.7
billion (1.7 percent) higher, primarily due to increased FDIC deposit insurance
premiums.
Indicators of asset quality continued to worsen during the second quarter. Both the
quarterly net charge-off rate and the percentage of loans and leases that were
noncurrent (90 days or more past due or in nonaccrual status) reached the highest
levels registered in the 26 years that insured institutions have reported these data.
Insured institutions charged off $48.9 billion in uncollectible loans during the quarter, up
from $26.4 billion a year earlier, and noncurrent loans and leases increased by $40.4
billion during the second quarter. At the end of June, noncurrent loans and leases
totaled $332 billion, or 4.35 percent of the industry's total loans and leases.
"Deteriorating loan quality is having the greatest impact on industry earnings as insured
institutions continue to set aside reserves to cover loan losses," Chairman Bair noted.
"Of all the major earnings components, the amount that insured institutions added to
their reserves for loan losses was, by far, the largest drag on industry earnings
compared to a year ago."
All told, more than 28 percent of all insured institutions reported a net loss in the second
quarter, compared with 18 percent a year earlier.
Financial results for the second quarter and first half of 2009 are contained in the FDIC's
latest Quarterly Banking Profile, which was released today. Also among the major
findings:
Net interest margins improved in the quarter. The average margin (the difference
between the average yield on interest-earning assets and the average interest expense
of funding those assets) rose to 3.48 percent from 3.39 percent in the first quarter and
3.37 percent in the second quarter of 2008. More than half of all institutions reported
higher margins than in the first quarter. Net interest income totaled $100 billion in the
quarter, up from $96.6 billion a year earlier.
Net interest margins improved from the previous quarter at community banks and at
larger institutions. "This is good news for community banks, since three-fourths of their
revenues come from net interest income," Chairman Bair said.
Total assets of insured institutions declined by $238 billion. A $125.5 billion decline
in loan and lease balances accounted for more than half of the decline in total assets of
insured institutions during the second quarter. The 1.8 percent decline in industry assets
followed a $303.2 billion decline in the first quarter of 2009. Banks' balances with
Federal Reserve banks fell by $99.4 billion (20.4 percent) during the quarter, and assets
in trading accounts declined by $65.5 billion (7.9 percent). The industry's investment
securities portfolio increased by $130.6 billion (5.9 percent).
The number of institutions on the FDIC's "Problem List" rose. At the end of June,
there were 416 insured institutions on the "Problem List," up from 305 on March 31.
premiums.
Indicators of asset quality continued to worsen during the second quarter. Both the
quarterly net charge-off rate and the percentage of loans and leases that were
noncurrent (90 days or more past due or in nonaccrual status) reached the highest
levels registered in the 26 years that insured institutions have reported these data.
Insured institutions charged off $48.9 billion in uncollectible loans during the quarter, up
from $26.4 billion a year earlier, and noncurrent loans and leases increased by $40.4
billion during the second quarter. At the end of June, noncurrent loans and leases
totaled $332 billion, or 4.35 percent of the industry's total loans and leases.
"Deteriorating loan quality is having the greatest impact on industry earnings as insured
institutions continue to set aside reserves to cover loan losses," Chairman Bair noted.
"Of all the major earnings components, the amount that insured institutions added to
their reserves for loan losses was, by far, the largest drag on industry earnings
compared to a year ago."
All told, more than 28 percent of all insured institutions reported a net loss in the second
quarter, compared with 18 percent a year earlier.
Financial results for the second quarter and first half of 2009 are contained in the FDIC's
latest Quarterly Banking Profile, which was released today. Also among the major
findings:
Net interest margins improved in the quarter. The average margin (the difference
between the average yield on interest-earning assets and the average interest expense
of funding those assets) rose to 3.48 percent from 3.39 percent in the first quarter and
3.37 percent in the second quarter of 2008. More than half of all institutions reported
higher margins than in the first quarter. Net interest income totaled $100 billion in the
quarter, up from $96.6 billion a year earlier.
Net interest margins improved from the previous quarter at community banks and at
larger institutions. "This is good news for community banks, since three-fourths of their
revenues come from net interest income," Chairman Bair said.
Total assets of insured institutions declined by $238 billion. A $125.5 billion decline
in loan and lease balances accounted for more than half of the decline in total assets of
insured institutions during the second quarter. The 1.8 percent decline in industry assets
followed a $303.2 billion decline in the first quarter of 2009. Banks' balances with
Federal Reserve banks fell by $99.4 billion (20.4 percent) during the quarter, and assets
in trading accounts declined by $65.5 billion (7.9 percent). The industry's investment
securities portfolio increased by $130.6 billion (5.9 percent).
The number of institutions on the FDIC's "Problem List" rose. At the end of June,
there were 416 insured institutions on the "Problem List," up from 305 on March 31.