2011 – 4th Quarter Earnings for FDIC insured Banking Institutions

February 28, 2012 No Comments »

During the second quarter of 2009, the outlook of both the FDIC and the banks being covered by it was very bleak. In that quarter FDIC insured banks lost a collective $3.5 billion. Also, when this report came out in August of 2009, 81 banks had gone bankrupt since January of that year and another 416 were on the FDIC’s potential “problem list.”

Since the 2009 report the overall list of problematic banks has nearly doubled, yet profits by banks covered by the FDIC has soared immensely.

The last quarter of 2011 was an extremely positive one for banks under the umbrella of FDIC insurance. Collectively they reported earnings of $26.3 billion and have experienced their 10th consecutive quarter where earnings have registered a year over year increase.

Contributing Factors to Success for FDIC-insured Banks:

- Despite the fact that savers are losing buying power in their dollars by investing in CD’s right now (when compared to today’s inflation rates) they are still throwing money at these financial instruments at an increasing rate. Institutional money is also continuing to invest in these vehicles despite savings rates sitting far below current inflation rates. According to the latest FDIC press release, “deposits in domestic offices increased by $249.7 billion (2.9 percent) during the quarter. More than three-quarters of this increase ($191.2 billion or 76.6 percent) consisted of balances in large non interest-bearing transaction accounts that have temporary unlimited deposit insurance coverage.”

- Loan portfolio’s are also continuing to grow. According to the press release at FDIC.gov, loan balances posted a quarterly increase for the third quarter in a row. So even though lending restrictions have tightened greatly since the early 2000′s, it appears consumers with acceptable credit scores are continuing to refinance at record low rates.

- The infamous “Problem List” of under-performing banks insured by the FDIC continues to fall despite being significantly higher in number than they were back in 2009 – immediately following the US banking crisis. During the last quarter of 2011, the overall number of problematic banks fell from 844 to 813 – the smallest overall number of problematic banks since the first quarter of 2010.

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