The Nation’s DIF Loses $13 Billion in Q1’09

The FDIC released its quarterly profile of the banking industry on Wednesday.

Among the report’s highlights:

» The FDIC’s Deposit Insurance Fund (DIF) reserve ratio fell to 0.27 percent at the end of Q1’09, down from 0.36 percent at December 31, 2008, and 1.19% a year ago. The DIF decreased by 24.7 percent ($4.3 billion) during the first quarter to $13,007 million (unaudited). Operating and other expenses net of other revenue reduced the fund by $264 million. The reduction in the DIF was primarily due to a $6.6 billion  increase in loss provisions for actual and anticipated insured institution failures. FDIC Chairman Sheila Bair said she expects the fund to continue to decline through the year, but stay positive.

DIF Reserve Ratios

» Tier 1 capital growth reached a record high. Tier 1 capital rose by almost $70 billion, the largest quarterly increase ever reported by the industry. However, much of the increase occurred at institutions that received capital from the U.S. Treasury Department’s Troubled Asset Relief Program (TARP).

» Total assets declined by $302 billion. Downsizing by a few large banks caused total industry assets to fall by $302 billion (2.2 percent) during the first quarter. Two-thirds of all institutions reported asset growth in the quarter, but reductions at eight large banks caused the industry total to decline. Total loans and leases fell by $159.6 billion (2.1 percent), while assets in trading accounts declined by $144.5 billion (14.9 percent).

» During the quarter, the number of insured banks and thrifts on the FDIC’s “Problem List” increased from 252 to 305, and total assets of “problem” institutions rose from $159 billion to $220 billion.

» The number of FDIC-insured commercial banks and savings institutions reporting financial results declined from 8,305 to 8,246 in the first quarter.

» The 21 bank failures in the first quarter is the most since the fourth quarter of 1992. Overall, 36 banks have failed this year.

» Commercial banks and savings institutions insured by the Federal Deposit Insurance Corporation (FDIC) reported net income of $7.6 billion in the first quarter of 2009, a decline of $11.7 billion (60.8 percent) from the $19.3 billion that the industry earned in the first quarter of 2008.

Full Quarterly Banking Profile report available here »

Click for video:

Video Sheila Bair

Graph: FDIC

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