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FDIC: 'Problem List' on the Rise to 884 Institutions

Photo Courtesy - ABC News(WASHINGTON) -- At a press conference Wednesday, the FDIC released its fourth quarter and year-end 2010 earnings report for FDIC-insured institutions. 

The FDIC reported 157 insured commercial banks and savings institutions failed in 2010, marking the largest annual number of bank failures since 1992 when the FDIC saw 182 failed institutions.  In the fourth quarter of 2010, the FDIC added 24 institutions to the “Problem List,” raising the number of institutions on the list to 884.

Despite this increase in troubled financial institutions, FDIC Chairman Sheila Bair called 2010 a “turnaround year” for the industry after it experienced four straight quarters of positive earnings. The full-year net income for banks tallied at $87.5 billion, the highest full-year earnings since 2007. 

“While earnings in 2010 remain well below pre-crisis levels, the past year marked a significant milestone on the road to recovery,” Bair said. 

The FDIC reported banks earned $21.7 billion in the fourth quarter of 2010, compared to a $1.8 billion net loss in the fourth quarter of 2009.

Revenue growth was consistent compared to previous years but remained sluggish due to a lack of “upward momentum.”  Net operating revenue in 2010 was $163.5 billion, only $2.8 billion higher than the previous year.

“A key reason why revenues haven’t grown faster is that loans have not been growing,” Bair said.

Bank lending decreased for the ninth time in 10 quarters.  Total loan and lease balances fell $13.6 billion in the final quarter of 2010 with lending in real estate construction and development, non-credit card consumer loans, and home equity lines of credit shrinking.  Banks cut loan-loss provisions by $31.6 billion in the fourth quarter.

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