The FDIC added another 31 banks to their so-called "Problem List", so now the list totals 860 institutions under the agency's watchful eye.
The total assets of the banks on the FDIC watch list declined from $403 billion to $379 billion. This is the highest number of problematic institutions since 1993, when they counted 928 and the savings and loan crisis was in full swing.
However, the names of the banks wasn't published for fear that the stigma attached would cause a run on those banks. The agency added, that most of them are able to get back on their feet.
41 insured institutions failed during the July to September period this year. As of Monday the 2010 failed-bank tally stood at 149.
"Resilient revenues and improving asset quality remained a positive combination for insured institution earnings in the third quarter," the FDIC reported. So the Q3 additions to the Problem List came even, as the lending industry turned a healthy profit and the volume of nonperforming loans was down.
The numbers show a net income of $14.5 billion in Q3. This is the net income of the 7,760 insured commercial banks and saving institutions. This number is up from a $2 billion aggregate profit a year ago.
Although Q3 net income was below the $21.4 billion reported for the second quarter, FDIC says the industry's Q3 earning represent a three year high. But there was a $10.4 billion quarterly charge for goodwill impairment at one large institution, so this brought the shortfall.
FDIC reported weak signs on further improvement in loan quality trends. They say that the amount of loan and lease delinquencies fell for the second consecutive quarter.
Non-current balances were down by $8.3 billion in Q3, after falling nearly $19 billion in Q2. Before this improvement they have risen for four consecutive years.
However, FDIC Chairman Sheila C. Bair is cautiously optimistic while she reports these numbers, as "lenders continue to work though their bad loans from the housing boom and credit performance improves."
"The industry continues making progress in recovering from the financial crisis," Bair said. "Lower provisions for loan losses are driving bank earnings by allowing a larger share of revenues to reach the bottom line. At this point in the credit cycle it is too early for institutions to be reducing reserves without strong evidence of sustainable, improving loan performance and reduced loss rates. When it comes to the adequacy of reserves, institutions should always err on the side of caution."
Loan losses were also down to $34.9 billion in Q3 which is the lowest amount since the Q4 of 2007.
"Total loans and leases held by FDIC-insured institutions declined by just $6.8 billion, or 0.1 percent, in the third quarter," Bair said. "Many large banks have had sizable reductions in their loan portfolios over the past couple of years, but in the third quarter, such reductions were notably absent. I hope we are close to seeing genuine increases in loan balances again."
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