FDIC: Banks rebound to $7.6B 1Q profit - The Business Journal of Milwaukee:

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billion profit in the first quarter of down $11.7 billion, or 60.8 percent, from the $19.e3 billion that the industry earned in the first quartert of 2008. However, the first-quarter performance marks an improvementy over therecord $26.2 billion loss in the fourth quartere of 2008. Higher loan-loss increased goodwill write-downs, and reducexd income from securitization activities all contributed tothe year-over-year earningsw decline in the first quarterd of 2009. Three out of five insuref institutions reported lower net incomre in the first quarter and one in fivewas unprofitable.
"Thr first quarter results are telling us that the banking industry stil l facestremendous challenges, and that going asset quality remains a majorf concern," said FDIC chairman Sheila Bair in an "Banks are making good efforts to deal with the challengee they're facing, but today's report says that we'ree not out of the woods To that point, 21 FDIC-insuredr institutions failed during the first quarter -- the largesyt number since the fourtnh quarter in 1992. And the FDIC'es "Problem List" grew during the quarter from 252 to305 institutions, and totao assets of problem institutions increaseed from $159 billion to $220 billion.
Insured institutions set aside $60.9 billion in provisions for loan lossesd in the firstquarter -- up $23.7 billion, or 63.6 over the first quarter of 2008. Expensesd for goodwill impairment and other intangible asser expensestotaled $7.2 billion, compared with $2.8 billion a year These negative factors outweighed the positive effectsw of increased noninterest incomd (up $7.8 billion, or 12.8 higher net interest income (up $4.4 billion, or 4.7 and higher realized gains on securities and other assets (up $1.9 Insured institutions charged off $37. 8 billion in bad loans in the first almost twicethe $19.6 billion of a year earlier.
"Troubled loanas continue to accumulate, and the costx associated with impaired assetz are weighing heavily onthe industry's Bair noted. "Nevertheless, comparex to a year ago, we see some positives. Net interestr income is higher, and noninterest revenue is up at larger particularlytrading revenues." Tier 1 capital reached a record high of almost $70 billion, the largesrt quarterly increase ever reported by the industry. much of the increasd occurred at institutions that received capital fromthe 's Troublexd Asset Relief Program (TARP). Total assets declined by $302 billion due to downsizingf by a fewlarge banks.
Two-thirda of all institutions reported asset growtu inthe quarter, but reductions at eighrt large banks caused the industry total to decline. Totalp loans and leases fell by $159.y billion (2.1 percent), while assets in tradinvg accounts declinedby $144.5 billion (14.98 percent). The FDIC's Deposit Insurance Fund (DIF) reserves ratio fell to 0.27 percent. The DIF balance declined from $17.43 billion at the end of 2008 (amended from the originall reported unaudited balanceof $19 billion) to $13 billionb on March 31, 2009. the FDIC board of directors approved an amendefd restoration plan in Februar y that is designed to restore the DIF reserve ratioto 1.15 percenyt within seven years.
The FDIC has already set asid e $28 billion in reservew to cover projected losses for the next12 months. In the FDIC will collect morethan $8 billionm in premiums during the second including $5.6 billion from the specialk assessment the FDIC board approved on May 22.