The Federal Deposit Insurance Corp. (FDIC) has reported that 45 institutions failed during the fourth quarter of 2009, bringing the total number of FDIC-insured bank failures in 2009 to 140 – the highest annual total since 1992. Additionally, the number of institutions on its ‘Problem List’ rose to 702 at the end of the fourth quarter of 2009, up from 552 at the end of the third quarter and 252 at the beginning of the year.
According to the FDIC, the total assets of the ‘Problem List’ institutions increased between the final two quarters of 2009, from $345.9 billion to $402.8 billion. FDIC policy does not allow the agency to make the names of the institutions on its ‘Problem List’ public.
The number of total loans and leases for all FDIC-insured banks declined by $128.8 billion (1.7%) during the fourth quarter of 2009, making it the sixth consecutive quarter in which the industry's loan balances declined. Furthermore, real estate construction and development loans declined by $41.5 billion (8.4%). However, investments by banks in mortgage-backed securities increased by $44.8 billion (3.3%) during this period.
‘Resolving these credit market dislocations will take time,’ FDIC Chairwoman Sheila Bair said in a statement. ‘We encourage institutions to lend using a balanced approach, as outlined in the recent inter-agency policy statements. Institutions should neither over-rely on models to identify and manage concentration risk nor automatically refuse credit to sound borrowers because of those borrowers' particular industry or geographic location.’