FDIC Banks Earn Big, But Still Lend Little
Total loans and leases declined by $210.4 billion (2.8 percent) during the quarter. Loans to commercial and industrial borrowers declined by $89.1 billion (6.5 percent), residential mortgage loan balances fell by $83.7 billion (4.2 percent), and real estate construction and development loans declined by $43.6 billion (8.1 percent). Total assets of insured institutions declined by $54 billion. Banks' balances with Federal Reserve banks increased by $142.4 billion (36.7 percent) during the quarter, and investments in U.S. Treasury securities rose by $28.6 billion (49.3 percent), as institutions increased their lower-risk assets.
Financial results for the third quarter and the first nine months of 2009 are contained in the FDIC's latest Quarterly Banking Profile, which was released today. Among the other findings, net interest margins improved to a four-year high. The average margin (the difference between the average yield on interest-earning assets and the average interest expense of funding those assets) rose to 3.51 percent from 3.48 percent in the second quarter and 3.37 percent in the third quarter of 2008. Almost two-thirds of all institutions (62 percent) reported higher margins than in the second quarter. Net interest income totaled $99.9 billion in the quarter, up from $95.3 billion a year earlier.
The number of institutions on the FDIC's "Problem List" rose to its highest level in 16 years. At the end of September, there were 552 insured institutions on the "Problem List," up from 416 on June 30. This is the largest number of "problem" institutions since December 31, 1993, when there were 575 institutions on the list. Total assets of "problem" institutions increased during the quarter from $299.8 billion to $345.9 billion, the highest level since the end of 1993, when they totaled $346.2 billion. Fifty institutions failed during the third quarter, bringing the total number of failures in the first nine months of 2009 to 95.