WASHINGTON (AP) _ With bank failures rising, the government’s deposit insurance fund fell 20 percent to $10.4 billion in the second quarter as U.S. banks lost $3.7 billion.
The Federal Deposit Insurance Corp. said Thursday that surging levels of soured loans at banks dragged down profits in the April-June period. The $3.7 billion loss compared with profits of $7.6 billion in the first quarter, and $4.7 billion a year ago.
The FDIC also said the number of banks deemed to be in trouble jumped to 416 from 305 at the end of the first quarter. That’s the highest number since June 1994 during the savings and loan crisis. Total assets of troubled institutions surged to $299.8 billion from $220 billion in the first quarter.
Eighty-one banks have failed so far this year, and hundreds more are expected to fall in coming years because of souring loans for commercial real estate. That threatens to deplete the FDIC’s fund, which guarantees deposits of up to $250,000 per account. The new level of the insurance fund puts the ratio at 0.22 percent, compared with the congressionally mandated minimum of 1.15 percent.
The FDIC said nearly 66 percent of banks and savings and loans reported earnings below those in the second quarter of 2008, and more than a quarter posted a net loss.