The number of problem U.S. banks jumped 40 percent to a 15-year high in the first quarter of 2009, the Federal Deposit Insurance Corporation (FDIC) said Wednesday. A total of 305 banks had financial problems in the January-March period, up 21 percent from 252 in the previous quarter, marking the highest number since 1994, the FDIC reported. The sharp rise came as banks faced growing credit losses for home mortgages, commercial real estate, and consumer credit cards amid the economic recession. “Bank failures continued to mount, and they will continue to do so,” FDIC Chairwoman Sheila Bair told reporters. The FDIC's quarterly list of problem banks held combined assets totaling $220 billion, up from $159.4 billion at the end of 2008. The financial regulator does not release the names of the troubled banks. The rise in problem banks is reflected in the growing number of U.S. bank failures in 2009, which stood at 36 last week. If that pace continues, more than 100 FDIC-insured banks could fail this year. Twenty-five banks failed in 2008, and only three failed in 2007. Despite the growing number of problem banks, industry-wide banking profits rose in the first quarter, the FDIC said. Profits reached $7.6 billion, led by higher revenues at the biggest banks as their trading performance recovered. The profit compares with a record loss of $36.89 billion in the fourth quarter of 2008, but is still down 61 percent from the $19.3 billion profit record for the first quarter of last year.
