by Calculated Risk on 8/29/2013 01:02:00 PM

The FDIC reported FDIC-Insured Institutions Earned $42.2 Billion in the Second Quarter of 2013

Commercial banks and savings institutions insured by the Federal Deposit Insurance Corporation (FDIC) reported aggregate net income of $42.2 billion in the second quarter of 2013, a $7.8 billion (22.6 percent) increase from the $34.4 billion in profits that the industry reported a year earlier. This is the 16th consecutive quarter that earnings have registered a year-over-year increase. Increased noninterest income, lower noninterest expenses, and reduced provisions for loan losses accounted for the increase in earnings from a year ago.

The FDIC reported the number of problem banks declined:

The number of problem banks continued to decline. The number of banks on the FDIC's "Problem List" declined from 612 to 553 during the quarter. The number of "problem" banks is down nearly 40 percent from the recent high of 888 institutions at the end of first quarter 2011. Twelve FDIC-insured institutions failed in the second quarter of 2013, up from four failures in the first quarter. Thus far in 2013, there have been 20 failures, compared to 40 during the same period in 2012.

Click on graph for larger image.

This graph shows the dollar value of Residential REO for FDIC insured institutions. Note: The FDIC reports the dollar value and not the total number of REOs.

The dollar value of 1-4 family residential Real Estate Owned (REOs, foreclosure houses) declined from $7.89 billion in Q1 to $6.98 Billion in Q2. This is the lowest level of REOs since Q4 2007.  The dollar value of FDIC insured REO peaked at $14.8 Billion in Q3 2010.

Even in good times, the FDIC insured institutions have about $2.5 billion in residential REO, so the FDIC insured institutions are about two-thirds of the way back to normal levels.