FDIC Reveals That Over 400 Banks Remain on the Problem Bank List

The recently released Quarterly Banking Profile from the FDIC reveals that over 400 banks remain on the Problem Bank List more than six years after the start of the biggest banking crisis since the 1930s.

As of March 31, 2014, the FDIC’s confidential Problem Bank List contains the names of 411 banking institutions that have weak capital positions and/or operational problems that could lead to failure.  The FDIC does not publicize the names of the banks classified as “problem banks” for fear of causing a run on the banks involved.

PBL MARCH 2014Although the banking industry has seen a dramatic recovery since the depths of the banking crisis the number of problem banks still comprise a substantial 6.1% of all FDIC insured institutions.  Most of the banks classified as problem banks are small banks that were never able to fully recover from the financial crisis.  As such, although the number of problem banks remains large, they do not constitute a threat to the health of the overall banking system.

Number of FDIC-Insured Problem Institutions

Report Date Number of Institutions
December 31, 2006 50
December 31, 2007 76
December 31, 2008 252
December 31, 2009 702
December 31, 2010 884
December 31, 2011 813
December 31, 2012 651
December 31, 2013 467
March 31, 2014 411

The number of problem banks has declined for 12 consecutive quarters and now totals less than half of the high reached in the first quarter of 2011 when 888 banks were on the problem bank list.  In addition, the total assets of all problem banks as of March 31, 2014 total only $126.1 billion, a small fraction of almost $15 trillion in assets held by all FDIC insured institutions.

PBL ASSETS MARCH 2014During the quarter ending March 31, 2014, the number of problem banks declined from 467 to 411 and assets of problem banks declined from $152.7 billion to $126.1 billion.  Much of the reduction in the problem bank list is due to the large number of banking failures.  From 2008 to date there has been a total of 497 banking failures.

Banking Failures Since 2008

Year           Number of Bank Failures

2008               25

2009             140

2010              157

2011                92

2012                51

2013                23

2014                  8

Total               497

The continued closure of problem banks by regulators along with continued growth in the economy should eventually lower the number of problem banks to pre-banking crisis levels.

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