NEW YORK (
) -- Not many people on Wall Street pay attention to the Federal Deposit Insurance Corp.'s quarterly banking data.
But the FDIC's Quarterly Banking Profile is a treasure trove of information about the health of the nation's banks.
In fact, my study of this report helped me predict the housing bubble and the Great Credit Crunch.
On Tuesday, I
that the first-quarter data reveal the continuing exposure that FDIC-insured banking institutions have to real estate loans.
Today I expand my analysis to other items of concern in the latest Quarterly Banking Profile.
After a bank determines that its balance sheet is laced with loans that have the risk of default, it increase its "Reserve for Losses," which is a direct drag on revenue.
When a loan becomes delinquent, the loan amount is listed as "30-89 Day Past Due." At 90 days in arrears, it becomes a "Noncurrent Loan."
The table below shows the data at the start of the Great Credit Crunch (the end of 2007), compared to the data for the first quarter of 2012.
Reserves for Losses ended 2007 at $102.4 billion, and as problem loans surfaced, this category rose to a record $263.1 billion in the first quarter of 2010.
The good news is that the banking system has reduced the reserve of losses in every quarter since the first quarter of 2010.
The stressful news is that reserves at $183.1 billion are still 78.8% higher than when the Great Credit Crunch began. This is another sign that the banking system remains stressed.
30-89 Day Past Due have been more than $100 billion in each quarter since 2007 except in the latest quarter.
This is a sign that fewer loans are going into default, but remember that Tuesday's analysis shows that total loan balances declined by $56.3 billion in the first quarter.
Noncurrent Loans began the Great Credit Crunch at $110.0 billion and grew to an alarming high of $405.4 billion in the first quarter of 2010 as loans cascaded through the 30-89 day category right into being noncurrent.
Banks did a good job at whittling them down to $305.0 billion by the end of the first quarter of 2012, but noncurrent loans remain 177.2% higher than when the problem loans began.
It appears that banks may have sliced reserves too much compared with the size of the noncurrent loan category.
Other Real Estate Owned is a costly asset. After a bank forecloses on a property, it owns that property.
The bank must pay any property taxes and homeowner fees, and keep the homes it owns well-groomed.
At the end of 2007, OREO totaled $12.14 billion, and this total ballooned to a record high of $53.18 billion in the third quarter of 2010.
As banks became net sellers of OREO properties, the net total owned declined to $44.80 billion in the first quarter of 2012, still up 269.0% since the end of 2007.
At the end of 2007, the Deposit Insurance Fund had a balance of $52.4 billion with $4.29 trillion of Insured Deposits.
The balance in the DIF comes from assessments to all FDIC-insured financial institutions.
With the insurance guarantee increased to $250,000 from $100,000 savers moved significant amounts of money into bank deposits and CDs.
Insured deposits are up 63.7% since the end of 2007 to approximately $7.03 trillion at the end of the second quarter of 2012.
While this tremendous growth evolved, bank failures accelerated, and at the end of the first quarter of this year the DIF was at $15.3 billion, down 70.8% from the end of 2007.
As the FDIC-provided chart below shows, the DIF has been underfunded since the end of June 2008, as the DIF needs to total 1.15% of insured deposits by June 2013.
Under the Dodd-Frank legislation, the Deposit Insurance Fund must be expanded to 1.35% of insured deposits by Sept. 30, 2020. The current reading is an anemic 0.22%.
If this rule were in effect today, the DIF would have to be at $94.9 billion vs. the current $15.3 billion. If insured deposits rose to $10 trillion by Sept. 30, 2020, the DIF would have to be at $135.0 billion.
Where will the DIF funding come from? Increased assessments on banks with $50 billion or more in assets, with larger assessments for banks considered "too big to fail."
In conclusion, banks' real estate loan exposure, which I discussed Tuesday, and the additional balance sheet stresses I presented today show why the Great Credit Crunch is far from over.