WASHINGTON ( TheStreet) -- The Federal Deposit Insurance Corp. said Tuesday that its "Problem List" of troubled banks and thrifts grew to 702 as of Dec. 31, up from 552 in September and 252 a year earlier, despite the increasing pace of bank failures.
The FDIC said the combined domestic banking industry essentially broke even during the fourth quarter, with $914 million in net income, vs. an industry net loss of $37.8 billion a year earlier. Most of the improvement in earnings was concentrated among the largest banks -- in fact, out of the four peer groups covered in the FDIC's report, only banks and thrifts with total assets exceeding $10 billion had a positive return on assets for the quarter. Major factors in the industry's overall earnings improvement included trading revenue, which was $2.8 billion for the fourth quarter, compared to trading losses of $9.2 billion during the fourth quarter of 2008. Servicing income also rebounded, to $8 billion, up from a loss of $390 million a year earlier. The industry trend of several quarters' improvement in net interest margins reversed itself during the fourth quarter. The industry's margin (the difference between the average rate earned on loans and investments and the average cost of funds) was 3.49%, up considerably from 3.33 a year earlier but down from 3.51% in the third quarter. Industry net income for all of 2009 was "well below historical norms" at $12.5 billion, up from $4.5 billion in 2008, but way down from the $100 billion during 2007.