An aggregate profit of $18 billion

An aggregate profit of $18 billion was reported for commercial banks and savings institutions insured by the FDIC in the first quarter of 2010. This was a $12.5 billion improvement from the $5.6 billion the industry earned in the 2009 first quarter, but still well below historical norms for quarterly profits. More than half of all institutions (52.2 percent) reported year- over-year improvements in their quarterly net incomes. Fewer than one in five institutions (18.7 percent) reported net losses for the quarter, compared to 22.3 percent a year earlier.

The average return on assets, a basic yardstick of profitability, rose to 0.54 percent, from 0.16 percent a year ago. The FDIC noted this is the highest quarterly ROA for the industry since the first quarter of 2008.

The primary factor contributing to the year-over-year improvement in quarterly earnings was a reduction in provisions for loan losses. While first-quarter provisions were still high, at $51.3 billion, they were $10.2 billion (16.6 percent) lower than a year earlier. Lower expenses for goodwill impairment and other intangible asset charges added $5 billion to pretax earnings.

The number of institutions on the FDICs problem list rose to 775, up from 702 at the end of 2009. In addition, the total assets of problem institutions increased during the quarter from $403 billion to $43 1 billion. These levels are the highest since June 30, 1993, when the number and assets of problem institutions totaled 793 and $467 billion, respectively, but the increase in the number of problem banks was the smallest in four quarters. Fortyone institutions failed during the first quarter.

The DIF balance - the net worth of the fund - increased slightly to negative $20.7 billion, from negative $20.9 billion (unaudited) on Dec. 31 , 2009. The fund balance reflects a $40. 7 billion contingent loss reserve that has been set aside to cover estimated losses. Combining the fund balance with this contingent loss reserve shows total DIF reserves of $20 billion. Total insured deposits increased by 1 .3 percent ($70 billion) during the first quarter.