The number of troubled U.S. banks leaped to the highest level in about five years and bank profits plunged by 86 percent in the second quarter as slumps in the housing and credit markets continued.
Federal Deposit Insurance Corp. data released Tuesday show 117 banks and thrifts were considered to be in trouble in the second quarter, up from 90 in the previous quarter.
The FDIC also said that federally insured banks and savings institutions earned $5-billion in the April-June period, down from $36.8-billion a year earlier. The roughly 8,500 banks and thrifts also set aside a record $50.2-billion to cover losses from soured mortgages and other loans in the second quarter.
"Quite frankly, the results were pretty dismal," FDIC Chairwoman Sheila Bair said. The majority of U.S. banks "will be able to weather" the economic and housing storms, with 98 percent of them still holding adequate capital by the regulators' standards, Bair said.
Nine FDIC-insured banks have failed so far this year, compared with three in all of 2007. More banks are in danger of collapsing this year, Bair said.