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Fewer banks at dire risk of failing, FDIC data shows

The number of banks on the U.S. government's list of financial institutions most at risk for failure fell for the second consecutive quarter, according to data released Tuesday by the Federal Deposit Insurance Corp., signaling that the troubles for most U.S. banks may be easing even as Europe's problems grow worse.

Twenty-one lenders came off the list of so-called problem banks during the third quarter, compared with 23 in the previous period. That brings the total number of troubled banks to 844, or roughly one of every nine lenders.

Although the nation's 7,436 banks registered a nearly 50 percent jump in profit during the third quarter, to $35.3 billion, revenue growth was extremely weak. The bulk of the gains — more than 80 percent — came from the banks setting less money aside to cover loan losses.

Banks, meanwhile, continued to be flooded with deposits as corporations and consumers flocked to the sidelines amid the gloomy economic reports and the looming fears that Europe's debt troubles could ripple across the Atlantic. Total deposits rose by more than $234.5 billion, with the nation's biggest banks receiving about three-quarters of the influx of cash.

Twenty-six banks, most of them small, were closed during the third quarter. That was four more than in the previous period, but the pace of bank failures has fallen sharply from a year ago. There were 74 bank failures through the first nine months of 2011, compared with 127 in the period a year earlier.

Fewer banks at dire risk of failing, FDIC data shows 11/22/11 [Last modified: Tuesday, November 22, 2011 10:26pm]
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