FDIC Report: MN Banks Improve in 2010

Minnesota banks collectively earned $207 million in 2010-up 127 percent from last year-as more banks in the state turned a profit.

Minnesota banks showed signs of improvement in 2010, collectively earning $207 million during the year that represents a significant increase-127 percent-from 2009 when Minnesota banks together earned just $75 million, according to a recent report from the Federal Deposit Insurance Corporation (FDIC).

According to the FDIC, about 22 percent of the 404 institutions in Minnesota were unprofitable in 2010, an improvement from last year when about 29 percent didn't turn a profit.

The state's non-performing asset ratio-which are bank loans in which repayments or interest payments are not being made on time-increased slightly in 2010 to 3.95 percent from 3.83 percent last year.

The improvement in Minnesota echoed national trends. Nationally, banks earned a total of $87.5 billion, the highest full-year total since 2007, when the industry earned $99.9 billion.

For the fourth quarter, all of the banks in the U.S. together earned $21.7 billion, a $23.5 billion improvement from the $1.8 billion net loss the industry reported in the fourth quarter of 2009.

Almost two-thirds of all institutions-62 percent-reported improved quarterly net income from a year ago. The average return on assets-which the FDIC calls “a basic yardstick of profitability”-rose to 0.65 percent from negative 0.06 percent a year ago.

“Overall, 2010 was a turnaround year with four straight quarters of positive earnings,” FDIC Chairman Sheila C. Bair said in a statement. “We are encouraged not only by the rising trend in total industry net income, but also by the fact that a substantial majority of insured institutions are participating in this trend.”

The number of institutions on the FDIC's “problem” list rose from 860 in 2009 to 884 in 2010. Despite the increase in the number of institutions on the list, the rate of increase has declined in each of the past four quarters.

Thirty insured institutions failed during the fourth quarter of 2010, bringing the total number of failures for the full year to 157-eight of which were in Minnesota. Six Minnesota banks failed in 2009 and just one bank in the state failed in 2008.