FDIC: Banks reported profits of $29 billion

The first-quarter earnings, the FDIC reported Tuesday, were bolstered for a sixth consecutive quarter by reduced provisions for loan losses.

The FDIC did report that it now has 888 banks on its “problem list,” the most in close to two decades. But that was an increase of four banks over the previous quarter, the slowest growth in more than three years.

Sheila Bair, who chairs the Federal Deposit Insurance Corp., said in a statement that the banking industry “shows continuing signs of improvement,” but added, “[T]here is a limit to how far reductions in loan-loss provisions can boost industry earnings.”

{mosads}Bair also noted that, while bank’s balance sheets were certainly progressing, the economy’s recovery was “sluggish” and the housing market remained “weak.”

The agency said that 56 percent of banks reported higher income than in 2010’s first quarter, with 15 percent posting a net loss. Banks’ operating revenue also fell 3.2 percent – to $5.5 billion – when compared to a year ago.