The Federal Deposit Insurance Corp. (FDIC) added 111 lenders to its list of “problem banks” in the second quarter, a 36 percent increase that pushed the number of banks that have failed asset quality, liquidity and earnings tests to a 15-year high, Bloomberg reported.



A total of 416 banks with combined assets of $299.8 billion have failed the FDIC’s grading system, the most since June 1994. The banks were not identified in an FDIC report released today.

“For now, the difficult and necessary process of recognizing loan losses and cleaning up balance sheets continues to be reflected in the industry’s bottom line,” FDIC Chairman Sheila Bair said in a statement.

Regulators have taken over 81 banks this year, with 24 banks collapsing in the second quarter. The surge in failures prompted the agency to charge the industry an emergency fee in the second quarter to raise $5.6 billion to replenish its insurance fund, which fell to $10.4 billion as of June 30 from $13 billion in the previous quarter, the FDIC said. An $11.6 billion increase in loss provisions for bank failures caused the decline in the fund, the agency said.

FDIC-insured banks reported a net loss of $3.7 billion in the second quarter, compared with a $5.5 billion gain in the first quarter. The loss was driven by increased expenses for bad loans, the FDIC said. Funds set aside by banks to cover loan losses rose to $66.9 billion in the second quarter from $60.9 billion in the first quarter.

The FDIC insures deposits at 8,195 institutions with $13.3 trillion in assets. The agency is a bank regulator that insures bank customer deposits, helps find buyers for failing banks and liquidates lenders that have collapsed.

The agency this week approved new guidelines for private-equity firms that invest in failed banks to increase the pool of buyers beyond traditional lenders and reduce costs to the banking industry and taxpayers.