What is FDIC Problem Bank List?

FDIC Problem Bank List is a confidential list, published by the Federal Deposit Insurance Corporation (FDIC) every quarter, of U.S. banks and thrifts that are on the brink of financial insolvency.

Key Takeaways

  • FDIC Problem Bank List is a confidential list, published by the Federal Deposit Insurance Corporation (FDIC) every quarter, of U.S. banks and thrifts that are on the brink of financial insolvency.
  • Only institutions that are insured by the FDIC through the Deposit Insurance Fund are on the FDIC Problem Bank List.
  • If problems continue with a listed bank, the FDIC takes control of it, before selling it to a stronger bank, or liquidating it and refunding the depositors.

Understanding FDIC Problem Bank List

To make the FDIC problem bank list, a bank must have financial, managerial or operational weaknesses that threaten its continued financial viability. Only institutions that are insured by the FDIC through the Deposit Insurance Fund are on the FDIC Problem Bank List. If problems continue with a listed bank, the FDIC takes control of it, before selling it to a stronger bank, or liquidating it and refunding the depositors.

The criteria to gauge the solvency of the member banks is based on the FDIC's CAMELS rating system. CAMELS is an acronym for:

  • Capital adequacy
  • Asset quality
  • Management
  • Earnings
  • Liquidity
  • Sensitivity

Since making this information public might start runs on banks, the names of the banks are withheld from the list. While the FDIC Problem Bank List is not available to the public, the FDIC does make public how many institutions are on the list as part of its wider banking survey.

The FDIC Problem Bank List includes data for net interest margins, net income, and net trading revenue. It also includes data on lending levels (outstanding loans) and asset quality — such as the level of nonperforming assets, net charge-offs (actual loan losses), and loan loss provisions.

FDIC Problem Bank List and Bank Failures (2001 - 2020)

At the peak of the financial crisis in 2009, there were nearly 900 troubled institutions on the FDIC Problem Bank List. By 2018, this had fallen below 100.

Chart of number and assets of banks on the Problem Bank List.

As expected, there is a strong correlation between the FDIC Problem Bank List and the actual number of bank failures. According to FDIC, a look at bank failures since 2001 shows that the peak was reached in 2010, when 157 FDIC insured banks failed as a result of the 2008 financial crisis. With that number dwindling to 0 by 2018, though it showed a slight uptick to 4 in 2019.

Bank Failures 2001 - 2020
Source: FDIC. Investopedia Author