Problem banks grow in fourth quarter, says FDIC (by Ronald D. Orol)

WASHINGTON (MarketWatch) -- The number of problem banks in the U.S. grew in the fourth quarter, with total failures reaching an 18-year high in all of 2010, the Federal Deposit Insurance Corp. said Wednesday, even as the agency reported another quarter of healthy profits for the banking industry. "Overall, 2010 was a turnaround year with four straight quarters of positive earnings," said FDIC Chairman Sheila Bair. The number of banks on the FDIC's "problem list" grew to 884 in the fourth quarter of 2010, up from 860 in the third quarter, and 829 in the second quarter. Banks insured by the FDIC reported a quarterly profit of $21.7 billion -- the second highest quarterly total reported since the second quarter of 2007 -- compared with the $1.8 billion net loss in the fourth quarter of 2009.