The number of problem banks on a regulatory watch list increased to 117 by the end of the second quarter from 90 at the end of the first quarter, the Federal Deposit Insurance Corp said.
The combined assets of the problem banks increased to $78 billion from $26 billion, the agency said.
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The housing slump and worsening economic conditions forced U.S. banks to set aside $50.2 billion in loan loss provisions during the second quarter, the FDIC said in its quarterly industry update.
That figure is more than four times the $11.4 billion that the industry set aside in the second quarter last year.
"By any yardstick, it was another rough quarter for bank earnings, but the results were not unexpected as the industry coped with financial market disruptions, the housing slump, worsening economic conditions and the overall downturn in the credit cycle," FDIC Chairman Sheila Bair said in a statement.
Nine banks have failed so far this year, including IndyMac Bancorp Inc, which became the third-largest U.S. bank failure and was on the FDIC watch list in the second quarter.
Bair also said the agency will consider a plan in early October to replenish its Deposit Insurance Fund, which had a large drop due to IndyMac and other bank failures.
Watch Bair's news conference in video at left.
The fund, which is used to cover insured deposits, fell to $45.2 billion at the end of the second quarter from $52.8 billion at the end of the first quarter.
The agency maintains a running tally of banks with financial, operational or managerial weakness that threaten their financial viability.
FDIC examiners closely monitor the list but do not publicly release the names on it.
Earnings at U.S. banks and thrifts were $5 billion in the second quarter, versus $36.8 billion in the year-ago period, the agency said.
With the exception of the fourth quarter of last year, second-quarter earnings in 2008 were the lowest for the industry since the fourth quarter of 1991.