Banks and savings institutions insured by the Federal Deposit Insurance Corp. (FDIC) posted aggregate net income of $2.8bn in Q309 despite net quarterly losses reported by more than 26% of all insured institutions, according to the FDIC's quarterly report on insured institutions. Provisions for loan losses totaled $62.5bn in the quarter, an $11.3bn or 22.2% increase over the year-ago quarter. Realized losses on securities and other assets were $4.1bn -- $3.8bn lower than last year. "Today's report shows that, while bank and thrift earnings have improved, the effects of the recession continue to be reflected in their financial performance," said FDIC chairman Sheila Bair. Forty-seven institutions were absorbed through mergers while 50 banks failed in the quarter -- the largest number of failures in a single quarter since Q492 when 55 firms failed. The FDIC's Deposit Insurance Fund (DIF) balance fell below zero for the first time since Q392. As of September, the DIF was at negative $8.2bn. The FDIC's "problem" bank list swelled nearly 33% to 552 from 416 banks in the previous quarter. The total assets of these "problem" firms grew little more than 15% to $345.9bn from $299.8bn during the same time. Both the number of banks and the volume of assets on the FDIC's "problem" list are at their highest level since the end of 1993. Write to Diana Golobay.