The Federal Deposit Insurance Corp. is receiving higher bids for failed bank assets and officials at the agency say they are beginning to see signs of a recovery in the financial services industry.
In a new memo, the agency notes that it is seeing "more bidders and higher bids" for failed institutions.
"Not only are failed insured-depository institutions with good deposit franchises attracting better prices, but there have also been higher-than-expected proceeds from assets sales."
In 2009, regulators closed 140 insolvent banks and thrifts. So far this year, there have been 83 bank failures.
"We still expect bank failures to peak this year, and start tapering off next year as the industry continues to heal and recover," FDIC chairman Sheila Bair said at a Tuesday FDIC board meeting.
The FDIC staff memo highlights several indicators showing the banking industry is starting to recover. More than half of all FDIC-insured institutions were profitable in the first quarter.
Banks are reporting lower new loan loss provisions and net charge-offs have declined for the past four quarters. In addition, the number of institutions on FDIC's problem bank listed increased by only 10% in the first quarter to 775.
In the previous quarter the number of problems bank jumped 27% to 702. "(S)igns of a slowdown in the growth of this number are a positive indicator that the industry could be slowly improving," the memo says.