The Federal Deposit Insurance Corp said Tuesday that the list of banks it considers to be in trouble shot up nearly 50 per cent to 171 during the third quarter - yet another sign of escalating troubles among the institutions controlling Americans' deposits.

In the second quarter, 117 FDIC-insured institutions were on the list. Now, at 171, the number of institutions on the FDIC's 'problem list' is at its highest level since late 1995.

Profound problems

"We've had profound problems in our financial markets that are taking a rising toll on the real economy," said FDIC Chairman Sheila Bair in a statement, adding that Tuesday's report "reflects these challenges".

Total assets held by troubled institutions on the FDIC list climbed from US$78.3 billion to US$115.6 billion - a figure that suggests that the nation's top 20 banks are not on the list, even though they are getting slammed, too, by the growing credit crisis.

FDIC does not reveal the institutions it deems troubled.

On average, about 13 per cent of institutions on the FDIC's list end up failing.

Biggest bank failures

Banks that don't make the list can end up collapsing anyway - the two biggest bank failures over the past year, Washington Mutual Inc and IndyMac Bancorp, had not been on the FDIC's list of troubled banks. Wachovia Corp, which nearly failed before it got bought by Wells Fargo & Company in October, had not been on the list, either.

Nine banks failed in the third quarter, decreasing the FDIC's deposit insurance fund to US$34.6 billion from US$45.2 billion in the second quarter.

The FDIC also said Tuesday that commercial banks and savings institutions suffered a 94 per cent drop in third-quarter profits to US$1.7 billion from US$27 billion in the same period last year.

Subprime mortgages

Except for the fourth quarter of 2007, it was the lowest quarterly profit since the fourth quarter of 1990.

Many of the nation's banks, hit by defaults in subprime mortgages last year, are now struggling to stay afloat amid a widespread credit crisis that is causing defaults to rise in nearly all types of debt, ranging from prime mortgages to credit cards to commercial real-estate loans to small business loans.

Recently, community banks - defined as those with assets under US$1 billion - have started to show similar stresses as their larger counterparts, the FDIC said.

- AP