Regulators said there were 252 banks in trouble at the end of 2008, up from 171 in the third quarter.
The FDIC also said that for all of last year, the banking industry earned $16.1 billion, the smallest annual profit since 1990.
Rising losses on loans and eroding values of assets "overwhelmed" banks' revenues in the fourth quarter, the FDIC said. More than two-thirds of all banks and thrifts turned a profit in that period but their earnings were outstripped by large losses at a number of major banks.
FDIC Chairman Sheila Bair, reaching for a silver lining in the dismal picture, noted that total bank deposits increased in the October-December period by $307.9 billion, or 3.5 percent - the largest rise in 10 years. Deposits in domestic bank offices rose $274.1 billion, or 3.8 percent.
"Public confidence in the banking system and deposit insurance is demonstrated by the increase in domestic deposits during the fourth quarter," Bair said in a statement. "Clearly, people see an FDIC-insured account as a safe haven for their money in difficult times."
The Office of Thrift Supervision, meanwhile, announced a loss of $3 billion in the fourth quarter and a record $13 billion annual loss for savings and loans last year.
The FDIC now believes U.S. bank failures will cost the deposit insurance fund more than $40 billion over the next four years amid the ravages of rising unemployment and falling home prices that have sent loan defaults soaring.
Fourteen federally-insured institutions already have failed this year, extending a wave of collapses that began in 2008 - when regulators shut down 25 U.S. banks. Last year's tally was more than in the previous five years combined and up from only three bank failures in 2007.
The failures sliced the amount in the deposit insurance fund to $18.9 billion as of Dec. 31, from $52.4 billion a year earlier.
The FDIC on Friday will propose raising the insurance premiums paid by U.S. banks and thrifts. That will follow a plan to rebuild the deposit insurance fund put in place in October that increased average premiums to 13.5 cents for every $100 of banks' deposits from 6.3 cents.
U.S. banks and thrifts in the third quarter suffered a 94 percent drop in profits to $1.7 billion, from $27 billion in the same period in 2007. The institutions wrote off $27.9 billion in loans as uncollectible during the July-September quarter.
----
AP Business Writer Daniel Wagner contributed to this report.
Morey money-related links:
CLICK HERE to follow Action News on Twitter
CLICK HERE to get Action News on your website
CLICK HERE to find Action News on Facebook
