The tide of bad loans and foreclosed properties just keeps rising at the nation's banks and credit unions, according to an analysis of the most recent federal banking records conducted by the Investigative  Reporting Workshop.

At the end of June, troubled assets at the nation's 8204 banks insured by the Federal Deposit Insurance Corp. totaled more than $323 billion, up from $237 billion six months ago and just $170 billion a year ago.

The much smaller credit union sector also has seen large increases in bad loans and foreclosed properties. A year ago, credit unions had about $6.2 billion in troubled assets. At the end of June 2009, that had risen to nearly $10.5 billion.

In the Workshop analysis, troubled assets at banks include loans more than 90 days past due, loans on which banks are no longer claiming interest income (nonaccrual loans) and properties aquired through foreclosure. For credit unions, troubled assets are the combination of loans past due more than 60 days and properties aquired through foreclosure.

And with profits at many banks turning into losses and eating up capital over the past year, the number of institutions with a "troubled asset ratio" of greater than 100 has skyrocketed. In June 2008, only 77 FDIC-insured banks had more troubled assets on their books than they had capital and loan loss reserves. A year later, that figure has climbed to 298. The troubled asset ratio is calculated by dividing total troubled assets by the amount of capital plus loan loss reserves.

Ratio a strong indicator of bank stress

While it is not an official FDIC statistic, nor is it intended as a definitive predictor of the likelihood of bank failure, the troubled asset ratio apparently is a strong indicator of severe stress inside a bank because it shows the bank's ability to withtstand loan losses. Of the 92 banks that have failed so far this year, 84 had troubled asset ratios of 100 percent or greater in the final quarter they reported data before they closed.

At the end of June 2009 42 credit unions had troubled asset ratios of greater than 100, compared with 37 in June 2008.

Meanwhile, the FDIC said that it was carrying 416 banks on its list of "troubled institutions" at the end of June, more than at any time since 1994, when the banking crisis of the late 1980s and early 1990s was winding down.

And the number of bank failures through Sept. 11 is the most of any year since 1992, when 179 instiutions were taken over by the insurance deposit fund. Already, 2009, with more than three months to go, has seen the ninth largest number of bank failures since the FDIC was formed in 1935. The most failures occured in 1989, when 531 institutions failed, most of them savings and loans.

Despite the large number of failures, and FDIC's admitted difficulties in finding buyers for some of the banks it is taking over, depositors remain protected by the insurance fund. Individual accounts up to $250,000 are covered by deposit insurance. Since the FDIC's inception, no depositor has ever lost money in an insured account.

Real estate lending continues to be the major problem for banks. At the end of June, more than $262.2 billion in real estate loans were more than 90 days past due or were in nonaccrual status. But the effects of the recession on businesses large and small also now are showing up in the nation's banks. Problem commercial and industrial loans totaled more than $38 billion on June 30, a 50 percent increase over Dec. 31, 2008.

Banks, credit unions see sharp drop in profits

All of these loan difficulties have meant sharp erosion in bank profits. The FDIC reported that as a group, banks lost $3.7 billion in the second quarter, after reporting a $7.5 billion profit in the first three months of this year. A year ago, banks earned $24 billion in the first half of the year.

 Credit unions had a total profit of about $1.1 billion in the first half of 2009, compared with more than $2 billion in the first six months of 2008.