From CNN:

More banks are in trouble than just three months ago according to the FDIC.

In its quarterly review of the nation’s banking industry, the Federal Deposit Insurance Corp. reported Tuesday that the number of firms on its so-called “problem bank” list grew to 117 during the second quarter - its highest level since the middle of 2003. There were 90 banks on the problem list in the first quarter of this year.

FDIC Chairman Sheila Bair expressed little surprise at the increase and warned that the number would grow.

“More banks will come on the list as credit problems worsen and assets of problem institutions will continue to rise,” said Bair in a press conference.

The number of troubled institutions has moved steadily higher this year as banks across the country struggle to cope with the fallout in the housing market and rising loan losses.

Problem banks typically face difficulties with their finances, or are suffering through operations or management issues that pose a threat to their existence.

Banks included on the problem list are considered the most likely institutions to fail, although few institutions actually reach that point - just 13% of banks on the FDIC’s problem list have failed on average.

The FDIC, one of the regulators of the nation’s banking system, doesn’t reveal the names of the banks on the list, but it does give the total assets of these institutions.

That number was $72 billion during the quarter, up sharply from $26.3 billion the previous quarter. The lion’s share of that figure included the Pasadena, Calif.-based mortgage lender IndyMac, which boasted assets of $32 billion before it collapsed in mid-July.

Nine banks have failed this year, primarily due to problems stemming from the real estate and mortage meltdown - and most economists predict that at least one more major financial institution will fail this year.

Odds are on that being either Wachovia or Washington Mutual, both of which have great exposure to the California real estate market.

Photo: Hand and empty pocket, originally uploaded by pedrosales.