Rich banks get richer

Crumbling bank facade

How are America's banks faring in the new consumer-aware regulatory environment?

Based on the Federal Deposit Insurance Corporation's first-quarter numbers, I'd sum it up in nine words: The rich get richer and the poor get poorer.

During the first three months of this year, the industry posted $29 billion in earnings, its best quarter since the economy tanked three years ago.

Good news for banks, right? Well, not all banks.

It turns out that, among the 7,574 federally insured banks out there, the richest 1.4% -- megabanks like Bank of America, Citigroup, JPMorgan Chase and Wells Fargo -- accounted for $24.4 billion of that $29 billion figure.

Not coincidentally, these fat cats also were the recipients of federal bailout cash and record-low interest rates.

And these are also the banks that offer savers some of the worst savings account and CD rates.

By contrast, community and regional banks -- where you and I are apt to find the best FDIC-insured investments -- continue to struggle.

The FDIC says 12 percent of all federally insured banks are still at risk of failure, the highest level in 18 years. It added four banks to the list in the first quarter, bringing to 888 the number of FDIC banks on life support.

Smaller banks, which depend heavily on commercial lending to keep the lights on, have been left holding the bag as businesses closed due to the recession.

During the first quarter, the reserves that FDIC banks set aside for possible loan defaults fell to $20.7 billion from $51.6 billion in the same quarter last year.

Overall revenue also declined 3.2 percent to $5.5 billion, just the second time in 27 years that the industry lost money from the same quarter the previous year.

It should be noted that the lion's share of that drop in revenue also belonged to the megabanks.

On a positive note, outright bank failures have slowed. Just 43 banks have failed this year, well off the pace of last year, when 157 banks folded.

FDIC chief Sheila Bair minimized the impact of financial reform on the sluggish numbers. "I think it's a broader problem with the economy," she said.

And she's probably right. Without some positive moves to create sustainable jobs and rebuild infrastructure on Main Street, most banks will struggle along with the rest of us to stay afloat.

Follow on Twitter.