The amount money loaned by banks for construction and development fell 29.3% in the first quarter from the year-earlier period to reach just $295.51 billion, the Federal Deposit Insurance Corp. reported today in its Quarterly Banking Profile. The amount is by far the largest decrease in loans secured by real estate and marks a rough start to the year for the new homebuilding industry.

The report also said nearly 16% of all construction and development loans were non-current, or more than 90 days past due. That's an improvement of almost 1 percentage point from 2010's first quarter but remained by far the highest percentage of any category for non-current loans with the next highest percentage coming in at 9.6%. During the first three months of 2011, banks also charged off 3.7% of loans, an improvement of 1.5 percentage points.

The FDIC's list of problem institutions increased by four to 888, with the assets of these institutions increasing to $397 billion from $390 billion. Meanwhile, the number of institutions reporting financial results to drop 1.1% from 2010's fourth quarter to total 7,574. Meanwhile, During the quarter 56 banking institutions were absorbed through mergers, 26 institutions failed, and one new institution started reporting.

Overall, net income for the banking industry rose 66.5% to $29 billion, which was the best quarterly result since the April-June 2007 quarter. This was the seventh consecutive quarter during which earnings posted a year-over-year improvement. Just over 56% of institutions reported improved earnings and the number of unprofitable institutions fell to 15.4% from 19.3% a year ago.