While the number of undercapitalized U.S. banks and thrifts plateaued in the second quarter, the "problem" bank list per the Federal Deposit Insurance Corp. continued to decline.

The FDIC reported 82 "problem" banks and thrifts as of June 30, down from 92 at March 31 and representing the lowest total in more than a decade. The FDIC defines "problem" institutions as those "with financial, operational or managerial weaknesses that threaten their continued financial viability."

"Problem" assets decreased to $54.4 billion from $56.4 billion at March 31. In the prior quarter, those assets had risen sharply; Deutsche Bank AG unit Deutsche Bank Trust Co. Americas, with more than $40 billion in assets, was rumored to be the primary cause of the increase.

Ten banking institutions were considered undercapitalized at June 30, matching the March 31 tally and down from 37 three years ago.

Two of the undercapitalized banks — Little Rock, Ark.-based One Bank & Trust NA and Chatsworth, Ill.-based Citizens Bank of Chatsworth — were acquired after June 30. One Bank & Trust was acquired by Paragould, Ark.-based First Paragould Bankshares Inc. on Aug. 1. Citizens Bank merged with newly formed, Westmont, Ill.-based CBC Financial Inc. on July 2. Citizens Bank, which was a second-quarter entry to the undercapitalized bank list, survived the merger and became a wholly owned subsidiary of CBC Financial.

Newark, N.J.-based City National Bank of New Jersey also fell to undercapitalized status in the second quarter. In large part because of a spike in its loan loss provision, City National Bank reported a $4.9 million loss in the second quarter. All four of the institution's regulatory capital ratios are in undercapitalized territory.

Rogersville, Tenn.-based Civis Bank is operating with a supervisory prompt corrective action directive, which went into effect June 28. Based on March 31 data, the FDIC classified the bank as "significantly undercapitalized." In the second quarter, Civis Bank lost $130,000, but its regulatory capital ratios improved slightly.

Orange City, Fla.-based Pinnacle Bank and Bend, Ore.-based High Desert Bank dropped off the undercapitalized list. Pinnacle Bank received an equity infusion in the second quarter, substantially boosting its regulatory capital. In June, Bend, Ore.-based Mid Oregon FCU acquired substantially all the assets and liabilities of High Desert Bank.

In the third quarter, at least one institution in addition to Citizens Bank likely will exit the undercapitalized list. Fort Walton Beach, Fla.-based Beach Community Bank was recapitalized in July. In a private placement, the bank raised gross proceeds of approximately $100 million.

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