The number of problem U.S. banks and thrifts rose to 305 in the first quarter of 2009, up 21 percent from 252 in the prior quarter, marking the highest number since 1994, the Federal Deposit Insurance Corp said on Wednesday.

The sharp rise came as banks face mounting credit losses for home mortgages, commercial real estate and consumer credit cards amid the economic recession. The FDIC also said its deposit insurance fund fell to $13 billion in the first quarter, compared to $17.3 billion at the end of 2008.

Bank failures continued to mount and they will continue to do so, FDIC Chairman Sheila Bair told reporters.

The problem banks together held assets totaling $220 billion in the first quarter, up from $159.4 billion at the end of 2008, the FDIC said.

The agency does not release names of the problem banks and compiles the list from regulators' confidential assessments of banks' capital adequacy, asset quality, management, earnings and liquidity.

The rise in problem banks is reflected in the growing number of U.S. bank failures in 2009, which stood at 36 last Friday. If that pace continues, more than 100 FDIC-insured banks could fail this year after 25 in 2008 and just three in 2007.

(Reporting by John Poirier, editing by Gerald E. McCormick)