Commercial banks and savings
institutions insured by the Federal Deposit Insurance Corporation (FDIC) have
just posted their 10th consecutive quarter of annual gains. In the fourth quarter of 2011 these banks
reported aggregate profits of $26.3 billion, a $4.9 billion increase over
profits in the fourth quarter of 2010. The FDIC reported the numbers on Tuesday,
stating that, as has been the case in the previous nine quarters, these
improvements were primarily driven by lower provisions for loan losses.
Sixty-three percent of the insured institutions
reported improvements in quarterly income compared to the year before and the
share of institutions reporting net losses for the quarter fell to 18.9 percent
from 27.1 percent in the fourth quarter of 2010. The average return on assets (ROA) rose to
0.76 percent from 0.64 percent.
Loan loss provisions were 40 percent
lower than a year earlier with $19.5 billion set aside in Q4 2011 compared to
$32.7 billion in Q4 2010. Net operating
revenue was $3.8 billion or 2.3 percent lower than a year earlier because of a
$4.4 billion or 7.4 percent drop in noninterest income.
FDIC Acting Chairman Martin J. Gruenberg said that "2011 represented
the second full year of improving performance by the banking system. Banks
reported higher positive aggregate earnings, the numbers of 'problem' banks and
failures declined, and loan balances increased in the final three quarters of
the year." He also noted that "insured institutions of all sizes
continued to make substantial progress in improving their profitability."
Charge-offs of uncollectable loans and well as noncurrent assets both
fell. Charge-offs declined from 40.2
percent from a year earlier to $25.4 billion and loans and leases 90+ days past
due or in nonaccrual status fell for the seventh straight quarter although
their numbers remain elevated compared to previous crises.
Other highlights from FDIC's Quarterly Banking Profile:
- Loan portfolios increased for the third
quarter. Commercial and industrial loans
increased by $62.8 billion; residential mortgage loans balances by $16.0 billion,
and credit card balances by $21.3 billion.
Loans and leases overall increased by $130.1 billion or 1.8 percent.
- Deposits in insured deposit accounts increased by
$249.7 billion or 2.9 percent during the 4th quarter. Three quarters of the increase - $191.2
billion - went into large noninterest-bearing transactional accounts with (temporarily)
unlimited insurance. The 10 largest
insured banks accounts for 73.6 percent of the growth in these balances.
- "Problem banks" diminished for the third consecutive
quarter. There are now 813 banks on FDIC's
"Problem List" compared to 844 the previous quarter and the smallest number
since the first quarter of 2010. Assets
in these banks declined from $339 billion to $319 billion.
- Eighteen insured institutions failed during the
fourth quarter and there were 92 failures for the entire year. In 2010 there were 157 FDIC banks that
- Balances in the Deposit Insurance Fund (DIF)
continued to increase, rising from $7.8 billion at the end of the third quarter
to $9.2 billion at year's end. The
contingent loss reserve which covers the cost of expected failures fell from
$7.2 billion to $6.5 billion during the quarter and estimated insured deposits
grew 3.1 percent.