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Q4 Bank Profits up 36.9 Percent from Previous Year
Federal Deposit Insurance Corporation
(FDIC) insured commercial banks and savings institutions posted an aggregate
net income of $34.7 billion in the fourth quarter of 2012. This was a $9.3 billion or a 36.9 percent improvement
from profits reported in the fourth quarter of 2011. FDIC reports that this is the 14th
consecutive quarter that those aggregate profits have increased on an annual
Annual improvements in quarterly net income
were reported by 60 percent of all institutions while only 14 percent reported
net losses. The average return on assets
(ROA) rose to 0.97 percent from 0.73 percent a year ago.
Fourth quarter net operating revenue (net interest income plus total
noninterest income) totaled $169 billion, an increase of $7.3 billion (4.5
percent) from a year earlier, as gains from loan sales rose by $2.4 billion and
trading income increased by $1.9 billion. Net interest income was $2.7 billion
(2.5 percent) lower than in the fourth quarter of 2011, as the average net
interest margin fell to a five-year low.
annual improvement in earnings was fueled by increased noninterest
income and lower provisions for loan losses.
For the full year, industry earnings totaled $141.3 billion - a 19.3
percent improvement over 2011 and the second-highest ever reported by the
industry after the $145.2 billion earned in 2006.
Loan performance continued to improve; noncurrent loans and leases fell for the
11th consecutive quarter and were at the lowest percentage in four
years. The 30-89 day delinquency rate
across all insured institutions was 0.70 percent for non-farm residential
loans, 0.92 for home equity loans, 0.63 percent for multi-family residential
loans, and 2.28 percent for "other" 1-4 family residential loans. Insured banks
and thrifts charged off $18.6 billion in uncollectible loans in the quarter, a
27.4 percent annual improvement.
"The improving trend that began more than three years ago gained
further ground in the fourth quarter," said FDIC Chairman Martin J.
Gruenberg. "Balances of troubled loans declined, earnings rose from a year
ago, and more institutions of all sizes showed improved performance."
Loan balances rose by $118.2 billion (1.6 percent) the sixth quarterly
increase in seven quarters. Loans
secured by nonfarm nonresidential real estate properties grew by $14.6 billion
(1.4 percent) but home equity lines of credit declined by $12.6 billion (2.2
percent), and real estate construction and development loans fell by $6.6
billion (3.1 percent).
number of institutions on the FDIC's "Problem List" declined for a
seventh consecutive quarter, from 694 to 651. The number of problem banks reached a high of
888 at the end of the first quarter of 2011.
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