Asset quality indicators continued to improve as insured banks and thriftsrncharged off $11.7 billion in uncollectible loans during the quarter, down $6.8rnbillion (37 percent) from a year earlier. The amount of noncurrent loans andrnleases – those 90 days or more past due or in nonaccrual status – fell by $14rnbillion (6.3 percent) during the quarter. The percentage of loans and leasesrnthat were noncurrent declined to 2.62 percent, the lowest level since the 2.35rnpercent posted at the end of the third quarter of 2008.</p

Net income for all of 2013 totaled $154.7 billion, an increase of $13.6rnbillion (9.6 percent) from 2012 and the ROA rose to 1.07 percent from 1.00rnpercent.  More than half of allrninstitutions (54.2 percent) reported higher net income in 2013, while only 7.8rnpercent were unprofitable, the lowest annual proportion of unprofitablerninstitutions since 2005.</p

During the fourth quarter there was an increase of $90.9 billion (1.2rnpercent) in loan balances with all loan categories growing during the quarterrnexcept one-to-four family residential real estate loans. Home equity loanrnbalances declined for a 19th consecutive quarter, falling by $6.9 billion (1.3rnpercent). Balances of other loans secured by one- to four-family residentialrnreal estate properties fell by $13 billion (0.7 percent), as the amount ofrnmortgage loans sold during the quarter exceeded by $29 billion the amount ofrnmortgage loans originated and intended for sale. For the 12 months throughrnDecember 31, total loan and lease balances were up by $197.3 billion (2.6rnpercent).</p

One- to four-family residential real estate loans originated for sale in Q4rn2013 dropped by 62 percent or $307.7 billion from the same quarter in 2012rnlargely due to the reduction in demand for refinancing as interest ratesrnincreased.  Noninterest income from thernsale, securitization and servicing of mortgages was $2.8 billion (34 percent)rnlower than a year ago. Realized gains on available-for-sale securities alsornwere lower than a year ago, as higher medium- and long-term interest ratesrnreduced the market values of fixed-rate securities. Banks reported $506 millionrnin pretax income from realized gains in the fourth quarter, a decline of $1rnbillion (66.6 percent) from a year ago.</p

Two FDIC insured institutions failed during the fourth quarter compared torneight a year earlier and there were 24 failures during 2013, down from 51 inrn2012.  FDIC’s problem bank list shrankrnfrom 515 banks to 467 during the fourth quarter putting it at about half the sizernit was when it peaked at 888 in the first quarter of 2011.  </p

The unaudited Deposit Insurance Fund (DIF) balance was at $47.2 billion atrnthe end of the fourth quarter compared to $40.8 billion at the end of the thirdrndue primarily to assessment income and a reduction in estimated losses fromrnfailed institution assets.  Estimatedrninsured deposits increased 0.7 percent, and the DIF reserve ratio – the fund’srnbalance as a percentage of estimated insured deposits – rose to 0.79 percent asrnof December 31 from 0.68 percent as of September 30. A year ago, the DIFrnreserve ratio was 0.44 percent. By law, the DIF must achieve a minimum reservernratio of 1.35 percent by 2020.

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