FDIC Banks Again Report Improved Quarterly Profits

Commercial banks and savingsrninstitutions insured by the Federal Deposit Insurance Corporation (FDIC) havernjust posted their 10^th consecutive quarter of annual gains.  In the fourth quarter of 2011 these banksrnreported aggregate profits of $26.3 billion, a $4.9 billion increase overrnprofits in the fourth quarter of 2010.  The FDIC reported the numbers on Tuesday,rnstating that, as has been the case in the previous nine quarters, thesernimprovements were primarily driven by lower provisions for loan losses.</p

Sixty-three percent of the insured institutionsrnreported improvements in quarterly income compared to the year before and thernshare of institutions reporting net losses for the quarter fell to 18.9 percentrnfrom 27.1 percent in the fourth quarter of 2010.  The average return on assets (ROA) rose torn0.76 percent from 0.64 percent.</p

Loan loss provisions were 40 percentrnlower than a year earlier with $19.5 billion set aside in Q4 2011 compared torn$32.7 billion in Q4 2010.  Net operatingrnrevenue was $3.8 billion or 2.3 percent lower than a year earlier because of arn$4.4 billion or 7.4 percent drop in noninterest income.</p

FDIC Acting Chairman Martin J. Gruenberg said that “2011 representedrnthe second full year of improving performance by the banking system. Banksrnreported higher positive aggregate earnings, the numbers of ‘problem’ banks andrnfailures declined, and loan balances increased in the final three quarters ofrnthe year.” He also noted that “insured institutions of all sizesrncontinued to make substantial progress in improving their profitability.”</p

Charge-offs of uncollectable loans and well as noncurrent assets bothrnfell.  Charge-offs declined from 40.2rnpercent from a year earlier to $25.4 billion and loans and leases 90+ days pastrndue or in nonaccrual status fell for the seventh straight quarter althoughrntheir numbers remain elevated compared to previous crises.</p

Other highlights from FDIC’s Quarterly Banking Profile: </p<ul