Q4 Bank Profits up 36.9 Percent from Previous Year

by devteam February 27th, 2013 | Share

Federal Deposit Insurance Corporationrn(FDIC) insured commercial banks and savings institutions posted an aggregaternnet income of $34.7 billion in the fourth quarter of 2012.  This was a $9.3 billion or a 36.9 percent improvement</bfrom profits reported in the fourth quarter of 2011.  FDIC reports that this is the 14th</supconsecutive quarter that those aggregate profits have increased on an annualrnbasis.</p

Annual improvements in quarterly net incomernwere reported by 60 percent of all institutions while only 14 percent reportedrnnet losses.  The average return on assetsrn(ROA) rose to 0.97 percent from 0.73 percent a year ago.</p

Fourth quarter net operating revenue (net interest income plus totalrnnoninterest income) totaled $169 billion, an increase of $7.3 billion (4.5rnpercent) from a year earlier, as gains from loan sales rose by $2.4 billion andrntrading income increased by $1.9 billion. Net interest income was $2.7 billionrn(2.5 percent) lower than in the fourth quarter of 2011, as the average netrninterest margin fell to a five-year low.</p

Thernannual improvement in earnings was fueled by increased noninterestrnincome and lower provisions for loan losses. rnFor the full year, industry earnings totaled $141.3 billion – a 19.3rnpercent improvement over 2011 and the second-highest ever reported by thernindustry after the $145.2 billion earned in 2006.</p

Loan performance continued to improve; noncurrent loans and leases fell for thern11th consecutive quarter and were at the lowest percentage in fourrnyears.  The 30-89 day delinquency raternacross all insured institutions was 0.70 percent for non-farm residentialrnloans, 0.92 for home equity loans, 0.63 percent for multi-family residentialrnloans, and 2.28 percent for “other” 1-4 family residential loans. Insured banksrnand thrifts charged off $18.6 billion in uncollectible loans in the quarter, arn27.4 percent annual improvement.</p

“The improving trend that began more than three years ago gainedrnfurther ground in the fourth quarter,” said FDIC Chairman Martin J.rnGruenberg. “Balances of troubled loans declined, earnings rose from a yearrnago, and more institutions of all sizes showed improved performance.”</p

Loan balances rose by $118.2 billion (1.6 percent) the sixth quarterlyrnincrease in seven quarters.  Loansrnsecured by nonfarm nonresidential real estate properties grew by $14.6 billionrn(1.4 percent) but home equity lines of credit declined by $12.6 billion (2.2rnpercent), and real estate construction and development loans fell by $6.6rnbillion (3.1 percent).</p

Thernnumber of institutions on the FDIC’s “Problem List” declined for arnseventh consecutive quarter, from 694 to 651.   The number of problem banks reached a high ofrn888 at the end of the first quarter of 2011.

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About the Author


Steven A Feinberg (@CPAsteve) of Appletree Business Services LLC, is a PASBA member accountant located in Londonderry, New Hampshire.

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