FDIC Banks Again Report Improved Quarterly Profits

by devteam February 28th, 2012 | Share

Commercial banks and savingsrninstitutions insured by the Federal Deposit Insurance Corporation (FDIC) havernjust posted their 10th 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

  • Loan portfolios increased for the thirdrnquarter.  Commercial and industrial loansrnincreased by $62.8 billion; residential mortgage loans balances by $16.0 billion,rnand credit card balances by $21.3 billion. rnLoans and leases overall increased by $130.1 billion or 1.8 percent.
  • Deposits in insured deposit accounts increased byrn$249.7 billion or 2.9 percent during the 4th quarter.  Three quarters of the increase – $191.2rnbillion – went into large noninterest-bearing transactional accounts with (temporarily)rnunlimited insurance.  The 10 largestrninsured banks accounts for 73.6 percent of the growth in these balances.
  • “Problem banks” diminished for the third consecutivernquarter.  There are now 813 banks on FDIC’srn”Problem List” compared to 844 the previous quarter and the smallest numberrnsince the first quarter of 2010.  Assetsrnin these banks declined from $339 billion to $319 billion.
  • Eighteen insured institutions failed during thernfourth quarter and there were 92 failures for the entire year.  In 2010 there were 157 FDIC banks thatrnfailed.
  • Balances in the Deposit Insurance Fund (DIF)rncontinued to increase, rising from $7.8 billion at the end of the third quarterrnto $9.2 billion at year’s end.  Therncontingent loss reserve which covers the cost of expected failures fell fromrn$7.2 billion to $6.5 billion during the quarter and estimated insured depositsrngrew 3.1 percent.</li</ul<p<br /rnrnrnrnrnrnrnrnrnrnrnrn

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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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