FDIC Institutions Report Increased Earnings

Institutions insured by the ""Federal Deposit Insurance Corporation (FDIC)"":http://www.fdic.gov/ recorded their second-highest annual earnings ever in 2012, according to the ""FDIC's Quarterly Banking Profile"":http://www2.fdic.gov/qbp/2012dec/qbp.pdf for the fourth quarter of 2012. High noninterest income and declining loan loss provisions contributed to the increase, according to the FDIC.

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Net income for all FDIC-insured institutions over the year was $141.3 billion, a 19.3 percent increase from net income recorded in 2011.

The factor contributing most to this increase was a 24.9 percent reduction in loan loss provisions, according to the FDIC. Rising noninterest income--up 8 percent from 2011--also contributed to increased earnings in 2012.

Earnings in the fourth quarter alone were 36.9 percent higher than their year-ago levels. Total fourth-quarter earnings reached $34.7 billion for the fourth quarter.

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In fact, 60 percent of the 7,083 institutions insured by the FDIC reported a year-over-year increase in earnings in the fourth quarter.

Fourteen percent reported losses in the fourth quarter, down from 20 percent in the fourth quarter of 2011.

Average return on assets at the institutions is also up from last year, now standing at 0.97 percent, up from 0.73 percent a year ago.

Increased gains on loan sales, rising trading revenues, and diminishing losses on foreclosure sales all contributed to the rise in noninterest income in the fourth quarter, according to the FDIC.

While more institutions added to their reserves than reduced them in the fourth quarter, total reserves at FDIC institutions declined by $5 billion in the fourth quarter, marking the 11th consecutive quarter of reserve declines at FDIC banks.

At the same time, a little more than half--53.6 percent--of FDIC-insured banks lowered their loss provisions. The $15.1 billion recorded in the fourth quarter is 24.6 percent lower than the amount recorded a year ago and marks the 13th consecutive quarter of loss provision declines.

Delinquencies at FDIC-insured institutions are declining. The number of loans 90 or more days past due fell 5.5 percent in the fourth quarter. At the end of the year, 3.6 percent of loans held by the institutions were noncurrent, down from 2.86 percent a year earlier.

The total number of institutions insured by the FDIC decreased from 7,181 to 7,083 in the fourth quarter as 88 banks merged with others and eight failed.