FDIC: Bank Profits Rise in Fourth Quarter, Full Year

FDIC-insured banks and savings institutions earned $63.9 billion in the fourth quarter of 2021, a 7.4% increase from the year prior, and full-year net income increased 89.7% to $279.1 billion, the FDIC reported today in its Quarterly Banking Profile. FDIC Acting Chairman Martin Gruenberg said that “with strong capital and liquidity levels to support lending and protect against potential losses, the banking industry continued to meet the country’s credit needs while navigating the economic effects of the pandemic.”

The average net interest margin was unchanged from the prior quarter at 2.56%, six basis points higher than the recent record low in the second quarter of 2021, but was down 12 basis points from the previous year. Net interest income increased 4.4% from fourth quarter 2020 to total $137.2 billion. Noninterest income increased 3.4% year-on-year to $72.7 billion, due in large part to higher trading revenue and investment banking fees. Community banks reported a 7.1% increase in fourth-quarter net income year-on-year, the FDIC said.

“The FDIC’s latest quarterly report on the health of America’s banks shows that the industry ended the year on firm footing as the economy continued its return to normalcy. Deposit growth remained strong while credit availability and demand continued on their promising upward trajectory,” noted American Bankers Association Chief Economist Sayee Srinivasan. He added that “while deposits continued to increase, we are beginning to see consumer spending and business investment return to more typical patterns. The fourth quarter was the first since the second quarter of 2019 where loan growth exceeded deposit growth.”

The average net charge off rate declined by 21 basis points year-on-year to 0.21%, and the noncurrent loan rate declined five basis points to 0.89%. During the fourth quarter, no new banks were added and no banks failed. The number of banks on the FDIC’s problem bank list declined by two to 44, the lowest level on record.