The FDIC reported on February 26, 2014 that U.S. commercial banks and savings institutions that the agency insures stated that aggregate net income was $40.3 billion in 4th quarter 2013. This is up approximately 17% compared with 4th quarter 2012. Bank earnings have enjoyed a year-over-year increase for 17 of the last 18 quarters, which is good general news.
53% of reporting banks had year-over-year growth in quarterly earnings. Unprofitable banks now comprise just 12.2% of the total as of the 4th quarter 2013, down from 15% in the 4th quarter of 2012. The FDIC also stated that the number of unprofitable banks was reduced in number from 515 to 467 during the 4th quarter of 2013. This is just about half of the high of 888 at the end of the 1st quarter of 2011. Two FDIC-insured institutions failed in the 4th quarter of 2013, which is down from eight in the 4th quarter of 2012. For all of 2013, there were 24 bank failures, compared to 51 in 2012.
The value of 1-4 unit residential REOs held by banks declined from $6.79 billion in the 3rd quarter of 2013 to $6.64 billion in the 4th quarter, which is a reduction of 2.2%. This is the lowest level of REOs since the 3rd quarter of 2007. Even in good times, the FDIC insured institutions have about $2.5 billion in residential REO on their books.