FDIC-insured institutions push 4Q profits 12%

Federal Deposit Insurance Corp.-insured commercial banks and savings institutions improved aggregate net income nearly 12 percent to $40.8 billion in the fourth quarter, up from $36.5 billion a year earlier.

The results contributed to full-year earnings of $163.7 billion, 7.5 percent higher than 2014, according to news release.

Of the 6,182 FDIC-insured institutions, 56.6 percent reported higher fourth-quarter earnings compared to a year earlier. Unprofitable banks dropped to 9.1 percent, the lowest level for a fourth quarter since 1996. The rate was 9.9 percent in fourth-quarter 2014.

The FDIC attributed the earnings increase to a $6.8 billion improvement in net operating revenue, $2.7 billion decline in noninterest expenses and a drop in litigation costs.

FDIC Chairman Martin Gruenberg tempered the results, saying banks are operating in a “challenging environment.”

“Revenue growth continues to be held back by narrow interest margins. Many institutions are reaching for yield, given the competition for borrowers and low interest rates. And there are signs of growing credit risk, particularly among loans related to energy and agriculture,” he said in the release.