Banks post most profitable year since 2006

Banks had a good year last year, posting their most profitable performance since 2006. 

Earnings increased to $26.3 billion in the final three months of 2011, as financial institutions experienced fewer losses, the Federal Deposit Insurance Corp. reported Tuesday.

Fourth-quarter earnings were $4.9 billion, or 23.1 percent higher than the same period a year ago, as almost two out of every three banks reported higher quarterly net income than a year ago. Only 18.9 percent were unprofitable, compared with 27.1 percent in fourth-quarter 2010.

For all of last year, earnings hit $119.5 billion, a 40.1 percent increase from 2010, as the industry showed signs of strength for the first time since the 2008 financial crisis. 

The sluggish economic recovery has held bank revenues mostly flat. 

During the quarter, 54 institutions were merged into other institutions and 18 insured institutions failed. 

The number of institutions on the FDIC’s “problem list” declined from 844 to 813 during the quarter. For the year, the 92 institutions failed and 198 were absorbed by mergers. 

Nearly all of the earnings — 83 percent — were at banks with assets of at least $10 billion, including Bank of America Corp., JPMorgan Chase, Citi and Wells Fargo.

The Quarterly Banking Profile provides the earliest comprehensive summary of financial results for all FDIC-insured institutions.