This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Banks Earn $100 Billion Post-Crisis Profit

NEW YORK ( TheStreet) -- U.S. banks and thrifts earned $26.3 billion during the fourth quarter and $119.5 billion in earnings for 2011, the industry's best annual performance since 2006, according to a Federal Deposit Insurance Corp. statement issued Tuesday

When combined, U.S. banks and savings and loan associations earned $145.2 billion.

Of course, at this point in the credit cycle, the release of loan loss reserves continues to pad earnings. The 19 commercial banks (not holding companies) with total assets of $100 billion as of Dec. 30 saw their allowances for loan losses decline by $4.9 billion during the fourth quarter, according to data provided by HighlineFI, directly boosting bottom-line results.

For all of 2011, the group of 19 released $28.3 billion in reserves.

  • Citibank, NA -- the main banking subsidiary of Citigroup (C - Get Report) -- saw its allowance for loan losses decline by $8.4 billion during 2011, adjusting for the merger of Citibank (South Dakota) N.A. into Citibank, NA, on July 1. Citibank, NA had $24.7 billion in loan loss reserves as of Dec. 30.
  • Bank of America (BAC - Get Report) subsidiary FIA Card Services, NA released $7.4 billion in loan loss reserves during 2011. Meanwhile, the company's larger subsidiary Bank of America, NA, released only $542.5 million in reserves during 2011, as the subsidiary was saddled with problem mortgage loans.
  • Wells Fargo Bank, NA -- the main banking subsidiary of Wells Fargo (WFC - Get Report) -- released $3.3 billion in reserves. The holding company's returns on average assets (ROA) have ranged from 1.11% to 1.27% over the past five quarters, for the steadiest and strongest performance among the "big four" U.S. bank holding companies.
  • JPMorgan Chase's (JPM - Get Report) main banking subsidiary JPMorgan Chase Bank, NA, released only $928 million in reserves during 2011. The company's smaller Chase Bank USA, NA subsidiary saw its allowance for loan losses declined by $2.4 billion during 2011.

The FDIC said that the industry's earnings posted their 10th straight year-over-year gain, and that "almost two out of every three banks (63.2 percent) reported higher quarterly net income than a year ago, and only 18.9 percent were unprofitable, compared with 27.1 percent in fourth quarter 2010."

The industry's ROA was 0.76% during the fourth-quarter, increasing from 0.64% a year earlier.

Industry revenue continued to show weakness, which was no surprise, with the Federal Reserve in the fourth quarter implementing rules required by the Durbin Amendment to the Dodd Frank Wall Street Reform and Consumer Protection Act, which set a cap on interchange fees large banks charge merchants to process debit card purchases.

The aggregate fourth-quarter noninterest income for all U.S. banks and thrifts totaled $54.9 billion, declining 7% from a year earlier. Meanwhile, net interest income rose 1% to $107.1 billion in the fourth quarter.

The aggregate net interest margin -- the difference between a bank's average yield on loans and investments and its average cost for deposits and borrowings -- continued to be pressured in the prolonged low-rate environment, narrowing to 3.57% during the fourth quarter, from 3.71% a year earlier.

Asset quality continued to improve for a seventh-straight quarter, with noncurrent assets and repossessed real estate making up 2.55% of total assets as of Dec. 30, compared to 3.11% at the end of 2010.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
BAC $15.42 0.06%
C $51.19 -0.37%
JPM $59.55 -0.10%
WFC $54.50 -0.07%
AAPL $124.24 0.70%


DOW 17,678.23 -40.31 -0.23%
S&P 500 2,056.15 -4.90 -0.24%
NASDAQ 4,863.3620 -13.1570 -0.27%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs