WASHINGTON (

TheStreet

) -- The

Federal Deposit Insurance Corp.

on Wednesday reported an aggregate fourth-quarter profit of $21.7 billion for all U.S. banks and thrifts, improving from a net loss of $1.8 billion a year earlier, as credit costs declined.

The combined industry profit for all of 2010 was $87.5 billion compared to a net loss of $10.6 billion in 2009. This was the highest industry profit since 2007, when the industry earned $99.9 billion.

The largest four U.S. banks earned a combined $8.6 billion during the fourth quarter, improving from $4.1 billion a year earlier, as they reduced their provisions for loan loss reserves by a combined $9.1 billion.

For

Bank of America, NA

, the largest banking subsidiary of

Bank of America

(BAC) - Get Report

, fourth quarter net income was $1.3 billion, compared to $229 million a year earlier. The fourth-quarter loan loss provision was $2.5 billion, declining from $5.9 billion in the fourth quarter of 2009.

Citibank, NA

-- the main banking subsidiary of

Citigroup

(C) - Get Report

-- earned $1.5 billion during the fourth quarter, improving from a $524 million net loss in the fourth quarter of 2009. Citibank NA's fourth-quarter provision for loan declined to $1.7 billion, from $4.2 billion a year earlier.

For

JPMorgan Chase Bank, NA

, the largest subsidiary of

JPMorgan Chase

(JPM) - Get Report

, fourth-quarter net income was $2.6 billion, improving from $1.9 billion a year earlier. The bank's provision for loan losses was $2.9 billion in the fourth quarter, declining from $4.4 billion during the fourth quarter of 2009.

Wells Fargo Bank, NA

-- the main banking subsidiary of

Wells Fargo & Co.

(WFC) - Get Report

-- earned $3.2 billion during the fourth quarter, improving from a profit of $2.5 billion a year earlier. Wells Fargo Bank NA's fourth-quarter loan provision declined to $2.5 billion from $3.7 billion in the fourth quarter of 2009.

The FDIC said the industry's combined return on assets (ROA) for 2010 was 0.66%, which is still a far cry from the "normalized" ROA for each of 2004, 2005, and 2006. In 2007 the ROA for all U.S. banks and thrifts was 0.81%.

Asset quality continued to improve, as the FDIC said the industry's combined ratio of noncurrent assets - including nonaccrual loans, loans past due 90 days or more, and repossessed real estate - made up 3.11% of total assets as of December 31, compared to 3.25% the previous quarter and 3.36% a year earlier.

The 2010 ratio of net charge-offs to total loans was 2.54%, slightly higher than 2.52% the previous year, however, the reduced provisions and noncurrent asset ratios underscored the overall credit quality improvement.

The industry's capital build-up subsided a bit, as the combined Tier 1 leverage ratio was 8.90% as of December 31, compared to 8.99% the previous quarter and 8.62% at the end of 2009.

Despite the overall industry improvement, the FDIC said its "problem bank list" continued to grow, to 884 as of year-end, compared to 860 the previous quarter.

TheStreet

updated

Bank Watch List

of

undercapitalized

institutions Wednesday.

There were 157 bank failures during 2010 and so far in 2011, there have been 22 failures, including four

last Friday

.

All previous bank and thrift failures since the beginning of 2008 are detailed in

TheStreet's

interactive bank failure map:

Image placeholder title

The bank failure map is color-coded, with the states having the greatest number of failures highlighted in dark gray, and states with no failures in light green. By moving your mouse over a state you can see its combined 2008-2011 totals. Clicking on a state opens a detailed map pinpointing the locations and providing additional information for each bank failure.

RELATED STORIES:

Wells Fargo Rebound Eyed by Hedge Funds >>

More Banks, Thrifts Join Watch List >>

--

Written by Philip van Doorn in Jupiter, Fla.

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Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for TheStreet.com Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.