U.S. Banks Earn $40.3 Billion During Fourth Quarter

NEW YORK (TheStreet) -- The health of the U.S. banking industry is continuing to improve, although the hostile interest rate environment is placing a drag on operating revenue.

The Federal Deposit Insurance Corp. on Wednesday said U.S. banks earned $40.3 billion during the fourth quarter, increasing from $36.0 billion in the third quarter and from $34.4 billion during the fourth quarter of 2012.

The sequential improvement mainly reflected a rough third quarter for JPMorgan Chase Bank, NA (the main subsidiary of JPMorgan (JPM)), which earned only $401 million, when JPM at the holding company level saw its pretax earnings lowered by $9.15 billion from provisions for litigation expenses. That was preparation for the holding company's $17.5 billion in fourth-quarter residential mortgage-backed securities settlements with government authorities and private investors.

JPMorgan Chase, NA bounced back with fourth-quarter earnings of $4.8 billion.

The FDIC said industry earnings had risen year-over-year during 17 out of the last 18 quarters, with the third quarter being the exception, because of the weak quarter for JPMorgan Chase, NA, although the regulator didn't mention that bank by name.

The year-over-year improvement in the industry's aggregate earnings "was mainly attributable to an $8.1 billion decline in loan loss provisions," the FDIC said. A loan loss provision is the amount a bank sets aside each quarter to cover anticipated loan losses. A negative provision means the bank transferred money from reserves. Here's how those numbers stack up for the nation's four largest banks, according to data provided by Thomson Reuters Bank Insight:

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