WASHINGTON — U.S. banks ended 2011 on a roll, a government regulator reported Tuesday, with profits up sharply from a year earlier and over the entire year.
The nation’s banks and thrifts posted a combined profit of $26.3 billion in the final three months of 2011, the Federal Deposit Insurance Corp. said in its Quarterly Banking Profile. That was up 23 percent over the final quarter of 2010.
For the entire year, the nation’s 7,357 banks and thrifts enjoyed a combined net profit of $119.5 billion. That was up almost 40 percent from 2010.
“The only reason that profits increased for the industry as a whole … is because of the very substantial reduction in loan-loss provisions,” said Bert Ely, a bank-sector analyst.
Loan-loss provisions are the sums banks must set aside to guard against bad loans. As the loan portfolios have improved, banks have had to set aside less money, and this helped allow banks to post outsize profits.
$13.1 billion
Decline in fourth-quarter loan-loss provisions for U.S. banks last year, compared with 2010; FDIC acting chairman Martin Gruenberg says that is driving bank profits
