Recent data from the FDIC revealed that American banks had $141.3 billion in net income last year, trailing $145.2 billion in 2006 to land the position of the second-best earnings year in U.S. history.
Fourth-quarter net income increased 37 percent year-over-year to $34.7 billion, a decrease from $37.6 billion in the third quarter, Bloomberg reports.
“It’s not unusual to see fourth quarter earnings come in below previous quarters,” the American Bankers Association said. “The real story is the 37 percent year-over-year gains, which is a significant uptick in a challenging economic environment. At the same time, low interest rates and other factors will continue to present challenges for banks’ top line revenue growth.”
Deposits increased by a record $313.1 billion in the fourth quarter, even after the expiration of the Transaction Account Guarantee program. Deposits in transaction accounts, which are used for municipal and business expenses, saw a 3.3 percent increase, according to Bloomberg.
“Deposits continue to flow into U.S. banks as customers seek the safety of our country’s institutions during a period of economic uncertainty,” the ABA said. “Businesses accelerated dividend payments in anticipation of higher tax rates in 2013, which no doubt contributed to elevated deposit rates. The steady increase in deposits is not a one-quarter event, but has been a noticeable trend since the recession began, reflecting continued confidence in our nation’s banking system.”
Additionally, total loan balances increased by 1.6 percent in the fourth quarter, led primarily by a 3.7 percent increase in commercial loans.
“There’s not a lot of great opportunities out there at these rates,” ABA Chief Economist James Chessen said, adding that “you’ll start to see more consumer lending,” Bloomberg reports.