FDIC-insured banks report $256.9B in income for 2023

On Thursday, the FDIC reported its commercial banks and savings institutions saw a net income of $256.9 billion, down $6 billion from 2022, but still above the levels reported prior to the pandemic.

In its latest Quarterly Banking Profile, the federal agency said its 4,587 banks and savings institutions saw a fourth quarter 2023 net income of $38.4 billion, down 43.9 percent from the prior quarter. Non-recurring, noninterest expenses at large banks drove the decrease in quarterly earnings, the agency said. Additionally, higher provision expenses and lower noninterest income contributed to the decline.

The agency said an estimated 70 percent of the decrease in net income was caused by specific, nonrecurring, noninterest expenses at large banks, including special assessment, goodwill impairment and legal, reorganization or other one-time costs.

“The banking industry has shown resilience after a period of liquidity stress in early 2023,” FDIC Chairman Martin J. Gruenberg said. “Full-year net income remained high, overall asset quality metrics were favorable, and the industry’s liquidity was stable. However, ongoing economic and geopolitical uncertainty, continuing inflationary pressures, volatility in market interest rates, and emerging risks in some bank commercial real estate portfolios pose significant downside risks to the banking industry.”

The agency said community banks reported full-year 2023 net income of $26.6 billion, down $2 billion from the prior year, a decline of more than 7 percent. Additionally, community bank net income declined in the fourth quarter to $5.9 billion – a decline of $650.2 million from the third quarter of 2023, or 9.9 percent. Higher noninterest and provision expense drove the decline, the FDIC said. Net operating revenue increase over the previous quarter on higher net interest income.

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