US bank earnings drop 7.3 percent in 4Q

WASHINGTON (AP) — U.S. banks' earnings dropped 7.3 percent in the fourth quarter from a year earlier as a few big banks had increased costs to settle legal cases and the industry had declines in income from the mortgage business.

The data issued today by the Federal Deposit Insurance Corp. showed a reversal of the trend of rising earnings as the industry has recovered from the financial crisis.

The FDIC reported that U.S. banks earned $36.9 billion in the October-December period, down from $39.8 billion a year ago.

Overall, growth in lending helped boost revenue at most banks. Sixty-one percent of banks reported an increase in profit in the fourth quarter from a year earlier, and only 9.4 percent of banks were unprofitable. But the gains were outweighed by the big banks' costs for settling cases related to sales of risky mortgage securities before the crisis and the mortgage income declines, the FDIC said.

Three of the biggest U.S. banks — JPMorgan Chase, Bank of America and Citigroup — together posted $4.4 billion in legal costs during the quarter.