‘Bankers’ Dirty Secret: $6 Billion Net Income Heist’

WASHINGTON — Reports from 4,587 commercial banks and savings institutions insured by the Federal Deposit Insurance Corporation (FDIC) reveal a staggering $6 billion net income decline in 2023. The financial heist, orchestrated by the nation’s top bankers, left the industry with a full-year net income of $256.9 billion, down from $262.9 billion in 2022.

According to the FDIC’s latest Quarterly Banking Profile, released on March 7, 2024, the banking industry’s net income decrease was driven by higher noninterest and provision expenses, as well as lower noninterest income. The shocking revelation has raised eyebrows among financial experts and lawmakers, who are now calling for increased oversight and regulation of the industry.

FDIC Chairman Martin J. Gruenberg warned of the dangers of ongoing economic and geopolitical uncertainty, continuing inflationary pressures, and emerging risks in some bank commercial real estate portfolios. “The banking industry has shown resilience after a period of liquidity stress in early 2023,” Gruenberg said. “However, these issues, together with funding and earnings pressures, will remain matters of ongoing supervisory attention by the FDIC.”

Community banks reported a $2 billion net income decline in 2023, with full-year pre-tax return-on-assets (ROA) decreasing by 17 basis points to 1.22 percent. The industry’s net interest margin fell two basis points from the prior quarter, while unrealized losses on securities declined to the lowest level since the second quarter of 2022.

The FDIC’s Quarterly Banking Profile also noted that loan growth in the fourth quarter of 2023 and domestic deposits increased for the first time in seven quarters. However, the noncurrent loan rate increased modestly, and the net charge-off rate increased and remains above pre-pandemic levels.

As the banking industry continues to grapple with these challenges, lawmakers and financial experts are urging increased transparency and accountability. “This report highlights the need for robust regulation and oversight of the banking industry,” said a senior congressional aide. “We must ensure that the banks are working for the people, not just their shareholders.”