RJ and Makay

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A fourth quarter surge in U.S. bank earnings at the end of last year propelled the industry to its highest level of profitability in five years, according to the Federal Deposit Insurance Corp. (FDIC).  The strong performance along with fewer distressed banks indicates that the sector has significantly healed since the 2008 financial crisis.  Bank earnings grew in the October-December 2011 period to $26.3 billion, a 23% gain from Q4 2010.

After three years of repeated small bank failures across the U.S., bank troubles seem to be easing.  The new development is expected to increase the insurance fund, which protects depositors, into positive territory next month.

In the first quarter of this year, only four lenders were added to the government’s list of so called “problem banks,” bringing the total to 888, the Federal Deposit Insurance Corporation (FDIC) reported on Tuesday.  It represents the smallest quarterly increase since the beginning of the financial crises and is a clear sign that the banking industry is regaining a healthy footing.