The dip in net income reflected a slowdown in the lowering of banks' loan loss provisions to negative $5.2 billion.
Still, net interest income fell by $7.6 billion, or 5.6%, the sixth straight quarterly decline, and average net interest margin fell to 2.56%.
“Banks remained resilient in fourth quarter 2020, consistent with the improving economic outlook,” the FDIC says.
Banks' net interest margins plummet; poor business loan performance pushes up delinquency and charge-off rates.
Banks diverted earnings to reserves for "newly risky loans as the coronavirus tanked credit health and plunged the U.S. into a recession."
The fintech company began its bid for a banking charter over two years ago.
The formula for banks' lower profits: three rate cuts by the Fed, yield-curve inversions, and higher salary and benefits costs.
The company said the approval was “a significant step in [its] application process for a national bank charter.”
It was the first quarterly decline in net income since late 2018 but the industry generated nearly $100 billion in new loans.
Boosted by a 6% gain in net interest income, the industry's strong Q1 performance followed a record year in 2018.
Despite a strong fourth quarter, many U.S. bankers foresee a worsening economy and higher funding costs.
Quarterly U.S. bank earnings show balance sheets getting stronger; business loans still performing well.
