WASHINGTON, May 29 (Reuters) - The U.S. banking industry reported earnings of $40.3 billion during the first quarter of 2013, in part due to one-time changes in income and expenses at big banks, according to data released on Wednesday by the Federal Deposit Insurance Corp.
Bank earnings during the quarter were up 15.8 percent from the same period in 2012 and represented an all-time quarterly high, the FDIC said, though the previous high mark was when the industry was smaller in terms of total assets.
A reduction in expenses for legal costs and proceeds from a settlement boosted earnings during the quarter, the FDIC said.
Banks also reduced to a six-year low the amount they set aside in case of losses on loans, the FDIC said.
“We saw improvement in asset quality indicators over the quarter, a continued increase in the number of profitable institutions, and further declines in the number of problem banks and bank failures,” FDIC Chairman Martin Gruenberg said in a statement.
“However, tighter net interest margins and slow loan growth create an incentive for institutions to reach for yield, which is a matter of ongoing supervisory attention.”
Net operating revenue during the first quarter was $170.6 billion, up $2.7 billion, or 1.6 percent, from a year earlier, the FDIC said.
The number of problem banks fell during the quarter, and four FDIC-insured banks failed, the smallest number of failures since the second quarter of 2008, the agency said. (Reporting By Emily Stephenson; Editing by Andrea Ricci)