US bank earnings drop 7.3 percent in 4Q; declines in mortgage income were a factor

Markets Associated Press

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

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The data issued Tuesday 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 in the final quarter of 2013.

Overall, growth in lending helped boost revenues at most banks. But that was 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.