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The surge in first-quarter earnings follows the industry's most profitable year since 2006, a sign that many banks have put the 2008 financial crisis behind them. Still, last year's increase came largely because banks suffered fewer losses
-- not because they took in more money. The slow recovery, record-low interest rates and weak demand for loans left bank revenue mostly flat for the year. Banks are starting to take in more money this year. The industry posted a 3 percent increase in revenue from a year earlier. It was only the second time in the last five quarters that revenue rose, the FDIC said. And bank losses on loans declined in the January-March period to $21.8 billion
-- the lowest level in four years. Gruenberg said the overall financial health of the banking industry continues to show gradual improvement. So far this year, 24 banks have failed. That's far below the 92 banks that shuttered last year and the 157 that closed in 2010
-- the most for one year since the height of the savings and loan crisis in 1992. In the first quarter, fewer bank failures allowed the insurance fund to strengthen. The fund, which turned from deficit to positive in the second quarter of 2011, had a $15.3 billion balance as of March 31, according to the FDIC. That compares with $11.8 billion at the end of last year. The FDIC is backed by the government, and its deposits are guaranteed up to $250,000 per account. Apart from its deposit insurance fund, the agency also has tens of billions in loss reserves.
[Associated
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