WASHINGTON, March 7 Reuters The U.S. banking sector saw its profits drop by nearly half in the last quarter of 2024, as large firms began paying hefty fees to help recoup costs incurred by several bank failures last spring, the Federal Deposit Insurance Corporation reported Thursday.

Roughly 70 of the 43.9 decline in quarterly bank profits was due to specific, nonrecurring expenses at large banks, primarily a special assessment fee larger banks were ordered to pay to the FDIC to replenish its deposit insurance fund. In all of 2023, bank profits were down 2.3 to 257 billion, but remain above prepandemic levels, the FDIC said.

The FDIC directed banks to pay the fee to recoup billions of dollars in losses its insurance fund suffered following the failures of Silicon Valley Bank and two other larger firms.

Overall, the latest quarterly numbers from the FDIC painted a mixed picture for the banking industry. On the positive end, the FDIC said bank deposits were up 1.1 in the fourth quarter, the first increase in nearly two years. Also, unrealized losses on securities, which had weighed heavily on some bank balance sheets, declined 30.2 to its lowest level since the second quarter of 2022.

Net operating revenue for the banking sector exceeded 1 trillion for the first time since the FDIC began tracking the data, the agency said.

However, the agency also found that noncurrent loans had risen 0.86 and the net chargeoff rate, which is debt a bank anticipates it will never…