Income rises for banks in second quarter, says FDIC

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Net income increased 4.1 percent for banks in second quarter, year over year, the Federal Deposit Insurance Corporation (FDIC) reported.

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Specifically, aggregate net income totaled $62.6 billion in the second quarter, an increase of $2.5 billion. The increase is attributable to a $4.9 billion increase in net interest income. Financial results for second quarter 2019 are included in the FDIC’s latest Quarterly Banking Profile released today.

“The banking industry reported another positive quarter,” FDIC Chair Jelena McWilliams said. “Quarterly net income expanded due to higher net interest income, loan growth increased, asset quality indicators showed modest improvement, and the number of ‘problem banks’ continued to decline. Community banks also reported another positive quarter. Net income at community banks benefited from higher net operating revenue, and the annual rate of loan growth at community banks was stronger than the overall industry.”

Net income jumped 8.1 percent for community banks reported to $6.9 billion in second quarter. Growth in net interest income, noninterest income, and securities sales drove the increase in profitability.

“With the recent lowering of short-term interest rates and inversion of the yield curve in the second quarter, new challenges for banks in lending and funding may emerge. Therefore, banks need to maintain rigorous underwriting standards and prudent risk management in order to support lending through the economic cycle,” McWilliams said.

Also, total loan and lease balances rose 4.5 percent over the past 12 months. Commercial and industrial loans registered the largest increase. In addition, the number of problem banks fell from 59 to 56 during the second quarter, the lowest since first quarter 2007. Finally, the Deposit Insurance Fund (DIF) balance increased by $2.6 billion from the previous quarter to $107.4 billion.

Five new banks opened in the second quarter while 60 institutions were absorbed through merger transactions, and one institution failed.

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