FDIC: Bank income up 6.9% in 1Q

WASHINGTON – The Federal Deposit Insurance Corp. last week reported an aggregate net income of $39.8 billion of all FDIC-insured banks for this year’s first quarter, which represents a 6.9 percent increase from a year earlier.
The FDIC says the increased earnings is mainly attributable to a $4.3 billion – or 2.6 percent – rise in net operating revenue, which totaled $168.4 billion.
“The banking industry continued to show gradual but steady improvement during the quarter,” said FDIC Chairman Martin J. Gruenberg in a statement. “Revenue, earnings, and loan balances were up; asset quality continued to improve and the number of banks on the ‘Problem List’ declined to the lowest level in more than six years. Nearly two thirds of banks reported higher earnings than a year ago.”
Indeed, of the 6,419 insured institutions in the first quarter of 2014, 62.7 percent reported year-over-year growth in this year’s first quarter, according to the release. The number of banks that were unprofitable during the first quarter fell to 5.6 percent compared with 7.4 percent a year earlier.
The FDIC also reported community bank earnings increasing 16 percent to $4.9 billion.
“Community banks reported improved performance during the quarter that outpaced the overall industry,” Gruenberg said. “Their earnings were up significantly from a year ago and their loan growth was appreciably higher than the rest of the industry.”
But the chairman also warned against the current interest-rate environment, which he says “remains challenging for banks.” Revenue growth is subdued, he added, and net interest margins have continued to decline.
“Many institutions have responded by reaching for yield, which is a matter of ongoing supervisory attention,” he said.
The average net interest margin dropped to 3 percent in the first quarter from 3.1 percent in the fourth quarter of last year, which was .04 percent less than it was in the first quarter of last year.
Other first quarter highlights include continued improvement in asset quality indicators, a slight increase in loan growth and a $2.5 billion increase to the Deposit Insurance Fund, which totaled $65.3 billion.

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