PROVIDENCE – Banks and credit unions continue to report major losses through the second quarter, although Rhode Island fares better than its national counterparts on certain metrics, according to the Federal Deposit Insurance Corp.’s quarterly banking profile released in August.
Nationally, federally insured institutions reported a combined $86 billion loss, or 69.7%, to their net income in the first and second quarters of 2020 compared with the first half of 2019, according to the FDIC.
Understanding Stroke: Essential Information for Immediate Action
Stroke is a leading cause of death and long-term disability in the United States, impacting…
Learn More
Rhode Island’s federally insured institutions have not fared much better earnings-wise, with a 67.5% aggregate income drop, or $66.2 million loss, compared with a year ago.
However, Rhode Island’s banks and credit unions scored better than national totals on certain performance and condition ratios. Yield on interest-earning assets for the first half of 2020, for example, was 3.66% among the Rhode Island institutions included, compared with 3.56% nationally.
Rhode Island institutions also boasted a stronger net interest margin at 3.02% compared with the 2.97% reported nationally. The net charge-off rate, or ratio of bad loans that will not be repaid compared to all loans and leases, was 0.42% among Rhode Island institutions and was 0.56% nationally.
One measurement by which Rhode Island performed worse than the national totals was the percentage of unprofitable institutions, which was 25% in the state compared with just 5.37% nationwide. However, Rhode Island data reflects only eight banks and credit unions, compared with the 5,066 nationally.
Other key metrics of national performance in the second quarter of 2020 compared with the prior year include:
- A $7.6 billion, or 5.4%, drop in net interest income driven by the losses by the three largest institutions.
- A $4.6 billion, or 6.9%, increase in noninterest income due to higher trading revenue and net gains on loan sales.
- A $7.2 billion, or 6.2%, increase in noninterest expenses, reflecting higher salaries and “goodwill impairment charges” from assets worth less than what they originally cost.
- An $884.6 billion, or 4.4%, increase in total assets, including the largest quarterly increase in securities holdings due to the growth of U.S. Treasury and mortgage-backed securities.
- A $33.9 billion, or .3%, bump in total loan and lease balances, led by commercial and industrial loan growth amid demand for the Paycheck Protection Program.
- A $1.2 trillion, or 7.5%, increase in total deposit balances driven by a rise in noninterest-bearing account balances that was partially offset by a decline in noninterest liabilities due to lower Federal Home Loan Bank advances.
Nancy Lavin is a staff writer for the PBN. Contact her at Lavin@PBN.com.
