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FDIC Quarterly

Last Updated: October 19, 2023

The FDIC Quarterly provides a comprehensive summary of the most current financial results for the banking industry, along with feature articles. These articles range from timely analysis of economic and banking trends at the national and regional level that may affect the risk exposure of FDIC-insured institutions to research on issues affecting the banking system and the development of regulatory policy. The FDIC Quarterly brings together data and analysis that were previously available through three retired publications -- the FDIC Outlook, the FDIC Banking Review, and the FYI: An Update on Emerging Issues in Banking. Past issues of these publications are archived under their original publication names.

FDIC Quarterly, 2023, Volume 17, Number 3 - PDF (PDF Help)

Quarterly Banking Profile: Second Quarter 2023
Net income for the 4,645 FDIC-insured commercial banks and savings institutions declined $9.0 billion (11.3 percent) from one quarter ago to $70.8 billion in second quarter 2023. Declines in noninterest income, reflecting the accounting treatment of the acquisition of three failed institutions, lower net interest income, and higher provision expense drove the decrease. Without the three failed-bank acquisitions in the past two quarters, net income would have been roughly flat from the prior quarter. Year-over-year net income increased $6.4 billion (9.9 percent), as growth in net interest income exceeded growth in provision expense and noninterest expense. The banking industry reported an average return on assets (ROA) of 1.21 percent in the second quarter, down from 1.36 percent in first quarter 2023 but up from 1.08 percent in second quarter 2022.

Community Bank Performance
Community banks—which represent 90 percent of insured institutions—reported quarterly net income of $7.1 billion in second quarter 2023, an increase of $236.2 million (3.4 percent) from one quarter ago. Higher noninterest income and lower losses on the sale of securities exceeded lower net interest income and higher noninterest expense. Less than half (42.5 percent) of all community banks reported higher net income compared with first quarter 2023. The share of unprofitable community banks rose slightly to 5.1 percent. The pretax return on assets (ROA) ratio rose 1 basis point from one quarter ago to 1.28 percent.

Insurance Fund Indicators
The Deposit Insurance Fund (DIF) balance increased by $897 million to $117.0 billion. The rise in the DIF was primarily driven by assessment income of $3.1 billion. Net investment income (including the effect of unrealized and realized gains and losses) added $0.3 billion. These gains were partially offset by additional provisions for insurance losses of $2.0 billion and operating expenses of $0.5 billion. One insured institution, First Republic Bank, failed during the second quarter at an estimated cost to the Fund of $15.6 billion. The DIF reserve ratio was 1.10 percent on June 30, 2023, down 1 basis point from the previous quarter and 13 basis points lower than the previous year.

Featured Article:

Banking Sector Performance During Two Periods of Sharply Higher Interest Rates: 2022 and 2004 to 2006 - PDF
Interest rates rose dramatically in 2022, causing an abrupt shift in banking conditions. The increase in the federal funds target rate in 2022 was the largest and fastest since the 1980s and followed an extended period of low interest rates. Intermediate and longer-term rates also rose but at a slower pace, causing the yield curve to rise and invert. Interest rates affect banks through earnings, lending, funding costs, and the fair value of assets. This article examines the increase in interest rates in 2022 and compares the resulting changes in banking outcomes with changes that occurred during 2004 to 2006 (2004 cycle), when interest rates rose by nearly the same magnitude.

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