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FDIC Quarterly Banking Profile

ALL INSTITUTIONS PERFORMANCE
SECOND QUARTER 2019

Notes to Users

  • Net Income Rises 4.1 Percent to $62.6 Billion on Higher Net Interest Income
  • Net Interest Margin Remains Stable at 3.39 Percent
  • Total Loan and Lease Balances Expand 4.5 Percent From 12 Months Ago
  • Noncurrent Rate Improves and Net Charge-Off Rate Remains Stable
  • Five New Banks Are Added in Second Quarter 2019
  • Net Income Rises 4.1 Percent to $62.6 Billion on Higher Net Interest Income
    During the three months ended June 30, quarterly net income for the 5,303 FDIC-insured commercial banks and savings institutions totaled $62.6 billion, an increase of $2.5 billion (4.1 percent) from a year ago. Improvement in quarterly net income was attributable to higher net interest income and an increase in realized securities gains. Almost 60 percent of all banks reported annual increases in net income from the year-ago quarter, while less than 4 percent of banks were unprofitable during the second quarter.1 The average return on assets increased to 1.38 percent from 1.37 percent in second quarter 2018.

    Net Interest Income Expands 3.7 Percent From a Year Earlier
    Net interest income of $139 billion increased by $4.9 billion (3.7 percent) from a year earlier, the slowest year-over-year growth rate since fourth quarter 2015. Slightly more than three-quarters of all banks (75.1 percent) reported an increase in net interest income from second quarter 2018. Net interest margin for the banking industry was 3.39 percent during the quarter, up slightly from 3.38 percent a year ago but below a recent high of 3.48 percent in fourth quarter 2018. Since year-end 2018, the average yield on earning assets rose by 1 basis point, while the average cost of funding increased by 11 basis points. During this period, the largest increase in the average cost of funding was among banks with assets from $1 billion to $10 billion.

    Loan-Loss Provisions Increase More Than 9 Percent From Second Quarter 2018
    Banks set aside $12.8 billion in loan-loss provisions during the second quarter, an increase of $1.1 billion (9.3 percent) from a year earlier. More than one-third of all banks (36.1 percent) reported year-over-year increases in loan-loss provisions. Loan-loss provisions as a percentage of net operating revenue increased from 5.80 percent in second quarter 2018 to 6.25 percent.

    Noninterest Income Falls 2.7 Percent From a Year Earlier
    Noninterest income fell by $1.8 billion (2.7 percent) from 12 months ago, although less than half of all banks (41 percent) reported declines. The overall decline in noninterest income was driven primarily by servicing fees, which fell by $3.1 billion from a year ago to negative $332.7 million, and investment banking fees, which declined by $533.5 million (16.1 percent). Increases in all other noninterest income (up $1.2 billion, or 3.8 percent) and trading revenue (up $742.5 million, or 9.8 percent) helped offset the decline in noninterest income during the year.

    Noninterest Expense Increases From Second Quarter 2018
    Noninterest expense rose by $1.6 billion (1.4 percent) from a year ago. The increase was widespread with 75.3 percent of all banks contributing to the growth. Salary and employee benefits rose by $1.8 billion (3.2 percent) from a year ago, as average assets per employee increased from $8.4 million to $8.8 million.

    Net Charge-Offs Rise 9.3 Percent From a Year Ago
    Banks charged off $12.8 billion in uncollectable loans during the second quarter, up $1.1 billion (9.3 percent) from a year ago. The overall increase in net charge-offs was led by credit card balances (up $669.4 million, or 8.3 percent) and commercial and industrial loans (up $368.9 million, or 25.2 percent). The average net charge-off rate increased modestly from 0.48 percent in second quarter 2018 to 0.50 percent. The net charge-off rate for commercial and industrial loans rose 5 basis points from a year ago to 0.33 percent, while the net charge-off rate for credit cards rose by 12 basis points from a year ago to 4.03 percent, surpassing the 4 percent level for the first time since second quarter 2012.

    Noncurrent Loan Rate Improves to 0.93 Percent
    Noncurrent loan balances (90 days or more past due or in nonaccrual status) declined by $4.9 billion (4.8 percent) from first quarter 2019. Slightly more than half of all banks (50.6 percent) reported declines in noncurrent loan balances. The quarter-over-quarter improvement was reflected in residential mortgages, which fell by $2.1 billion (5 percent), and credit card balances, which declined by $1.1 billion (8.7 percent). The average noncurrent rate declined by 6 basis points from the previous quarter to 0.93 percent.

    Loan-Loss Reserves Decline Modestly From the Previous Quarter
    Loan-loss reserves totaled $124.9 billion at the end of second quarter, down $292.5 million (0.2 percent) from the first quarter. Just over one-quarter of all banks (26.3 percent) reported quarterly declines in loan-loss reserves. At banks that itemize their loan-loss reserves, which are banks with total assets of $1 billion or more and represent 91 percent of total industry loan-loss reserves, the quarterly decline was attributable to residential real estate (down $762.7 million, or 6.5 percent) and credit cards (down $59.3 million, or 0.1 percent). Loan-loss reserves for commercial loans increased by $445.2 million (1.4 percent) from the previous quarter.

    Total Assets Increase From First Quarter 2019
    Total assets rose by $177.3 billion (1 percent) from the previous quarter. Cash and balances due from depository institutions declined by $81.5 billion (4.8 percent). Banks increased their investment securities by $54.8 billion (1.5 percent), as mortgage-backed securities rose by $65 billion (2.9 percent) and state and municipal securities declined by $14.5 billion (4.5 percent). After reaching an all-time high of 35.8 percent in second quarter 2018, the percentage of industry assets maturing or repricing in more than three years continued to decline, falling to 35.1 percent in the second quarter.

    Loan Balances Increase From the Previous Quarter and a Year Ago
    Total loan and lease balances rose by $152.3 billion (1.5 percent) from first quarter 2019. Almost three-quarters of all banks (72.7 percent) reported quarterly increases in their loan and lease balances. All major loan categories reported quarter-over-quarter increases, led by consumer loans, which rose by $42.2 billion (2.5 percent), and residential mortgage loans, which increased by $38.3 billion (1.8 percent).2 Over the past year, total loan and lease balances rose by $443 billion (4.5 percent), a modest increase from the 4.1 percent annual growth rate reported last quarter. Commercial and industrial loans had the largest dollar increase from a year ago, increasing by $142.8 billion (6.9 percent).

    Deposits Increase From First Quarter 2019
    Total deposit balances increased by $114 billion (0.8 percent) from the previous quarter, as deposits in foreign offices increased by $51.3 billion (4.1 percent) and domestic office deposits rose by $62.7 billion (0.5 percent). Domestic deposits in noninterest-bearing accounts rose by $37.2 billion (1.2 percent), while interest-bearing deposits increased by $25.5 billion (0.3 percent). Nondeposit liabilities increased by $25.1 billion (1.2 percent) from the previous quarter, as other liabilities rose by $25.2 billion (6.2 percent).

    Equity Capital Rises From the Previous Quarter
    Equity capital rose to $2.1 trillion in the second quarter, up $38.6 billion (1.9 percent) from the previous quarter, led by accumulated other comprehensive income. Declared dividends totaled $48.6 billion, an increase of $10.8 billion (28.6 percent) from second quarter 2018. At end of second quarter, 16 insured institutions with $2.2 billion in total assets were below the requirements for the well-capitalized category as defined for Prompt Corrective Action purposes.

    Five New Banks Are Added in Second Quarter 2019
    The number of FDIC-insured commercial banks and savings institutions declined from 5,362 to 5,303 during the three months ended June 30. Five new banks were added during the second quarter, 60 institutions were absorbed by mergers, and one bank failed. The number of institutions on the FDIC’s “Problem Bank List” declined from 59 to 56 at the end of second quarter, the lowest number since first quarter 2007. Total assets of problem banks increased from $46.7 billion to $48.5 billion.

    Chart 1. Quarterly Net Income

    Chart 2. Quarterly Net Operating Revenue

    Chart 3. Noncurrent Loan Rate and Quarterly Net Charge-Off Rate

    Chart 4. Reserve Coverage Ratio

    Chart 5. Unrealized Gains (Losses) on Investment Securities

    Chart 6. Quarterly Change in Loan Balances

    Chart 7. Number and Assets of Banks on the "Problem Bank List"

    Loans and Securities > 3 Years as a Percent of Total Assets

    Net Interest Margin

    Reserve Coverage Ratio

    DIF Reserve Ratio, 2007 Q1 - 2019 Q2

     

    TABLE I-A. Selected Indicators, All FDIC-Insured Institutions

    TABLE II-A. Aggregate Condition and Income Data, All FDIC-Insured Institutions

    TABLE III-A. Second Quarter 2019, All FDIC-Insured Institutions

  • Asset Concentration Groups
  • Asset Size Distribution & Geographic Regions
  • TABLE IV-A. First Half 2019, All FDIC-Insured Institutions

  • Asset Concentration Groups
  • Asset Size Distribution & Geographic Regions
  • TABLE V-A. Loan Performance, All FDIC-Insured Institutions

  • Asset Concentration Groups
  • Asset Size Distribution & Geographic Regions
  • TABLE VI-A. Derivatives, All FDIC-Insured Call Report Filers

    TABLE VII-A. Servicing, Securitization, and Asset Sales Activities


    Footnotes

    1Methodology used for calculating industry participation counts consists of institutions existing in both reporting periods.

    2Consumer loans include credit card balances.