FDIC Quarterly Banking Profile
ALL INSTITUTIONS PERFORMANCE
FIRST QUARTER 2019
Quarterly Net Income Increases 8.7 Percent From First Quarter 2018 to $60.7 Billion Net Interest Margin Improves to 3.42 Percent as the Increase in Asset Yield Outpaces the Rise in Funding Cost Loan Balances Drop Slightly From the Previous Quarter but Increase 4.1 Percent From a Year Ago Noncurrent and Net Charge-Off Rates Remain Stable The Number of Banks on the FDIC’s “Problem Bank List” Declines to 59
Net Income Increases 8.7 Percent From First Quarter 2018 to $60.7 Billion
The aggregate net income for the 5,362 FDIC-insured commercial banks and savings institutions totaled $60.7 billion in first quarter 2019, an increase of $4.9 billion (8.7 percent) from a year ago. The improvement in net income was led by higher net interest income, which reflected a modest growth in interest-earning assets and wider net interest margins (NIM). Almost two out of every three banks (62.3 percent) reported year-over-year increases in net income, and less than 4 percent of banks reported net losses for the quarter. The average return on assets rose to 1.35 percent, an improvement from the 1.28 percent a year earlier.
Net Interest Income Expands 6 Percent From a Year Ago
Net interest income of $139.3 billion rose by $7.9 billion (6 percent) from 12 months ago, as more than three out of every four banks (79.2 percent) reported year-over-year increases. NIM for the banking industry increased by 10 basis points from a year ago to 3.42 percent, as average asset yields (up 49 basis points) increased by more than average funding costs (up 39 basis points). The largest institutions (banks with assets greater than $250 billion) reported the largest annual increase in NIM (up 11 basis points), almost twice the rate of all other institution size groups.
Loan-Loss Provisions Rise Almost 12 Percent From First Quarter 2018
Banks allocated $13.9 billion in loan-loss provisions in the first quarter, an increase of $1.5 billion (11.8 percent) from a year earlier. Slightly more than one-third of all banks (35.2 percent) reported annual increases in loan-loss provisions. A large portion of the annual increase was concentrated among the largest banks.
Noninterest Income Declines 2.9 Percent From a Year Ago
Noninterest income declined by $2 billion (2.9 percent) from a year ago, due to lower servicing fees, which fell by $2.1 billion (58.3 percent), and all other noninterest income, which declined by $1.1 billion (3.6 percent). Despite the overall decline in noninterest income, trading revenue rose by $2.5 billion (32.8 percent). Slightly more than half of all banks (52.6 percent) reported annual declines in noninterest income.
Noninterest Expense Declines From First Quarter 2018
Noninterest expense fell by $427.1 million (0.4 percent) from a year earlier. The increase in salary and employee benefits (up $1.1 billion, or 2 percent) was offset by a decline in all other noninterest expense (down $1.4 billion, or 3 percent). The average assets per employee increased from $8.4 million in first quarter 2018 to $8.8 million.
Net Charge-Offs Increase 5.5 Percent From 12 Months Ago
During the first quarter, banks charged off $12.7 billion in uncollectable loans, an increase of $667.9 million (5.5 percent) from first quarter 2018. Credit card balances reported the largest year-over-year dollar increase in net charge-offs, increasing by $543.4 million (6.6 percent). The average net charge-off rate remained unchanged from a year ago (0.50 percent). For eight out of the past ten quarters, the net charge-off rate for credit cards increased, reaching 3.97 percent for the current quarter.
Noncurrent Loan Rate Remains Below 1 Percent
Noncurrent loan balances (90 days or more past due or in nonaccrual status) increased by $461.6 million (0.5 percent) from the previous quarter. Less than half of all banks (41.2 percent) reported increases in noncurrent loan balances. The quarterly increase was in commercial and industrial loan balances, which rose by $3.3 billion (22.8 percent), the largest quarterly dollar increase since first quarter 2016. The banking industry continued to reduce noncurrent loans for residential mortgages, which declined by $2.2 billion (5 percent) from the previous quarter. The average noncurrent rate remained unchanged from the previous quarter at 0.99 percent.
Loan-Loss Reserves Increase From the Previous Quarter
At the end of first quarter, loan-loss reserves increased by $432.3 billion (0.3 percent) from the previous quarter. Almost two-thirds of all banks (64.9 percent) reported increases in loan-loss reserves during the quarter. At banks that itemize their loan-loss reserves, which represent 91 percent of total industry loan-loss reserves, the quarterly growth was attributable to commercial loans (up $761.4 million, or 2.4 percent) and other consumer (up $308.3 million, or 3.1 percent), which excludes credit cards. For the past 11 consecutive quarters, growth in total itemized loan-loss reserves was attributable to credit cards; however, credit card losses remained stable during the first quarter, increasing by only $54.2 million (0.1 percent).
Equity Capital Increases From the Fourth Quarter
During the three months ended March 31, equity capital of $2.1 trillion rose by $36.9 billion (1.8 percent). Retained earnings in first quarter 2019 totaled $22.1 billion and dividends paid rose to $38.6 billion, an increase of $7.9 billion (25.9 percent). Accumulated other comprehensive income increased by $20.6 billion, as the fair value of securities improved. At the end of first quarter, 99.6 percent of all insured institutions, which account for 99.87 percent of total industry assets, met or exceeded the requirements for the well-capitalized category, as defined for Prompt Corrective Action.
Total Assets Increase From the Previous Quarter
Total assets increased by $147 billion (0.8 percent) during the first quarter. Assets in trading accounts increased by $94.2 billion (16.5 percent), the largest quarterly dollar increase since first quarter 2008. Securities holdings among the banking industry remained stable (up $1.3 billion, or .003 percent) from the previous quarter. Mortgage-backed securities rose by $30.6 billion (1.4 percent), but were offset in part by lower U.S. Treasury securities (down $11.4 billion, or 2.1 percent) and state and municipal securities (down $7.6 billion, or 2.3 percent).
Loan Balances Drop Slightly From the Previous Quarter but Increase 4.1 Percent From a Year Ago
Total loan and lease balances fell by $4.8 billion (0.05 percent) compared with the previous quarter. More than half of all banks (57.5 percent) reported quarterly increases in loan and lease balances. Commercial and industrial loans increased by $37.7 billion (1.7 percent), while consumer loans, including credit card balances, fell by $37 billion (2.1 percent). Over the past 12 months, total loan and lease balances increased by $395 billion (4.1 percent), a slight decline from the 4.4 percent annual growth rate reported last quarter. All major loan categories reported year-over-year increases, led by commercial and industrial loans (up $155.6 billion, or 7.6 percent) and consumer loans, which includes credit card balances (up $71.3 billion, or 4.4 percent).
Noninterest-Bearing Deposits Decline 3.2 Percent From the Previous Quarter
Total deposits rose by $59.5 billion (0.4 percent) from the previous quarter, as interest-bearing deposits increased by $172.4 billion (1.8 percent). Noninterest-bearing deposits declined by $100.4 billion (3.2 percent), the largest quarterly dollar decline since reporting the Quarterly Banking Profile, and deposits in foreign offices fell by $12.5 billion (1 percent). Nondeposit liabilities rose by $50.6 billion (2.5 percent) from the previous quarter, with the increase led by other secured borrowings (up $35.8 billion, or 18.7 percent) and other liabilities (up $28 billion, or 7.3 percent). Federal Home Loan Bank advances fell by $50.3 billion (8.8 percent) from the previous quarter, the largest quarterly dollar decline since first quarter 2010.
The Number of Banks on the FDIC’s “Problem Bank List” Declines to 59
The FDIC’s “Problem Bank List” declined from 60 at year end to 59 at the end of first quarter, the lowest since first quarter 2007. Total assets of problem banks declined from $48.5 billion to $46.7 billion. During the first quarter, one new bank was chartered, 43 institutions were absorbed by mergers, and no banks failed.
Chart 1. Quarterly Net Income
Chart 2. Quarterly Net Operating Revenue
Chart 4. Reserve Coverage Ratio
Chart 6. Quarterly Change in Loan Balances
TABLE I-A. Selected Indicators, All FDIC-Insured Institutions
TABLE II-A. Aggregate Condition and Income Data, All FDIC-Insured Institutions
TABLE III-A. First Quarter 2019, All FDIC-Insured Institutions
TABLE IV-A. Full Year 2018, All FDIC-Insured Institutions
TABLE V-A. Loan Performance, All FDIC-Insured Institutions
TABLE VI-A. Derivatives, All FDIC-Insured Call Report Filers
TABLE VII-A. Servicing, Securitization, and Asset Sales Activities