Bay State banks’ overall profitability ticked upward for the second quarter of 2011 compared to the year before, with interest income rising and provisions for loan losses falling year-over-year. But noninterest expenses are far outpacing noninterest income, as banks pour more money into employee costs, branches and equipment, according to the latest data from the FDIC.
Newly released statistics from the FDIC show Massachusetts banks inching upward in assets, going from $101.7 billion for the second quarter 2011 compared to $99.7 billion for the same period in 2010. Deposits were at $80.2 billion this year compared to $76.9 billion in 2010. Portfolios got a little fatter, too, with banks’ net loans standing at $65.6 billion.
Commercial real estate and commercial and industrial loans appeared to make up the biggest chunk of that growth: Commercial real estate portfolios grew to $17.5 billion compared to $16.6 billion in 2010, while commercial loans stood at $6.3 billion compared to $5.6 billion. Single-family loans actually dropped, going from $32.9 billion compared to $33.7 billion the year before – but these numbers only reflect the amount of loans banks keep on the books, as the FDIC doesn’t include loans that have been sold off. Low interest rates have kept many banks from holding on to mortgage loans in the past few years.
Delinquent loans, a perennial problem since the start of the mortgage meltdown, appear to be holding relatively steady. Loans in non-accrual status – those over 90 days’ past due and no longer collecting interest – were at $1.12 billion, up slightly from $1.05 billion the year before.
Still, provision for loan and lease losses this quarter actually dropped to $43.8 million, down $24.9 million. Interest income was at $793.2 million, compared to $780.3 million for the second quarter 2010, which contributed to a boost in profitability. Return on assets was at 0.68 percent in 2011, compared to 0.6 percent from 2010.
Non-interest income also increased, by about $10.9 million – but that pales compared to the $28.7 million increase in non-interest expenses. Employee salary and benefits increases took up the bulk of that, at $22.8 million. The actual number of employees rose to 18,169 full-time workers from 18,153 – a difference of 16 employees. Total net income was $171.5 million for the state, compared to $148.5 million the year before.
Banker & Tradesman’s analysis of the Massachusetts-based banking industry includes all FDIC-insured institutions with the exception of State Street, as its $166.6 billion-asset size would have an outsized impact on overall figures.
