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Higher provisions for credit losses amid loan defaults, as well as lower deposits dragged the profits of Massachusetts banks in the second half of the year, according to the latest FDIC data.

The FDIC’s quarertly state banking performance summary showed that the net income of 100 FDIC-insured Massachusetts banks declined to $1.9 billion in the first six months of the year from $2.02 billion the same time a year ago.

Total deposits decreased to $395.3 billion from January to June from $414 billion in the same period in 2022, while total loans and leases increased by $190 billion from $173 billion. The higher loans and leases propped up net interest income, which rose to $4.5 billion from $3.9 billion in the first six months of last year.

Provisions for credit losses more than doubled to $120 million in the six-month period, from the $43 million a year ago due to the acceleration in net charge-offs – bad debt that will never be recovered. Net charge-offs jumped to $67 million from $19 million as more borrowers defaulted on their loans.

On a nationwide basis, the FDIC-insured banks saw higher second-quarter net income compared to a year ago. Community banks were more profitable, despite the declines in deposits and unrealized securities losses dragging down net interest margin for all of the 4,645 FDIC-insured banks.

“Despite the period of stress earlier this year, the banking industry continues to be resilient. In the second quarter, key banking industry metrics were favorable. Net income remained high by historical measures, asset quality metrics were stable, and the industry remained well capitalized,” FDIC Chairman Martin Gruenberg said in a statement.

“However, the banking industry still faces significant challenges from the effects of inflation, rising market interest rates, and geopolitical uncertainty. These risks, combined with concerns about commercial real estate fundamentals, especially in office markets, as well as pressure on funding levels and net interest margins, will be matters of continued supervisory attention by the FDIC,” he added.

In March, bank runs led to the closure of Silicon Valley Bank, Signature Bank, and First Republic Bank after the banks mismanaged funds amid the steep rise in interest rates. Since last year, the Federal Reserve has raised key interest rates 11 times in a bid to lower inflation to its 2 percent target.