Net income for the banking industry increased 6.9 percent, or $2.6 billion, nationwide to $39.8 billion in the first quarter this year, the FDIC said this week.
Of the 6,419 insured banks, 62.7 percent reported year-over-year growth in quarterly earnings, and the proportion of banks that were unprofitable during the first quarter fell to 5.6 percent from 7.4 percent a year earlier.
Community banks fared particularly well during this period, with net income at those 5,946 banks climbing 16 percent year-over-year to $4.9 billion and net operating revenue increasing 8.7 percent to $21.5 billion.
Net operating revenue for the entire banking industry increased 2.6 percent to $168.4 billion. Net interest income increased $1.5 billion, or 1.5 percent, and noninterest income increased $2.8 billion, or 4.6 percent. Trading income increased $1.5 billion, or 23.9 percent, and income from the sale, securitization and servicing of one- to four-family residential real estate loans increased $545 million, or 15.6 percent.
Net loan losses across all banks declined year-over-year for the 19th consecutive quarter, while noncurrent loan balances declined for a 20th consecutive quarter. Quarterly net charge-offs declined 13.2 percent, or $1.4 billion, from the year-ago period. The annualized net charge-off rate fell to 0.43 percent from 0.52 percent a year ago and represented the lowest quarterly rate since the third quarter of 2006. The amount of loans and leases that were noncurrent declined $9.7 billion, or 6 percent, in the first quarter of 2015.
Total loan and lease balances at all banks increased $52.5 billion, or 0.6 percent, in the first quarter. For the 12 months ended March 31, loans and leases increased $431.2 billion, or 5.4 percent, which the FDIC said was the biggest increase since mid-2008. For community banks, loan balances increased 1.3 percent and 9.1 percent over those two periods, respectively.
All banks struggled with thin margins as higher-yielding assets matured only to be replaced by lower-yielding investments, but community banks experienced less margin compression and posted higher margins. The average net interest margin for the industry as a whole declined 14 basis points year-over-year to 3.02 percent in the first quarter, while average margins at community banks declined just 2 basis points from the year-ago period to 3.55 percent in the first quarter.
The number of banks on the FDIC’s Problem List fell from 291 to 253 during the first quarter, the smallest number of banks on the list in six years. That also represents a decline of 72 percent from the peak of 888 in the first quarter of 2011. Total assets of problem banks fell from $86.7 billion to $60.3 billion during the first quarter.
