Net income at FDIC-insured institutions continued to rise during the second quarter, boosted primarily by increasing noninterest income and falling loan losses, the agency said this week.
According to the FDIC’s quarterly banking profile, net income across all FDIC-insured institutions rose $7.8 billion, or 22.6 percent, to $42.2 billion over the second quarter of 2012, making this the 16th consecutive quarter that earnings registered a year-over-year increase. This quarter also marked the second consecutive quarter in which those institutions marked a new nominal high.
Falling loan losses were a major driver of increased income during the second quarter, the agency said. Net loan and lease charge-offs totaled $14.2 billion for the period, which is a 30 percent drop from the same quarter last year and also the smallest quarterly total since the third quarter of 2007.
Though charge-offs dropped across all major loan categories, residential real estate loans lead the decline. Charge-offs of home equity lines of credit were down 41.7 percent, or $1.1 billion, and other loans secured by 1-to-4 family residential properties dropped 32 percent, or $1.4 billion, from last year.
Noninterest income also contributed to increased income during the second quarter, increasing 11 percent year-over-year across FDIC-insured institutions to $6.7 billion for the quarter. Income from trading increased $5.1 billion, or 238 percent, over last year when the industry reported a net loss on credit derivatives.
Total industry assets posted a decline of 0.1 percent, or $14.8 billion, for a second consecutive quarter, and while the quarterly return on assets of 1.17 percent had increased from 0.99 percent a year ago, that figure remained below the 1.27 percent industry average from 2000 to 2006.
The FDIC also reported that the number of insured institutions fell to 6,940 from 7,019 from the end of the first quarter. During the second quarter, the agency said, 62 institutions merged into others and 12 failed. The number of institutions on the FDIC’s "Problem List" declined for a ninth consecutive quarter, from 612 to 553.
The last de novo charter happened during the fourth quarter of 2010, marking the eighth consecutive quarter that saw no new reporting institutions added.
