Community Banks Outperform Rest of Industry in Q3

Nov 27, 2019

Community bank net income rose 7.2 percent to $6.9 billion in the third quarter of 2019, the FDIC reported in its latest Quarterly Banking Profile.

Pretax return on assets rose 3 basis points to 1.51 percent, the highest rate for community banks since third-quarter 2006. Growth in net interest income (4 percent), noninterest income (16.4 percent), and securities sales (675.1 percent) were responsible for the annual increase in profitability.

Overall, the banking industry reported a 7.3 percent decline in net income from a year ago. The decline was largely due to nonrecurring events at three large institutions, with 62 percent of all institutions reporting a year-over-year increase in net income.

The number of banks on the “Problem Bank List” fell from 56 to 55 during the third quarter, while four new banks opened, 46 were absorbed by mergers, and no banks failed. The Deposit Insurance Fund balance rose $1.5 billion from the previous quarter to $108.9 billion, and the reserve ratio rose 1 basis point to 1.41 percent