Community banks reported an 8.2% second-quarter increase in net income from the previous quarter, according to the FDIC’s latest Quarterly Banking Profile.
Key Drivers: During the quarter, higher net interest income (up 4.0%), noninterest income (up 7.9%), and securities gains of $139.3 million offset higher noninterest expense (up 2.3%), and provision expense (up 37.2%).
Additional Data: For the first quarter, community banks reported:
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The pretax return on assets ratio increased 11 basis points from the previous quarter and 17 basis points from one year earlier to 1.53%.
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The net interest margin increased 10 basis points from the previous quarter and was up 19 basis points year-over-year to 3.81%.
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Net operating revenue increased 4.6% quarter-over-quarter due to increases in net interest income and noninterest income.
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Noninterest expense increased 2.3% from the previous quarter and was up 7.1% from a year ago.
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Quarterly provision expense was up 37.2% from the first quarter but down 8.1% from a year earlier.
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Unrealized losses on securities decreased 2.0% from the previous quarter and were down 21.8% from the previous year.
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Total assets increased 0.8% quarter-over-quarter and 4.8% year-over-year.
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Loan and lease balances grew 1.6% from the previous quarter and 5.1% from the prior year, and the quarterly loan growth was was broad-based across all major portfolios except auto loans.
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Deposits increased 0.4% from the previous quarter and 4.6% from a year ago.
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The number of community banks declined by 35 to 3,818, and one community bank failed during the quarter.
Overall Industry: The overall banking industry reported a 12.0% increase in net income from the previous quarter and 28.7% increase from a year ago. The quarterly increase was driven by higher noninterest income (up 6.1%) that was mostly due to higher trading revenue and fee income, securities gains primarily from one-time gains on equity security transactions, net interest income (up 2.8%), and lower provision expense (down 10.0%), all of which were offset by higher noninterest expense (up 2.8%).
Deposit Insurance Fund: The Deposit Insurance Fund balance increased $3.7 billion to $161.1 billion, while the reserve ratio increased five basis points during the quarter to 1.48%.
Mergers and Closings: The number of FDIC-insured institutions declined by 41 during the second quarter to 4,238. Four banks opened, four were sold to non-FDIC-insured institutions, 36 merged with other banks, and one bank failed during the first quarter.