Community banks reported a 10% first-quarter increase in net income from the previous quarter and an 8.5% increase from the previous year, according to the FDIC’s latest Quarterly Banking Profile.
Key Drivers: Higher net interest income (up 1.4%), lower losses on the sale of securities (up 54.8%), lower noninterest expenses (down 2.3%), and lower provision expenses (down 19%) more than offset a 9.1% decline in noninterest income.
Additional Data: For the first quarter, community banks also reported:
The pretax return on assets ratio increased 11 basis points from the previous quarter and 6 basis points from one year earlier to 1.18%.
The net interest margin increased 2 basis points from the previous quarter and 23 basis points year-over-year to 3.46%.
Net operating revenue decreased 0.6% quarter-over-quarter due to a decline in noninterest income that offset a quarterly increase in net interest income.
Noninterest expense decreased 2.3% from the previous quarter but increased 6% from a year ago.
Quarterly provision expense was down 19% from a quarter earlier but up 34.3% from a year earlier.
Unrealized losses on securities decreased 12.4% from the previous quarter and 18.8% from the previous year.
Total assets increased 1.2% quarter-over-quarter and 4% year-over-year.
Loan and lease balances grew 0.8% from the previous quarter and 4.9% from the prior year, and loan growth was broad-based across categories except agricultural production loans, auto loans, and credit card loans.
Deposits increased 1.6% from the previous quarter and were up 5.2% from a year ago.
Overall Industry: The overall banking industry reported a 5.8% increase in net income from the previous quarter, led by higher noninterest income.
Deposit Insurance Fund: The Deposit Insurance Fund balance increased $3.8 billion to $140.9 billion, while the reserve ratio increased 3 basis points during the quarter to 1.31%. The FDIC last week projected the DIF reserve ratio will reach its statutory minimum of 1.35% ahead of the statutory deadline of Sept. 30, 2028.
Mergers and Closings: In the first quarter, the total number of FDIC-insured institutions declined by 25 to 4,462. One bank opened, one bank failed and did not file a call report in the prior quarter, one bank was sold to an uninsured institution, and 25 institutions merged with other banks.