Community banks reported a 12.5% second-quarter increase in net income from the previous quarter and a 22.9% increase from the previous year, according to the FDIC’s latest Quarterly Banking Profile.
Key Drivers: Higher net interest income (up 5.7%) and higher noninterest income (up 10.1%) more than offset higher noninterest expense (up 3.5%) and higher provision expense (up 29.2%).
Additional Data: For the second quarter, community banks reported:
The pretax return on assets ratio increased 15 basis points from the previous quarter and 19 basis points from one year earlier to 1.33%.
The net interest margin increased 16 basis points from the previous quarter and 32 basis points year-over-year to 3.62%.
Net operating revenue increased 6.5% quarter-over-quarter due to increases in net interest income and noninterest income.
Noninterest expense increased 3.5% from the previous quarter and 6.5% from a year ago.
Quarterly provision expense was up 29.2% from the first quarter and 47.7% from a year earlier.
Unrealized losses on securities decreased 3.8% from the previous quarter and 20.8% from the previous year.
Total assets increased 0.5% quarter-over-quarter and 4.1% year-over-year.
Loan and lease balances grew 1.7% from the previous quarter and 4.9% from the prior year, and the quarterly loan growth was broad-based across categories except auto loans.
Deposits increased 0.1% from the previous quarter and were up $114.6 billion from a year ago.
Overall Industry: The overall banking industry reported a 1% decrease in net income from the previous quarter, driven by higher provision expenses largely attributable to the acquisition of one large bank.
Deposit Insurance Fund: The Deposit Insurance Fund balance increased $4.4 billion to $145.3 billion, while the reserve ratio increased 5 basis points during the quarter to 1.36%.
Mergers and Closings: In the second quarter, the total number of FDIC-insured institutions declined by 41 to 4,421. Two banks opened, one bank failed, five banks were sold to non-FDIC-insured institutions, and 37 institutions merged or consolidated.