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FDIC-insured institutions improve profits 13%

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Commercial banks and savings institutions insured by the Federal Deposit Insurance Corp. recorded an aggregate net income gain of 13 percent in the third quarter.

For the three months ended Sept. 30, the 5,980 institutions reporting to the FDIC improved earnings to $45.6 billion from $40.4 billion in third-quarter 2015, according to a news release.

FDIC Chairman Martin Gruenberg said revenue, net income, loan balances and assets rose overall from a year ago, but he tempered the results by saying institutions still face a challenging environment.

“Low interest rates for an extended period have led some institutions to reach for yield, which has increased their exposure to interest-rate risk, liquidity risk and credit risk,” he said in the release. “Current oil and gas prices continue to affect borrowers that depend on the energy sector and have had an adverse effect on asset quality. These challenges will only intensify as interest rates normalize.”

Other third-quarter financial highlights:
    •    Of the reporting institutions, 60.8 percent posted earnings growth compared with the same quarter a year earlier.
    •    Community banks - which represent 5,521 of those reporting - increased profits by 11.8 percent.
    •    The number of banks in danger of failure fell by 15 to 132, the lowest number in more than seven years.


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