FDIC-insured institutions post record quarterly income

Commercial banks and savings institutions insured by the Federal Deposit Insurance Corp. posted aggregate second-quarter profits of $43 billion, the highest quarterly net income on record.

For the quarter ended June 30, earnings moved up 7.3 percent compared to the same three-month period last year, according to a news release.

During the second quarter, more than half, 58.7 percent, of the 6,348 insured institutions reported year-to-year quarterly earnings growth. Unprofitable banks were 5.6 percent, the lowest rate since first-quarter 2005. The rate also was down from 6.8 percent a year earlier.

"Bankers generally reported another quarter of higher earnings, improved asset quality and increased lending," FDIC Chairman Martin Gruenberg said in the release. "There were fewer problem banks, and only one bank failed during the second quarter.  

“However, the low interest-rate environment remains a challenge. Many institutions have responded by acquiring higher-yielding, longer-term assets, but this has left banks more vulnerable to rising interest rates and that is a matter of ongoing supervisory attention."

Second-quarter financial notes:
    •    Net operating revenue improved by 2.1 percent to $172.2 billion.
    •    The 5,881 community banks reported $5.3 billion in net income, a 12 percent increase.
    •    Loan and leases balances rose 2.2 percent during the quarter.