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FDIC-insured institutions report 28% earnings increase

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Commercial banks and savings institutions insured by the Federal Deposit Insurance Corp. reported an aggregate first-quarter net income increase of 27.5 percent.

Combined earnings came to $56 billion on higher net operating revenue and lower taxes, according to a news release.

“While results this quarter were positive, banks face a challenging operating environment in the latter stage of this economic expansion,” FDIC Chairman Martin Gruenberg said in the release. “An extended period of low interest rates and an increasingly competitive lending environment have led some institutions to reach for yield. This has led to heightened exposure to interest-rate risk, liquidity risk and credit risk.

“The industry needs to be prepared to manage the inevitable downturn in order to avoid financial system disruption and sustain lending through the economic cycle.”

First-quarter financial notes:
    •    Of the 5,606 insured institutions that reported in, more than 70 percent posted quarterly earnings increases.
    •    Unprofitable banks made up 3.9 percent of the total, down from 4.3 percent a year earlier.
    •    Community banks, which make up the majority of the institutions at 5,168, posted a 17.7 percent in first-quarter net income to $6.1 billion.

During the first quarter, the number of so-called problem banks — those in danger of failing — dropped to 92, the lowest number since first-quarter 2008. The number of problem banks was 95 in first-quarter 2017, according to the release.

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