FDIC-insured institutions report combined 1Q income drop

Financial institutions insured by the Federal Deposit Insurance Corp. reported combined net income of $37.2 billion in the first quarter, a 7.6 percent decrease compared to aggregate earnings of $40.3 billion in the same quarter of 2013.

The FDIC cited a 10.7 percent decline in noninterest income, which was a combined $7.1 billion during the first three months of the year, according to a news release.

Still, more than half of the 6,730 institutions insured by the FDIC reported first-quarter earnings growth compared to the prior year, while the proportion of unprofitable banks fell to 7.3 percent from 8.5 percent in first-quarter 2013.

"We saw further improvement in the condition of the banking industry in the first quarter," FDIC Chairman Martin Gruenberg said in the release. "Asset quality continues to improve, loan balances are trending up, fewer institutions are unprofitable and the number of problem banks continues to decline.

"However, industry revenue has been affected by narrow margins, modest loan growth and a decline in noninterest income as higher interest rates have reduced mortgage-related activity and trading income fell."

First-quarter financial notes of FDIC-insured institutions:

• The number of problem banks - those in jeopardy of failing - declined to 411 from 467 a year earlier, representing the 12th consecutive quarter of reductions in the figure. Five FDIC-insured institutions failed during the first quarter.
• Community banks, which represent 93 percent of FDIC-insured institutions, earned $4.4 billion during the quarter, a 1.5 percent decrease from a year earlier.
• Aggregate noninterest expenses dropped slightly to $18 million, with payroll expenses falling 1.2 percent to $579 million.

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