The FDIC said insured commercial banks and savings institutions reported aggregate net income of $39.8 billion in Q1/15, up $2.6 billion (6.9%) from a year earlier. The FDIC said the increase in earnings was mainly attributable to a $4.3 billion rise in net operating revenue (net interest income plus total noninterest income). Noninterest income was $2.8 billion (4.6%) higher as trading income increased $1.5 billion (23.9%).
In a special asset size distribution report on U.S. banks with assets greater than $10 billion (94), the FDIC notes that the yield on earning assets and net interest margin in Q1/15 was 3.12% and 2.83%, respectively, down from 3.32% and 3.00% in Q1/14. The cost of funding earnings assets in Q1/15 was .29% compared to .32% in the same quarter last year.
Of the 6,419 insured institutions in the first quarter of 2015, nearly two-thirds (62.7%) reported year-over-year growth in quarterly earnings. The proportion of banks that were unprofitable during the first quarter fell to 5.6% from 7.4% a year earlier.
“The banking industry continued to show gradual but steady improvement during the quarter,” FDIC chairman Martin J. Gruenberg said. “Revenue, earnings, and loan balances were up; asset quality continued to improve; and the number of banks on the ‘Problem List’ declined to the lowest level in more than six years. Nearly two-thirds of banks reported higher earnings than a year ago.
“Community banks reported improved performance during the quarter that outpaced the overall industry,” he said. “Their earnings were up significantly from a year ago, and their loan growth was appreciably higher than the rest of the industry.”
Chairman Gruenberg concluded: “The current interest-rate environment remains challenging for banks. Revenue growth remains subdued, and net interest margins have continued to decline. Many institutions have responded by reaching for yield, which is a matter of ongoing supervisory attention.”
Highlights from the Q1/15 Quarterly Banking Profile:
To read the entire report, click here.