Saturday, May 25, 2024

Second quarter industry numbers released by FDIC

Although all FDIC-insured institutions reported net income of $62.6 billion at the end of the second quarter, Oklahoma banks were off by almost 4 percent when compared to the industry’s 2018 earnings at this same point.

“The drop in income conforms to the earlier trends we’ve seen,” OBA President and CEO Roger Beverage said.

“What’s interesting is that assets rose from $115.7 billion to $132.8 billion during this same period. That growth indicates that solid earnings in Oklahoma are getting to be harder to come by.

“Return on Assets (1.28) is also off compared to this same period last year (1.50),” Beverage said. “It’s even less than two years ago, but only by 1 basis point (1.29).”

The highlights from the FDIC news release show that:

Net income increased 4.1 Percent from second quarter 2018. Aggregate net income for the 5,303 FDIC-insured institutions rose by $2.5 billion (4.1 percent) from a year earlier, led by higher net interest income. Almost 60 percent of all institutions reported a year-over-year increase in net income and less than 4 percent of institutions were unprofitable. The average return on assets remained stable at 1.38 percent.

Net interest margin remains stable at 3.39 percent.

Community banks report increase in net income of 8.1 percent from a year earlier. The 4,873 FDIC-insured community banks reported net income of $6.9 billion in second quarter 2019, up $522.7 million from a year earlier. Growth in net interest income (up 5.1 percent to $19.3 billion) and noninterest income (up 4.8 percent to $4.7 billion), as well as gains on securities sales (up 654.8 percent to $233 million) drove the annual increase in profitability. Combined growth in these areas offset increases in noninterest expense (up 5.6 percent to $15.3 billion) and provision expense (up 2.2 percent to $672.7 million).

Total loan and lease balances increase from the previous quarter and a year earlier. Total loan and lease balances rose by $152.2 billion (1.5 percent) from first quarter 2019. Growth among major loan categories was led by consumer loans, which includes credit cards, (up $42.2 billion, or 2.5 percent) and residential mortgage loans (up $38.3 billion, or 1.8 percent). Over the past 12 months, total loan and lease balances rose by 4.5 percent, a slight increase from the 4.1 percent annual growth rate reported last quarter.

The number of banks on the “Problem Bank List” declined to 56.

“While the banking industry reported another positive quarter and the banking system remains strong, the FDIC continues to encourage prudent risk management in order to remain resilient through economic cycles,” Beverage said.

Meanwhile, in Oklahoma bank earnings through June 30, 2019 look like the top chart on this page, while on the national level, the second quarter banking industry earning look like the lower chart.
We’ll keep our fingers crossed that the second half of 2019 will be at least as good as all of 2018.