Thursday, September 29, 2022

Oklahoma banks make gains in fourth quarter

Oklahoma’s commercial banks saw a marked increase in net income earnings in the fourth quarter from both the previous quarter as well as the fourth-quarter mark from last year.

The FDIC’s Quarterly Banking Profile was released earlier this month and showed good news for both the state’s banks and the nation’s.

Oklahoma banks saw their net income increase from $1.5 to $1.9 billion from the end of the third quarter to the end of the fourth. The $1.9 billion is also well ahead of the $1.48 billlion mark at the end of the fourth quarter in 2021.

The only negatives were the percent of unprofitable institutions slightly creeped up from 2.16% at the end of the third quarter to 2.79% in the fourth. It concided with a smaller number of institutions also having earning gains compared to in the third quarter, 74.3% to 75.7%.

Still, both these numbers were markedly higher than at the same time in 2021, with the number of unprofitable institutions being 4.79 percent and less than 50 percent of banks posting an earning gain.

All the country’s FDIC-insured banks and savings institutions earned $63.9 billion in the fourth quarter of 2021, a 7.4% increase from the year prior, and full-year net income increased 89.7% to $279.1 billion.
FDIC Acting Chairman Martin Gruenberg said that “with strong capital and liquidity levels to support lending and protect against potential losses, the banking industry continued to meet the country’s credit needs while navigating the economic effects of the pandemic.”

The average net interest margin was unchanged from the prior quarter at 2.56%, six basis points higher than the recent record low in the second quarter of 2021, but was down 12 basis points from the previous year. Net interest income increased 4.4% from fourth quarter 2020 to total $137.2 billion. Noninterest income increased 3.4% year-on-year to $72.7 billion, due in large part to higher trading revenue and investment banking fees. Community banks reported a 7.1% increase in fourth-quarter net income year-on-year, the FDIC said.

Sayee Srinivasan, chief economist and head of research at the American Bankers Association, also released a statement on the most recent Quarterly Banking Profile.

“The FDIC’s latest quarterly report on the health of America’s banks shows that the industry ended the year on firm footing as the economy continued its return to normalcy. Deposit growth remained strong while credit availability and demand continued on their promising upward trajectory,” Srinivasan said.

“Total lending saw healthy growth and momentum over the quarter. Consumer lending was particularly strong and small business lending showed encouraging growth. This is consistent with the findings of ABA’s Economic Advisory Committee, made up of chief economists from major banking institutions across North America, who expect both credit availability and quality for business and consumer loans will improve over the next six months. While supply chain issues have caused backlogs within the housing and auto industries, we expect lending in these sectors to pick up steam as those issues resolve.

“With continued strong deposit growth over the past several quarters, loan demand rose in the last three months of the year and banks were increasingly able to deploy this capital into their communities. While deposits continued to increase, we are beginning to see consumer spending and business investment return to more typical patterns. The fourth quarter was the first since the second quarter of 2019 where loan growth exceeded deposit growth.

“Bank profits rose in 2021 due primarily to the recapture of reserves that banks had set aside for loan losses. As the economy continued to rebound from the initial shocks of the pandemic and credit quality improved, industry earnings recovered and rose from $147 billion in 2020 to $279 billion to 2021. The improvement included a $163 billion recapture of reserves, while net interest income remained relatively unchanged for the year. For the quarter, though, net interest income rose more than 2% to its highest level since the first quarter of 2020.

“Banks are poised to continue supporting economic growth and are in a strong position to weather headwinds as the economy continues to rebuild.”