The banking industry reported net income of $71.5 billion in the second quarter of 2024, an increase of $7.3 billion or 11.4% from the previous quarter, according to the FDIC’s most recent Quarterly Banking Profile released today.
The quarterly increase in net income was largely driven by nonrecurring items, including an estimated $4 billion reduction in reported expense related to the FDIC special assessment, approximately $10 billion in gains on equity security transactions by large banks, and the sale of an institution’s insurance division that resulted in an after-tax $4.9 billion gain, the agency said. The increases were partially offset by several large banks selling bond portfolios at a loss and a $2.7 billion increase in provision expense.
Quarterly net income for the 4,104 FDIC-insured community banks was $6.4 billion in Q2, an increase of $72.6 million or 1.1% from Q1, the agency said. Higher net interest income and higher noninterest income offset higher noninterest expense and higher provision expenses, it added.
Domestic deposits decreased $197.7 billion or 1.1% from Q1, which was well below the pre-pandemic average Q2 growth of 0.2%, the FDIC said. Both savings and transaction deposits declined from the prior quarter, with growth in small-time deposits partially offsetting the declines. The Deposit Insurance Fund balance increased $3.9 billion to $129.2 billion. The reserve ratio increased four basis points during the quarter to 1.2%.
The total number of FDIC-insured institutions declined by 29 during the quarter to 4,539. Three banks were sold to credit unions and 26 institutions merged with other banks. One bank failed in Q2 but did not file a call report in Q1, and no banks opened. The number of problem banks rose from 63 to 66, representing 1.5% of all banks, which is within the normal range for non-crisis periods.
ABA: Report shows continued resilience of banking industry
Today’s QBP indicates that the banking industry remains resilient as it continues to support growth while navigating economic uncertainty, American Bankers Association Chief Economist Sayee Srinivasan said.
“The industry saw a 1% jump in loan growth in the second quarter, with increases in nearly every category,” Srinivasan noted. “Bank deposits, partially buoyed by growth in retail CDs, declined slightly on seasonal tax outflows.
“Net income grew and asset quality remained favorable as banks carefully managed portfolio risk,” he added. “Banks continued to prudently increase loan-loss provisioning while keeping a watchful eye on potential headwinds. America’s banks remain well capitalized and financially sound as they continue meeting the needs of their customers and communities in today’s economy.”
