Banking and Finance Law Daily FDIC releases 2019 Q1 income report
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Wednesday, May 29, 2019

FDIC releases 2019 Q1 income report

By Nicole D. Prysby, J.D.

The FDIC released its quarterly report on the banking industry and announced that financial institutions reported another positive quarter. Higher net interest income boosted quarterly net income to $60.7 billion for the quarter, an increase of 8.7 percent versus first quarter 2018.

The Federal Deposit Insurance Corporation released its 2019 first quarter report on the net income of institutions insured by it. In its press release, the FDIC states that the banking industry reported another positive quarter, with net income, net interest, and loan and lease balances all rising. The FDIC also pointed out that the number of problem banks fell to its lower level since 2007.

The report provided the following summary of insured institution performance:

  • Net income increased 8.7 percent versus first quarter 2018, to $60.7 billion, with less than four percent of banks reporting net losses for the quarter;
  • Net interest income expanded by six percent over first quarter 2018;
  • Loan-loss provisions rose 12 percent over first quarter 2018;
  • Noninterest income and expenses declined from first quarter 2018;
  • Net charge-offs increased by 5.5 percent over first quarter 2018, mainly due to an increase in credit card balance charge-offs, but the noncurrent loan rate remains below 1 percent;
  • Loan-loss reserves increased by 0.3 percent over the previous quarter;
  • Equity capital increased by 1.8 percent over the previous quarter;
  • Total assets increased by.8 percent over the previous quarter;
  • Loan and lease balances fell 0.05 percent and noninterest-bearing deposits declined 3.2 percent over the previous quarter; and
  • The number of banks on the "Problem Bank List" dropped to 59, the lowest number since 2007.

At the release of the performance results, FDIC Chairman Jelena McWilliams said that, although the nation’s banks are strong, with the recent stabilization of interest rates, new challenges for banks in lending and funding may emerge. She added that, because the competition to attract deposit and loan customers is strong, banks need to maintain rigorous underwriting standards and prudent risk management.

McWilliams then introduced Diane Ellis, Director of the Division of Insurance and Research, who noted the increase in quarterly net income. Ellis stated that community banks reported quarterly net income of $6.5 billion in the first quarter, an increase of 10.1 percent from 2018. Net operating revenue (led by higher net interest income) rose three percent, and noninterest income declined for more than half of all banks. There has been a recent shift from noninterest-bearing deposits to interest-bearing deposits. Most banks have benefited from rising interest rates largely from assets repricing at a faster rate and in a greater amount than liabilities, she said. Loan balances fell by $5 billion, with an increase in some loan categories offset by the seasonal decline in credit card balances. Ellis also noted that the Deposit Insurance Fund balance was $104.9 billion on March 31, up $2.3 billion from the end of last quarter.

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