FDIC insured institutions report $60.7 billion in aggregate net income in the first quarter of 2019, an 8.7 percent increase from a year earlier. Net interest income increased by $7.9 billion from a year earlier, explaining the jump in overall net income. Nearly 80 percent of banks reported increased net interest income from a year earlier, and the average net interest margin rose from 3.32 percent to 3.42 percent.
FDIC Chairman Jelena McWilliams stated, “This was another positive quarter for the banking industry. Quarterly net income improved from a year ago, led by higher net interest income. Net interest margins widened, asset quality indicators remained stable, and the number of "problem banks" remains low.”
Total loan and lease balances increased by 4.1 percent from a year earlier, driven by increases to commercial and industrial loans but partially offset by falling credit card balances.
Community banks experienced a 10.1 percent increase in net income, an increase larger than that of the industry as a whole, which was also driven by an increase in net interest income. However, higher noninterest expense and lower noninterest income partially offset improvements to net income.
Noncurrent balances declined for residential mortgages but increased for commercial and industrial loans. The average net charge-off rate remained unchanged from a year earlier.
The first quarter of 2019 witnessed the lowest number of problem banks since 2009, the absorption of 43 institutions, the granting of one new charter, and no bank failures.
McWilliams added, “in July, this economic expansion will be the longest on record in the United States. As a result, the nation's banks are strong. With the recent stabilization of interest rates, new challenges for banks in lending and funding may emerge. The competition to attract deposit and loan customers is strong, and therefore, banks need to maintain rigorous underwriting standards and prudent risk management. These factors have increased banks' exposure to interest rate, liquidity, and credit risk. Attention to these risks will position banks to be more resilient in sustaining lending through the downside of an economic cycle.”