Earnings of more than $71 billion in the second quarter of 2024 – an 11% increase from the previous quarter – were posted by the nation’s banks, the federal insurer of bank deposits reported Thursday.
The Federal Deposit Insurance Corp. (FDIC) pointed to a drop in noninterest expense and “one-time gains” on equity security transactions as reasons for the earnings increase.
In reporting the financial results from the second quarter, the FDIC also said:
- Loan balances increased 1% (by $125.8 billion) from the first quarter. The agency said the modest increase was driven by higher loans to nondepository financial institutions (NDFIs) (up $76.0 billion, or 9.6%) and consumer loans (up $25.8 billion, or 1.2%). The agency said the NDFI lending was the reclassification from other existing loan categories. The agency also noted that more than 75% of all banks reported loan growth with all major loan categories – except for construction and development loans – showing growth.
- Net interest margins declined slightly – to 3.16%, down 1 basis point from the previous quarter – as “growth in funding costs slightly exceeded the growth in earning-asset yields,” the agency said. The decline, FDIC said, was driven by the largest banks.
- Charge-offs rose by 3 bp from the previous quarter to 0.68%, and were 20 bp higher than the same quarter in 2023. The credit card net charge-off rate was 4.82% in the second quarter, up 13 bp quarter over quarter and the highest rate reported since third quarter 2011.
- The number of insured banks declined by 29 to 4,539. The agency noted that three banks were sold to credit unions and 26 merged with other banks. One bank failed in the second quarter but did not file a call report in the first quarter, and no banks opened.
In a statement, FDIC Board Chairman Martin Gruenberg said banks continued to show resilience in the second quarter, but that there are downside risks still faced. He said those occur from “uncertainty in the economic outlook, market interest rates, and geopolitical events. In addition, weakness in certain loan portfolios, particularly office properties, credit cards, and multifamily loans, continues to warrant monitoring.”
FDIC-Insured Institutions Reported Net Income of $71.5 Billion
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