FDIC: Q2/16 Loan Growth Higher, Noncurrent C&I Loans Increase



The FDIC reported expanding loan portfolios generated higher levels of net interest income, helping lift the total earnings of FDIC-insured commercial banks and savings institutions to $43.6 billion in Q2/16.

Industry net income was $584 million (1.4%) higher than Q2/15. The average return on assets (ROA) was 1.06%, down from 1.09% the year before, as asset growth outpaced the increase in quarterly net income. More than half of all banks — 60.1% — reported higher quarterly earnings compared with the year-earlier quarter, while the percentage of banks reporting negative quarterly net income fell to 4.5%, from 5.8% in Q2/15.

The FDIC said loan growth remained strong as total assets increased by $240.6 billion (1.5%) during the quarter. Total loan and lease balances rose by $181.9 billion (2%). The largest increases occurred in residential mortgages (up $42.4 billion, 2.2%), real estate loans secured by nonfarm nonresidential properties (up $26.9 billion, 2.1%), credit card balances (up $22.3 billion, 3.1%), and loans to non-depository financial institutions (up $19.8 billion, 6.9%). All major loan categories saw increases in balances outstanding during the second quarter. For the 12 months ended June 30, total loans and leases increased 6.7%, down slightly from 6.9% for the 12 months ended March 31.

Net loan and lease charge-offs were higher than the year before for the third consecutive quarter. Charge-offs totaled $10.1 billion, a $1.2 billion (13.1%) increase over Q2/15. Fewer than half of all banks (44.9%) reported year-over-year increases in their quarterly net charge-offs. Most of the increase occurred in loans to commercial and industrial (C&I) borrowers. C&I net charge-offs rose to $2.2 billion from $1.1 billion a year earlier, an increase of $1.1 billion (100.3%). This is the fifth consecutive quarter that C&I charge-offs have been higher than the year-earlier quarter. Banks reported smaller year-over-year increases in credit cards, auto loans and agricultural production loans.

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