Banking income declines in 2Q

According to a recent Federal Deposit Insurance Corp. (FDIC) report, federally insured commercial banks and savings institutions saw net income decline by 8.5% to $64.4 billion in the second quarter. An increase in provision expense drove the annual reduction in net income.

Through the first two quarters of 2022, ending June 30, net income for 84 FDIC-insured Arkansas banks decreased by 26% to $868 million, from $1.17 billion in the same period of 2021.

“The banking industry reported generally positive results in the second quarter as loan balances strengthened, net interest income grew, and credit quality remained favorable, although net income declined as a result of increased provision expenses,” FDIC Acting Chairman Martin J. Gruenberg said. “Looking forward, downside risks from inflation, rising interest rates, slowing economic growth, and continuing pandemic and geopolitical uncertainties will continue to challenge bank profitability, credit quality, and loan growth.”

Reports from the 4,771 FDIC-insured institutions show that more than half of all banks (51.5%) reported an annual decline in quarterly net income. However, net income rose $4.6 billion (7.8%) from the first quarter of 2022 as growth in net interest income exceeded growth in provision expense.

In Arkansas, total employees increased 7.3% to 25,264 in the second quarter, from 23,532 on June 30, 2021.