U.S. banks see second quarter net income rise by 11.4%

The 4,539 U.S. banks insured by the Federal Deposit Insurance Corp. (FDIC) had a combined second quarter net income of $71.5 billion, up 11.4%, or $7.3 billion, compared with the first quarter.

According to the FDIC report posted Thursday (Sept. 5), a $3.6 billion decline in non-interest expense, a gain of $1.2 billion in non-interest income, and $937 million in sales of securities helped drive the second quarter net income boost.

The banking industry reported an aggregate return-on-assets ratio (ROA) of 1.2% percent in second quarter 2024, up 12 basis points from first quarter 2024. The ROA is a closely-watched metric of bank performance.

“The banking industry continued to show resilience in the second quarter. Net income increased and asset quality metrics remained generally favorable.  However, the banking industry still faces significant downside risks 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 Chairman Martin Gruenberg noted in a statement.

Second quarter income for the 4,104 institutions categorized as community banks posted combined second quarter net income of $6.4 billion, up $72.6 million, or 1.1%. Interest income was up 2.7%, or $546.4 million, and non-interest income was up 2.1%, or $365.7 million. The community bank pretax ROA increased one basis point from last quarter to 1.14%.

In a separate press release, the American Bankers Association said the FDIC quarterly report shows that U.S. banks are “well capitalized and financially sound.”

“The latest FDIC Quarterly Banking Profile indicates that the banking industry remains resilient as it continues to support growth while navigating economic uncertainty. The industry saw a 1% jump in loan growth in the second quarter, with increases in nearly every category. Bank deposits, partially buoyed by growth in retail CDs, declined slightly on seasonal tax outflows,” noted Sayee Srinivasan, ABA chief economist.

The total number of FDIC-insured institutions declined by 29 during the quarter to 4,539. Three banks were sold to credit unions and 26 institutions merged with other banks during the quarter. One bank failed in the second quarter but did not file a call report in the first quarter, and no banks opened.

In 2023, the FDIC reported that 4,587 commercial banks and savings institutions had combined net income of $256.9 billion, down $6 billion, or 2.3%, compared with 2022.