FDIC – US Bank Profits Rise Steadily in 2024

FDIC – Federal Deposit Insurance Corporation

Quarterly Banking Profile: Second Quarter 2024

‘Extracts’ and Bankhawk Commentary

‘Net income for the 4,539 FDIC-insured commercial banks and savings institutions increased $7.3 billion (11.4 percent) from the prior quarter to $71.5 billion. A decline in noninterest expense (down $3.6 billion, or 2.4 percent), along with higher noninterest income (up $1.2 billion, or 1.5 percent) and higher gains on the sale of securities (up $937 million), drove the increase in net income.’

Operating profits at banks increased by €7.3bn (11.4%) owing to two main factors. Firstly, non-recurring FDIC special assessments charged in Q1 to fund the rescue of Silicon Valley Bank, Silvergate Bank and Signature Bank in 2023. Secondly, non-interest income and gains on the sales of securities increased in Q2.

‘Higher provision expenses offset some of the increase in net income. The banking industry reported an aggregate return-on-assets ratio (ROA) of 1.20 percent in second quarter 2024, up 12 basis points from first quarter 2024, but down 1 basis point from second quarter 2023.’

“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 J. Gruenberg

The banking industry continues to power ahead in the second quarter of 2024 with strong net interest margins continuing to drive bank profitability. Clouds on the horizon are losses on commercial real estate office loans, credit card debt and multifamily loans. The collapse of three banks in early 2023 has barely caused a ripple.

Brian Weakliam, Founder Bankhawk

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