FDIC Quarterly Banking Profile 1Q2018 – Summary

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The FDIC recently released their 1Q2018 “Quarterly Banking Profile Summary” report (1), which analyzes Bank performance over the most recent quarter. Below is our summary of the reported data which is pertinent to Commercial Portfolios and Risk Management, as well as highlighting Community Bank performance data where available.

Net Income

Commercial and Savings Institutions insured with the FDIC performed well in 1Q2018 with Aggregate Net Income of $56B, a 27.5% year-over-year increase. This increase has been attributed to lower effective tax rate and higher net operating revenue – though, the gain was offset in part by higher loan-loss provisions and noninterest expense. Less than 4% of Institutions were unprofitable during 1Q2018, the lowest level in 22 years.

More than 70% of Community Banks report higher quarterly earnings. Among Community Banks, Net Income has increased year-over-year by $913.1mm (or 17.7%) up to $6.1B total. Approximately 73% of Community Banks reported higher net income than in the previous year. Community Bank sample size totaled 5,168, reflecting three new charters and no failures.

Net Interest Income

Year-over-year, Net Interest Income rose by $10.3B (an increase of 8.5%). The vast majority, 85.9% of Banks, individually experienced a year-over-year increase. For seven consecutive quarters, annual growth rate for Net Interest Income has exceeded 7.4%. Net Interest Margin, or difference between the interest income generated by banks or other financial Institutions and the amount of interest paid out to their lenders, increased modestly from 3.19% in 1Q2017 to 3.32% in 1Q2018.

Loan Loss Provisions

In 1Q2018, Banks increased Loan Loss Provisions by $356.6MM (or 3%), up to $12.4B total. Though Loan Loss Provisions increased overall, Provisions as a percent of Net Operating Revenue decreased modestly at a rate of 0.4% year-over-year. About 37% of Institutions reported higher Loan Loss Provisions year-over-year, due to higher net charge-offs and notable portfolio growth.

Loan Balances

Total Loan and Lease Balances rose by $455.2B, or 4.9%, year-over-year. Over the last quarter, they rose $31.3B, a 0.3% increase.

Amount of year-over-year increase to Loan Balances broken down by sectors most affected:

  • Commercial & Industrial – increased $91.8B, 4.7%
  • Nonfarm nonresidential – increased $56.1B, 4.2%
  • Residential mortgage – increased $87.8B

Net Charge-Off Rate

Banks overall charged off $12.1B in uncollectable loans – up $540.6MM, or 4.7% – mainly due to delinquent credit card balances. Interestingly, less than half (42.9%) reported a YoY increase, and aside from credit card balances, Net Charge-offs were lower for most loan categories.

For Community Banks, the year-over-year Net Charge-off Rate increased to 0.13%, still well below the rate for Non-community Banks. A notable element of this is that C&I sector Net Charge-off Rate increased 21 basis points to 0.48%.

Noncurrent Loan Rate

Loan balances 90 days or more past due or in nonaccrual status were $3.9B (or 3.4%) lower from 4Q2017. More than half, or 50.8% of all Banks reported declines in Noncurrent Loan Balances in 1Q2018.

Major contributors to the decline in Noncurrent Loans were:

  • Residential mortgages – down 4.9%
  • Commercial & Industrial loans – down 3.4%
  • Credit cards – down 3.7%


(1) https://www.fdic.gov/bank/analytical/qbp/2018mar/qbp.pdf