Banks post solid gains in second quarter

Commercial banks and savings institutions insured by the Federal Deposit Insurance Corp. earned $43 billion in net income during the second quarter nationally. That’s up 7.3 percent compared with the second quarter of 2014.

The data was released as part of the FDIC’s Quarterly Banking Profile, representing data through June 30, 2015.

The report attributed the improvement to higher net operating revenue and lower noninterest expenses, which outweighed increased expenses for loan-loss provisions.

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“Almost 60 percent of all banks – 58.9 percent – reported year-over-year growth in quarterly net income, while only 5.6 percent were unprofitable in the quarter,” the report stated. “In second quarter 2014, 6.8 percent of all banks reported net losses.”

The average return on assets, a key measure of bank health, increased slightly to 1.09 percent, from 1.07 percent in the second quarter of 2014.

The number of institutions nationwide dropped to 6,348 from 6,656 a year ago, while total assets increased to $15.75 trillion, from $15.17 trillion. Deposits totaled $11.9 trillion, up from $11.5 trillion as of June 30, 2014.

The FDIC also reported that the number of problem institutions – those considered to be in financial difficulty – dropped to 228 nationwide in the second quarter. That’s down from 354 a year ago and down from 884 during the banking crisis in 2010. Assets of problem institutions declined to $57 billion, compared with $110 billion in the second quarter of 2014 and $390 billion in 2010. Only five institutions have failed so far in 2015, compared with 12 a year ago and 157 in 2010.

Improvements were especially pronounced among community banks. “Community banks, which represent 93 percent of insured institutions, reported net income of $5.3 billion in the second quarter, up $555.3 million (11.8 percent) from one year earlier. The increase was driven by higher net interest income and noninterest income, and lower provision expense. The 12-month growth rate in loan balances at community banks was 8.8 percent, almost twice the rate of noncommunity banks. Asset quality indicators continued to improve, and community banks accounted for 44 percent of small loans to businesses.”

Colorado banks showed similar positive trends in the second quarter. Employment at FDIC-insured institutions increased to 9,615 as of June 30, up from 9,292 a year ago. Net income totaled $259 million through the second quarter, up from $250 million as of June 30, 2014. Total assets climbed to $49.33 billion, compared with $46.52 billion a year ago. Deposits totaled $42.3 billion, up from $39.68 billion a year ago.

The number of insured institutions dropped slightly from a year ago, to 95 from 97 statewide.

Banks are lending more in Colorado as well, with total loans and leases jumping to $29.5 billion, from $26.6 billion a year ago.

The Boulder Valley and Northern Colorado continue to experience a wave of new branching activity, with Bank of Colorado, Bank of America and Sunflower Bank among those adding branches.

Christopher Wood can be reached at 303-630-1942, 970-232-3133 or cwood@bizwestmedia.com.