The FDIC on August 23 released second quarter 2018 results for federally-insured financial institutions that indicate another positive quarter for the banking industry, a development the FDIC attributed to higher net operating revenue, a lower effective tax rate resulting from last year's tax law, and the current economic expansion that is the second longest on record. The FDIC's Quarterly Banking Profile reports that the industry's quarterly profit was $60.2 billion, a more than 7 percent increase from the previous record set in this year's first quarter and a 25.1 percent increase over 2017's Q2 figure. Community bank net income increased to $6.5 billion, up 21.1 percent over Q2 '17, the report states, while margins increased as average yields outpaced growth in funding costs. Loan balances expanded 4.2 percent from last year's second quarter, and the noncurrent loan rate declined while the net charge-off rate remained stable. Only 3.8 percent of banks were unprofitable, compared to 4.3 percent a year ago, the FDIC reported. Of the 5,542 commercial banks and savings institutions insured by the FDIC reporting second quarter financial results, more than 70 percent reported year-over-year growth in quarterly earnings. Meanwhile, the "problem bank list" continued to decline, from 92 to 82 banks during the quarter, the lowest number since the fourth quarter of 2007. Other notable bank activity during the quarter cited by FDIC included merger transactions that absorbed 64 institutions, the opening of two new charters – and the fact that no banks failed.

  • FDIC Chair Jelena McWilliams celebrated the new numbers, but with a slight caveat: "The banking industry experienced continued improvement in net interest income, noninterest income and loan performance this quarter. However, the interest-rate environment coupled with competitive lending conditions have led to heightened exposure to interest-rate, liquidity, and credit risks. The industry must continue to position itself to be resilient through economic cycles."