November 20, 2018 Media contact:
Julianne Fisher Breitbeil
(202) 898-6895
jbreitbeil@fdic.gov
FDIC-Insured Institutions Reported $62 Billion in Net Income in Third
Quarter 2018
Community Bank Net Income Increases to $6.8 Billion
Industry Net Income Registers a Strong Increase of 29.3 Percent from a Year Ago
Higher Net Operating Revenue and a Lower Effective Tax Rate Boost Net Income
Community Bank Net Income Rises 21.6 Percent from Third Quarter 2017
Net Interest Margin Widens to 3.45 Percent as Asset Yield Increases Outpace Funding
Cost Growth
Annual Growth Rate for Loan and Lease Balances Is 4 Percent
Noncurrent Rate Continues to Decline and Net Charge-Off Rate Remains Stable
_______________________________
“While the banking industry reported another positive quarter, we continue to monitor its overall
performance in a rising interest-rate environment with competitive lending conditions.”
— FDIC Chairman Jelena McWilliams
_______________________________
Commercial banks and savings institutions insured by the Federal Deposit Insurance Corporation (FDIC)
reported aggregate net income of $62 billion in the third quarter of 2018, up $14 billion (29.3 percent) from a
year ago. The improvement in earnings was attributable to higher net operating revenue and a lower effective
tax rate. Financial results for the third quarter of 2018 are included in the FDIC’s latest Quarterly Banking
Profile released today.
Of the 5,477 insured institutions reporting third quarter financial results, more than 70 percent reported year-
over-year growth in quarterly earnings. The percent of unprofitable banks in the third quarter declined to 3.5
percent from 4 percent a year ago.
“The banking industry reported another strong quarter,” FDIC Chairman Jelena McWilliams said.
“Improvement in net income was led by higher net operating revenue and a lower effective tax rate. Loan
balances grew, net interest margins improved, and the number of ‘problem banks’ continued to decline.
Community banks also reported another positive quarter, with loan growth and a net interest margin
surpassing the overall industry.”
“While the performance results were strong, the extended period of low interest rates and the competition to
attract loan customers have led to heightened exposure to interest-rate risk, and credit risk. Banks must
maintain prudent management of these risks in order to sustain lending through the economic cycle.”
—more—
Julianne Fisher Breitbeil
(202) 898-6895
jbreitbeil@fdic.gov
FDIC-Insured Institutions Reported $62 Billion in Net Income in Third
Quarter 2018
Community Bank Net Income Increases to $6.8 Billion
Industry Net Income Registers a Strong Increase of 29.3 Percent from a Year Ago
Higher Net Operating Revenue and a Lower Effective Tax Rate Boost Net Income
Community Bank Net Income Rises 21.6 Percent from Third Quarter 2017
Net Interest Margin Widens to 3.45 Percent as Asset Yield Increases Outpace Funding
Cost Growth
Annual Growth Rate for Loan and Lease Balances Is 4 Percent
Noncurrent Rate Continues to Decline and Net Charge-Off Rate Remains Stable
_______________________________
“While the banking industry reported another positive quarter, we continue to monitor its overall
performance in a rising interest-rate environment with competitive lending conditions.”
— FDIC Chairman Jelena McWilliams
_______________________________
Commercial banks and savings institutions insured by the Federal Deposit Insurance Corporation (FDIC)
reported aggregate net income of $62 billion in the third quarter of 2018, up $14 billion (29.3 percent) from a
year ago. The improvement in earnings was attributable to higher net operating revenue and a lower effective
tax rate. Financial results for the third quarter of 2018 are included in the FDIC’s latest Quarterly Banking
Profile released today.
Of the 5,477 insured institutions reporting third quarter financial results, more than 70 percent reported year-
over-year growth in quarterly earnings. The percent of unprofitable banks in the third quarter declined to 3.5
percent from 4 percent a year ago.
“The banking industry reported another strong quarter,” FDIC Chairman Jelena McWilliams said.
“Improvement in net income was led by higher net operating revenue and a lower effective tax rate. Loan
balances grew, net interest margins improved, and the number of ‘problem banks’ continued to decline.
Community banks also reported another positive quarter, with loan growth and a net interest margin
surpassing the overall industry.”
“While the performance results were strong, the extended period of low interest rates and the competition to
attract loan customers have led to heightened exposure to interest-rate risk, and credit risk. Banks must
maintain prudent management of these risks in order to sustain lending through the economic cycle.”
—more—
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Highlights from the Third Quarter 2018 Quarterly Banking Profile
Industry Net Income Registers a Strong Increase of 29.3 Percent from a Year Ago: Third quarter net
income totaled $62 billion, an increase of $14 billion (29.3 percent) from 12 months ago. Improvement in
net interest income and noninterest income, coupled with a lower effective tax rate, boosted the industry’s
net income. The average return on assets ratio rose by 29 basis points to 1.41 percent, the highest
quarterly level reported by the industry since the Quarterly Banking Profile began in 1986.
Community Bank Net Income Rises 21.6 Percent from Third Quarter 2017: Reports from 5,044
insured community banks showed $6.8 billion in net income, reflecting an increase of $1.2 billion (21.6
percent) from a year earlier. This increase resulted primarily from higher net operating revenue and a
lower effective tax rate. Higher net interest income (up $1.6 billion, or 8.9 percent) and higher noninterest
income (up $110 million, or 2.4 percent) lifted net operating revenue by $1.7 billion (7.6 percent) from the
third quarter of 2017. Community banks reported a decline in loan-loss provisions of $112.1 million (15.2
percent) and an increase in noninterest expenses of $855.1 million (6 percent).
Net Interest Margin Widens to 3.45 Percent as Asset Yield Increases Outpace Funding Cost
Growth: Net interest income totaled $137.1 billion in the third quarter, an increase of $9.6 billion (7.5
percent) from a year ago. More than four out of five banks (83 percent) reported an improvement in net
interest income from a year ago. The average net interest margin rose to 3.45 percent, up 15 basis points
from a year ago, as average asset yields grew more rapidly than average funding costs.
Noninterest Income Grows Almost 4 Percent from a Year Earlier: Noninterest income rose by $2.4 billion
(3.8 percent) from third quarter 2017, as more than half (54.2 percent) of all banks reported increases. The
annual increase was led by servicing fees, investment banking fees, and other noninterest income.
Annual Growth of Loan and Lease Balances is 4 Percent: Loan and lease balances rose by $82.7
billion (0.8 percent) from the previous quarter, as all major loan categories registered growth. Over the
past 12 months, loan and lease balances grew by 4 percent, a slight decline from 4.2 percent reported last
quarter.
Highlights from the Third Quarter 2018 Quarterly Banking Profile
Industry Net Income Registers a Strong Increase of 29.3 Percent from a Year Ago: Third quarter net
income totaled $62 billion, an increase of $14 billion (29.3 percent) from 12 months ago. Improvement in
net interest income and noninterest income, coupled with a lower effective tax rate, boosted the industry’s
net income. The average return on assets ratio rose by 29 basis points to 1.41 percent, the highest
quarterly level reported by the industry since the Quarterly Banking Profile began in 1986.
Community Bank Net Income Rises 21.6 Percent from Third Quarter 2017: Reports from 5,044
insured community banks showed $6.8 billion in net income, reflecting an increase of $1.2 billion (21.6
percent) from a year earlier. This increase resulted primarily from higher net operating revenue and a
lower effective tax rate. Higher net interest income (up $1.6 billion, or 8.9 percent) and higher noninterest
income (up $110 million, or 2.4 percent) lifted net operating revenue by $1.7 billion (7.6 percent) from the
third quarter of 2017. Community banks reported a decline in loan-loss provisions of $112.1 million (15.2
percent) and an increase in noninterest expenses of $855.1 million (6 percent).
Net Interest Margin Widens to 3.45 Percent as Asset Yield Increases Outpace Funding Cost
Growth: Net interest income totaled $137.1 billion in the third quarter, an increase of $9.6 billion (7.5
percent) from a year ago. More than four out of five banks (83 percent) reported an improvement in net
interest income from a year ago. The average net interest margin rose to 3.45 percent, up 15 basis points
from a year ago, as average asset yields grew more rapidly than average funding costs.
Noninterest Income Grows Almost 4 Percent from a Year Earlier: Noninterest income rose by $2.4 billion
(3.8 percent) from third quarter 2017, as more than half (54.2 percent) of all banks reported increases. The
annual increase was led by servicing fees, investment banking fees, and other noninterest income.
Annual Growth of Loan and Lease Balances is 4 Percent: Loan and lease balances rose by $82.7
billion (0.8 percent) from the previous quarter, as all major loan categories registered growth. Over the
past 12 months, loan and lease balances grew by 4 percent, a slight decline from 4.2 percent reported last
quarter.