Chairman Jelena McWilliams’ Opening Statement
Second Quarter 2018 Quarterly Banking Profile
August 23, 2018
Good morning, and welcome to our release of second quarter 2018 results
for FDIC-insured institutions.
The banking industry reported another positive quarter. Net income
increased on higher net operating revenue and a lower effective tax rate.
Loan balances continued to rise, net interest margins improved, and the
number of “problem banks” continued to fall.
Community banks also reported another solid quarter. Their net income
benefitted from higher revenue and a lower effective tax rate, and loan
growth that was stronger than the overall industry.
It is worth noting that the current economic expansion is the second longest
on record, and the nation’s banks are stronger as a result. The competition
to attract loan customers will be intense, and it will remain important for
banks to maintain their underwriting discipline and credit standards.
Prudent management of credit risk in this economic environment will
continue to be an FDIC priority.
Second Quarter 2018 Quarterly Banking Profile
August 23, 2018
Good morning, and welcome to our release of second quarter 2018 results
for FDIC-insured institutions.
The banking industry reported another positive quarter. Net income
increased on higher net operating revenue and a lower effective tax rate.
Loan balances continued to rise, net interest margins improved, and the
number of “problem banks” continued to fall.
Community banks also reported another solid quarter. Their net income
benefitted from higher revenue and a lower effective tax rate, and loan
growth that was stronger than the overall industry.
It is worth noting that the current economic expansion is the second longest
on record, and the nation’s banks are stronger as a result. The competition
to attract loan customers will be intense, and it will remain important for
banks to maintain their underwriting discipline and credit standards.
Prudent management of credit risk in this economic environment will
continue to be an FDIC priority.
Chairman’s Opening Statement Second Quarter 2018 Quarterly Banking Profile
2
Chart 1:
Our first chart shows that net income for the industry was 60.2 billion
dollars in the second quarter, up 25.1 percent from a year ago.
A little more than half of the dollar increase in net income was attributable
to tax reform. Assuming the effective tax rate for the banking industry prior
to the new tax law, we estimate that quarterly net income would have been
53.8 billion dollars, or 11.7 percent higher than second quarter 2017.
Community banks reported net income of 6.5 billion dollars in the second
quarter, an increase of 21.1 percent from a year earlier. Assuming the
2
Chart 1:
Our first chart shows that net income for the industry was 60.2 billion
dollars in the second quarter, up 25.1 percent from a year ago.
A little more than half of the dollar increase in net income was attributable
to tax reform. Assuming the effective tax rate for the banking industry prior
to the new tax law, we estimate that quarterly net income would have been
53.8 billion dollars, or 11.7 percent higher than second quarter 2017.
Community banks reported net income of 6.5 billion dollars in the second
quarter, an increase of 21.1 percent from a year earlier. Assuming the