Chairman Martin J. Gruenberg’s Opening Statement
Fourth Quarter 2017 Quarterly Banking Profile
February 27, 2018
Good morning, and welcome to our release of fourth quarter and full-year
2017 results for FDIC-insured institutions.
Results this quarter include one-time changes from the new tax law. Both
fourth quarter and full-year net income declined, reflecting a one-time
increase in income taxes from a revaluation of deferred tax assets and
repatriation of income from foreign subsidiaries.
Notwithstanding the one-time impact of the new tax law, the overall
performance of the industry continued to be positive. Net operating revenue
rose, loan balances increased, net interest margins improved, and the
number of “problem banks” fell below 100.
Community banks also were affected by the new tax law in the fourth
quarter, primarily from the one-time revaluation of deferred tax assets.
However, net interest income was up significantly at community banks, as
net interest margins improved and their loan growth outpaced that of the
overall industry.
Fourth Quarter 2017 Quarterly Banking Profile
February 27, 2018
Good morning, and welcome to our release of fourth quarter and full-year
2017 results for FDIC-insured institutions.
Results this quarter include one-time changes from the new tax law. Both
fourth quarter and full-year net income declined, reflecting a one-time
increase in income taxes from a revaluation of deferred tax assets and
repatriation of income from foreign subsidiaries.
Notwithstanding the one-time impact of the new tax law, the overall
performance of the industry continued to be positive. Net operating revenue
rose, loan balances increased, net interest margins improved, and the
number of “problem banks” fell below 100.
Community banks also were affected by the new tax law in the fourth
quarter, primarily from the one-time revaluation of deferred tax assets.
However, net interest income was up significantly at community banks, as
net interest margins improved and their loan growth outpaced that of the
overall industry.
Chairman’s Opening Statement Fourth Quarter 2017 Quarterly Banking Profile
2
The interest-rate environment and competitive lending conditions continue
to pose challenges for many institutions. Some banks have responded by
“reaching for yield” through investing in higher-risk and longer-term assets.
So far, interest rates on deposits have not increased at the same pace as
loan rates. Higher interest rates on deposits could result in narrower net
interest margins.
Going forward, the industry must manage interest-rate risk, liquidity risk,
and credit risk carefully to continue to grow on a long-run, sustainable path.
These challenges facing the industry will remain a focus of supervisory
attention.
2
The interest-rate environment and competitive lending conditions continue
to pose challenges for many institutions. Some banks have responded by
“reaching for yield” through investing in higher-risk and longer-term assets.
So far, interest rates on deposits have not increased at the same pace as
loan rates. Higher interest rates on deposits could result in narrower net
interest margins.
Going forward, the industry must manage interest-rate risk, liquidity risk,
and credit risk carefully to continue to grow on a long-run, sustainable path.
These challenges facing the industry will remain a focus of supervisory
attention.