Remarks by FDIC Chairman Jelena McWilliams and Deputy Director of
the Division of Insurance and Research Pat Mitchell on the
Second Quarter 2019 FDIC Quarterly Banking Profile
Good morning, and welcome to our release of second quarter 2019 performance results
for FDIC-insured institutions.
The banking industry reported another positive quarter. Quarterly net income expanded
from higher net interest income, as loan growth increased, asset quality indicators
showed modest improvement, and the number of “problem banks” continued to decline.
Community banks also reported another positive quarter. Net income at community
banks benefited from higher net operating revenue, and the annual rate of loan growth
at community banks was stronger than the overall industry.
In July, this economic expansion became the longest on record in the United States.
With the recent lowering of short-term rates and inversion of the yield curve in the
second quarter, new challenges for banks in lending and funding may emerge. The
competition to attract and maintain loan customers and deposits is strong, and
therefore, banks need to maintain rigorous underwriting standards and prudent risk
management.
Awareness of interest rate, liquidity, and credit risks at this stage of the economic cycle
will position banks to be more resilient in maintaining lending through the economic
cycle.
I would like to highlight that the deposit insurance fund reserve ratio reached 1.40
percent at the end of the second quarter. As a result of the reserve ratio exceeding 1.38
percent, in September the FDIC will apply credits of approximately 320 million dollars to
small banks’ quarterly assessment invoices.
the Division of Insurance and Research Pat Mitchell on the
Second Quarter 2019 FDIC Quarterly Banking Profile
Good morning, and welcome to our release of second quarter 2019 performance results
for FDIC-insured institutions.
The banking industry reported another positive quarter. Quarterly net income expanded
from higher net interest income, as loan growth increased, asset quality indicators
showed modest improvement, and the number of “problem banks” continued to decline.
Community banks also reported another positive quarter. Net income at community
banks benefited from higher net operating revenue, and the annual rate of loan growth
at community banks was stronger than the overall industry.
In July, this economic expansion became the longest on record in the United States.
With the recent lowering of short-term rates and inversion of the yield curve in the
second quarter, new challenges for banks in lending and funding may emerge. The
competition to attract and maintain loan customers and deposits is strong, and
therefore, banks need to maintain rigorous underwriting standards and prudent risk
management.
Awareness of interest rate, liquidity, and credit risks at this stage of the economic cycle
will position banks to be more resilient in maintaining lending through the economic
cycle.
I would like to highlight that the deposit insurance fund reserve ratio reached 1.40
percent at the end of the second quarter. As a result of the reserve ratio exceeding 1.38
percent, in September the FDIC will apply credits of approximately 320 million dollars to
small banks’ quarterly assessment invoices.
Second Quarter 2019 Quarterly Banking Profile Opening Statement
2
I am joined here today by Pat Mitchell, Deputy Director of the Division of Insurance and
Research, and Doreen Eberley, Director of the Division of Risk Management
Supervision, to discuss bank performance during the second quarter.
Pat, I will turn this over to you. Thank you.
Chart 1:
Thank you, Chairman McWilliams.
Our first chart shows that the banking industry reported quarterly net income of 62.6
billion dollars during the second quarter, an increase of 4.1 percent from a year ago.
Almost 60 percent of all banks reported annual increases in net income, and less than
4 percent of institutions were unprofitable. The industry’s return-on-assets ratio was
1.38 percent in the second quarter, up from 1.37 percent a year ago.
2
I am joined here today by Pat Mitchell, Deputy Director of the Division of Insurance and
Research, and Doreen Eberley, Director of the Division of Risk Management
Supervision, to discuss bank performance during the second quarter.
Pat, I will turn this over to you. Thank you.
Chart 1:
Thank you, Chairman McWilliams.
Our first chart shows that the banking industry reported quarterly net income of 62.6
billion dollars during the second quarter, an increase of 4.1 percent from a year ago.
Almost 60 percent of all banks reported annual increases in net income, and less than
4 percent of institutions were unprofitable. The industry’s return-on-assets ratio was
1.38 percent in the second quarter, up from 1.37 percent a year ago.