February 21, 2019 Media contact:
Julianne Fisher Breitbeil
(202) 898-6895
jbreitbeil@fdic.gov
FDIC-Insured Institutions Report Net Income of $59.1 Billion
in Fourth Quarter 2018
• Net Income Rises $33.8 Billion Over Fourth Quarter 2017
• Higher Net Operating Revenue and Lower Income Tax Expenses Lift Net Income
• Community Banks Net Income Increases $2.7 Billion from a Year Earlier
• Net Interest Income Increases 8.1 Percent from a Year Earlier
• Total Loan and Lease Balances Rise 4.4 Percent Over 12 Months
• Full-Year 2018 Net Income Grows to $236.7 Billion
• Number of “Problem Banks” Drops to 60
_______________________________
“The banking industry continued to report strong results, and the FDIC is actively monitoring
economic conditions to ensure banks remain resilient.” — FDIC Chairman Jelena McWilliams
_______________________________
Commercial banks and savings institutions insured by the Federal Deposit Insurance Corporation (FDIC)
reported aggregate net income of $59.1 billion in the fourth quarter of 2018, up $33.8 billion (133.4 percent) from
a year ago. The improvement in net income was led by higher net operating revenue and lower income tax
expenses. Financial results for the fourth quarter of 2018 are included in the FDIC’s latest Quarterly Banking
Profile released today.
Julianne Fisher Breitbeil
(202) 898-6895
jbreitbeil@fdic.gov
FDIC-Insured Institutions Report Net Income of $59.1 Billion
in Fourth Quarter 2018
• Net Income Rises $33.8 Billion Over Fourth Quarter 2017
• Higher Net Operating Revenue and Lower Income Tax Expenses Lift Net Income
• Community Banks Net Income Increases $2.7 Billion from a Year Earlier
• Net Interest Income Increases 8.1 Percent from a Year Earlier
• Total Loan and Lease Balances Rise 4.4 Percent Over 12 Months
• Full-Year 2018 Net Income Grows to $236.7 Billion
• Number of “Problem Banks” Drops to 60
_______________________________
“The banking industry continued to report strong results, and the FDIC is actively monitoring
economic conditions to ensure banks remain resilient.” — FDIC Chairman Jelena McWilliams
_______________________________
Commercial banks and savings institutions insured by the Federal Deposit Insurance Corporation (FDIC)
reported aggregate net income of $59.1 billion in the fourth quarter of 2018, up $33.8 billion (133.4 percent) from
a year ago. The improvement in net income was led by higher net operating revenue and lower income tax
expenses. Financial results for the fourth quarter of 2018 are included in the FDIC’s latest Quarterly Banking
Profile released today.
-2-
“The banking industry continued to report strong results,” McWilliams said. “Growth in net income was
attributable to higher net operating revenue and a lower effective tax rate. Loan balances expanded, net interest
margins improved, and the number of ‘problem banks’ continued to decline. Community banks also had a strong
quarter, with annual loan growth and a net interest margin that exceeded the overall industry.”
“Low interest rates and an increasingly competitive lending environment have led some institutions to reach for
yield, and the recent flattening of the yield curve may present new challenges in lending and funding. Therefore,
banks must maintain prudent management of these risks in order to support lending through this economic
cycle.”
Highlights from the Fourth Quarter 2018 Quarterly Banking Profile
Quarterly Net Income Rises $33.8 Billion Over Fourth Quarter 2017: In the fourth quarter of 2018, 5,406
insured institutions reported quarterly net income of $59.1 billion, up $33.8 billion (133.4 percent) from a year
ago. Lower income tax expenses, coupled with higher net operating revenue boosted quarterly net income. After
adjusting fourth quarters 2017 and 2018 to reflect the average effective tax rate prior to the 2017 tax law,
quarterly net income would have been $50.3 billion in fourth quarter 2018, an increase of 18.5 percent from a
year ago.
Full-Year 2018 Net Income Increases to $236.7 Billion: The banking industry reported full-year 2018 net
income of $236.7 billion, up $72.4 billion (44.1 percent) from 2017. Adjusted for tax reform effects in the same
manner as for quarterly net income, full-year 2018 would have been $207.9 billion, an increase of 13.6 percent
from 2017.
Community Banks Net Income Increases $2.7 Billion from a Year Earlier: The 4,979 insured institutions
identified as community banks reported net income of $6.8 billion in the fourth quarter, up $2.7 billion (65.1
percent) from a year ago. Excluding the benefits of a lower effective tax rate, estimated fourth quarter net
income would have increased by 11.2 percent from a year ago. Net operating revenue was up $1.4 billion to
$24.3 billion, due to increases in both net interest income and noninterest income. Loan-loss provisions
declined 10.4 percent, and noninterest expenses increased 3.6 percent compared with a year earlier.
Net Interest Income Increases 8.1 Percent from Fourth Quarter 2017: Net interest income totaled $140.2
billion in the fourth quarter, a $10.5 billion (8.1 percent) increase from a year ago. More than four out of five
banks (82.6 percent) reported an improvement in net interest income from a year ago. The average net interest
margin was 3.48 percent in the fourth quarter, up from 3.31 percent a year ago.
Total Loan and Lease Balances Rise 4.4 Percent Over 12 Months: Total loan and lease balances increased
2.1 percent from third quarter 2018, reflecting fourth-quarter growth in all major loan categories. Commercial and
industrial loans grew by $80.7 billion (3.9 percent) from the third quarter, and credit card balances, reflecting a
seasonal increase in balances, rose by $47.2 billion (5.5 percent). Over the past 12 months, total loan and lease
balances increased by 4.4 percent, a slight increase from the 4 percent annual growth rate reported in the third
quarter of 2018. Commercial and industrial loans registered the largest dollar increase from a year ago (up
$156.2 billion, or 7.8 percent).
Noncurrent Loan Rate and Net Charge-Off Rate Decline: The amount of loans that were noncurrent – 90
days or more past due or in nonaccrual status – decreased by $1 billion (1 percent) during the fourth quarter.
Noncurrent balances for residential mortgages were down $2 billion (4.4 percent) and commercial and industrial
loans were down $554.3 million (3.6 percent), but noncurrent balances for credit cards were up $1.6 billion (13.8
percent). The average noncurrent loan rate declined 3 basis points from the third quarter to 0.99 percent. Net
charge-offs declined by $605.9 million (4.6 percent) from a year ago, as the average net charge-off rate fell from
0.55 percent to 0.50 percent.
The Number of Banks on the “Problem Bank List” Declines to 60: The FDIC’s Problem Bank List declined
from 71 to 60 during the fourth quarter, the lowest number of problem banks since first quarter 2007. Total
assets of problem banks declined from $53.3 billion in the third quarter to $48.5 billion. During the fourth quarter,
merger transactions absorbed 70 institutions, two new charters were added, and no failures occurred.
“The banking industry continued to report strong results,” McWilliams said. “Growth in net income was
attributable to higher net operating revenue and a lower effective tax rate. Loan balances expanded, net interest
margins improved, and the number of ‘problem banks’ continued to decline. Community banks also had a strong
quarter, with annual loan growth and a net interest margin that exceeded the overall industry.”
“Low interest rates and an increasingly competitive lending environment have led some institutions to reach for
yield, and the recent flattening of the yield curve may present new challenges in lending and funding. Therefore,
banks must maintain prudent management of these risks in order to support lending through this economic
cycle.”
Highlights from the Fourth Quarter 2018 Quarterly Banking Profile
Quarterly Net Income Rises $33.8 Billion Over Fourth Quarter 2017: In the fourth quarter of 2018, 5,406
insured institutions reported quarterly net income of $59.1 billion, up $33.8 billion (133.4 percent) from a year
ago. Lower income tax expenses, coupled with higher net operating revenue boosted quarterly net income. After
adjusting fourth quarters 2017 and 2018 to reflect the average effective tax rate prior to the 2017 tax law,
quarterly net income would have been $50.3 billion in fourth quarter 2018, an increase of 18.5 percent from a
year ago.
Full-Year 2018 Net Income Increases to $236.7 Billion: The banking industry reported full-year 2018 net
income of $236.7 billion, up $72.4 billion (44.1 percent) from 2017. Adjusted for tax reform effects in the same
manner as for quarterly net income, full-year 2018 would have been $207.9 billion, an increase of 13.6 percent
from 2017.
Community Banks Net Income Increases $2.7 Billion from a Year Earlier: The 4,979 insured institutions
identified as community banks reported net income of $6.8 billion in the fourth quarter, up $2.7 billion (65.1
percent) from a year ago. Excluding the benefits of a lower effective tax rate, estimated fourth quarter net
income would have increased by 11.2 percent from a year ago. Net operating revenue was up $1.4 billion to
$24.3 billion, due to increases in both net interest income and noninterest income. Loan-loss provisions
declined 10.4 percent, and noninterest expenses increased 3.6 percent compared with a year earlier.
Net Interest Income Increases 8.1 Percent from Fourth Quarter 2017: Net interest income totaled $140.2
billion in the fourth quarter, a $10.5 billion (8.1 percent) increase from a year ago. More than four out of five
banks (82.6 percent) reported an improvement in net interest income from a year ago. The average net interest
margin was 3.48 percent in the fourth quarter, up from 3.31 percent a year ago.
Total Loan and Lease Balances Rise 4.4 Percent Over 12 Months: Total loan and lease balances increased
2.1 percent from third quarter 2018, reflecting fourth-quarter growth in all major loan categories. Commercial and
industrial loans grew by $80.7 billion (3.9 percent) from the third quarter, and credit card balances, reflecting a
seasonal increase in balances, rose by $47.2 billion (5.5 percent). Over the past 12 months, total loan and lease
balances increased by 4.4 percent, a slight increase from the 4 percent annual growth rate reported in the third
quarter of 2018. Commercial and industrial loans registered the largest dollar increase from a year ago (up
$156.2 billion, or 7.8 percent).
Noncurrent Loan Rate and Net Charge-Off Rate Decline: The amount of loans that were noncurrent – 90
days or more past due or in nonaccrual status – decreased by $1 billion (1 percent) during the fourth quarter.
Noncurrent balances for residential mortgages were down $2 billion (4.4 percent) and commercial and industrial
loans were down $554.3 million (3.6 percent), but noncurrent balances for credit cards were up $1.6 billion (13.8
percent). The average noncurrent loan rate declined 3 basis points from the third quarter to 0.99 percent. Net
charge-offs declined by $605.9 million (4.6 percent) from a year ago, as the average net charge-off rate fell from
0.55 percent to 0.50 percent.
The Number of Banks on the “Problem Bank List” Declines to 60: The FDIC’s Problem Bank List declined
from 71 to 60 during the fourth quarter, the lowest number of problem banks since first quarter 2007. Total
assets of problem banks declined from $53.3 billion in the third quarter to $48.5 billion. During the fourth quarter,
merger transactions absorbed 70 institutions, two new charters were added, and no failures occurred.