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Opening Statement by FDIC Chairman Martin J. Gruenberg on the Third Quarter 2014 Quarterly
Banking Profile
November 25, 2014
Good morning, and welcome to our release of third quarter results for FDIC-insured institutions.
Overall, this was another positive quarter for the industry.
Earnings were higher, revenues were up at more institutions, asset quality continued to improve, and
there were fewer unprofitable banks, “problem” banks, and bank failures. Meanwhile, community banks
had stronger loan growth and higher net interest margins than the overall industry. However, the current
operating environment remains challenging for banks. Low interest rates have put downward pressure on
net interest margins, especially at larger banks. While the economy continues to recover, loan demand
remains modest. And reductions in loan-loss provisions, which have supported earnings growth during
the recovery, appear to be coming to an end.
Chart 1:
Our first chart shows that insured institutions reported net income of 38.7 billion dollars in the third
quarter. This is a 7 percent increase compared to a year ago and is the nineteenth increase in 21
quarters. Community banks earned 4.9 billion dollars during the quarter, which is up 11 percent from a
year ago. Higher net interest income, increased noninterest income, and lower provision expenses were
the primary drivers of stronger earnings at community banks.
Opening Statement by FDIC Chairman Martin J. Gruenberg on the Third Quarter 2014 Quarterly
Banking Profile
November 25, 2014
Good morning, and welcome to our release of third quarter results for FDIC-insured institutions.
Overall, this was another positive quarter for the industry.
Earnings were higher, revenues were up at more institutions, asset quality continued to improve, and
there were fewer unprofitable banks, “problem” banks, and bank failures. Meanwhile, community banks
had stronger loan growth and higher net interest margins than the overall industry. However, the current
operating environment remains challenging for banks. Low interest rates have put downward pressure on
net interest margins, especially at larger banks. While the economy continues to recover, loan demand
remains modest. And reductions in loan-loss provisions, which have supported earnings growth during
the recovery, appear to be coming to an end.
Chart 1:
Our first chart shows that insured institutions reported net income of 38.7 billion dollars in the third
quarter. This is a 7 percent increase compared to a year ago and is the nineteenth increase in 21
quarters. Community banks earned 4.9 billion dollars during the quarter, which is up 11 percent from a
year ago. Higher net interest income, increased noninterest income, and lower provision expenses were
the primary drivers of stronger earnings at community banks.
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Chart 2:
The next chart shows that the proportion of banks reporting year-over-year income growth continues to
rise. Almost 63 percent of all institutions reported higher quarterly net income. You can also see that the
proportion of unprofitable institutions continues to decline. Only 6.4 percent of all banks reported a net
loss in the quarter. This is the smallest percentage in nine years.
Chart 3:
Chart three shows that loan balances increased by 51 billion dollars during the quarter. While this is less
than the large increase in the second quarter, loan balances are still 4.6 percent higher than a year ago.
Almost all loan categories registered increased balances, and nearly three-quarters of all institutions
reported higher total balances. Commercial and industrial loans continued to grow faster than any other
loan category at 10 billion dollars. Auto loan balances rose by 9 billion dollars, but residential mortgages
declined by 6.7 billion dollars, as banks reduced their inventories of mortgages held for sale.
Chart 2:
The next chart shows that the proportion of banks reporting year-over-year income growth continues to
rise. Almost 63 percent of all institutions reported higher quarterly net income. You can also see that the
proportion of unprofitable institutions continues to decline. Only 6.4 percent of all banks reported a net
loss in the quarter. This is the smallest percentage in nine years.
Chart 3:
Chart three shows that loan balances increased by 51 billion dollars during the quarter. While this is less
than the large increase in the second quarter, loan balances are still 4.6 percent higher than a year ago.
Almost all loan categories registered increased balances, and nearly three-quarters of all institutions
reported higher total balances. Commercial and industrial loans continued to grow faster than any other
loan category at 10 billion dollars. Auto loan balances rose by 9 billion dollars, but residential mortgages
declined by 6.7 billion dollars, as banks reduced their inventories of mortgages held for sale.