FDIC Chairman Martin J. Gruenberg:
Opening Statement
Second Quarter 2016 Quarterly Banking Profile
August 30, 2016
Good morning, and welcome to our release of second quarter 2016
banking results for FDIC-insured institutions.
Results for the banking industry were largely positive in the second quarter.
Income and revenue both increased from a year ago, loan growth remained
strong, there were fewer unprofitable banks, and the number of “problem
banks” continued to decline.
Community banks reported another solid quarter as their net income
growth, revenue growth, loan growth, and net interest margins remained
appreciably higher than the overall industry.
However, banks are still operating in a challenging environment. Net
interest margins and return on assets remained low by historical standards,
noncurrent commercial and industrial (C&I) loans increased, and loan
charge-offs rose for a third consecutive quarter.
At the end of June, the Deposit Insurance Fund reserve ratio, which is the
fund balance as a percent of estimated insured deposits, rose to 1.17
Opening Statement
Second Quarter 2016 Quarterly Banking Profile
August 30, 2016
Good morning, and welcome to our release of second quarter 2016
banking results for FDIC-insured institutions.
Results for the banking industry were largely positive in the second quarter.
Income and revenue both increased from a year ago, loan growth remained
strong, there were fewer unprofitable banks, and the number of “problem
banks” continued to decline.
Community banks reported another solid quarter as their net income
growth, revenue growth, loan growth, and net interest margins remained
appreciably higher than the overall industry.
However, banks are still operating in a challenging environment. Net
interest margins and return on assets remained low by historical standards,
noncurrent commercial and industrial (C&I) loans increased, and loan
charge-offs rose for a third consecutive quarter.
At the end of June, the Deposit Insurance Fund reserve ratio, which is the
fund balance as a percent of estimated insured deposits, rose to 1.17
Second Quarter 2016 Quarterly Banking Profile Chairman’s Opening Statement
2
percent, the highest ratio in more than eight years. This marks a significant
milestone for the fund, which fell into negative territory following the
financial crisis. Since the fund’s reserve ratio is now greater than 1.15
percent, most banks will pay lower deposit insurance assessments going
forward as a result of previously adopted FDIC regulations. I will come
back to this point later in my statement.
Chart 1:
Our first chart shows that net income was 43.6 billion dollars in the second
quarter, up 1.4 percent from a year earlier. This increase reflects higher net
operating revenues, combined with reduced litigation expenses at some of
2
percent, the highest ratio in more than eight years. This marks a significant
milestone for the fund, which fell into negative territory following the
financial crisis. Since the fund’s reserve ratio is now greater than 1.15
percent, most banks will pay lower deposit insurance assessments going
forward as a result of previously adopted FDIC regulations. I will come
back to this point later in my statement.
Chart 1:
Our first chart shows that net income was 43.6 billion dollars in the second
quarter, up 1.4 percent from a year earlier. This increase reflects higher net
operating revenues, combined with reduced litigation expenses at some of