Chairman’s Opening Statement
Third Quarter 2017 Quarterly Banking Profile
November 21, 2017
Good morning, and welcome to our release of third quarter 2017 results for
FDIC-insured institutions.
This was another positive quarter for the banking industry. Revenue and
net income were both higher, loan balances increased, net interest margins
improved, and the number of unprofitable banks and “problem banks”
continued to fall. Community banks also reported another solid quarter of
revenue, net income, and loan growth.
While overall performance improved from the prior year, the interest-rate
environment and competitive lending conditions continue to pose
challenges for many institutions. Some banks have responded to this
environment by “reaching for yield” through investing in higher-risk and
longer-term assets.
In addition, with the economy in the ninth year of an expansion that has
been characterized by modest economic growth, the annual rate of loan
growth has slowed in recent quarters. This slowdown has occurred across
all major loan categories and banks of all sizes.
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 continue to be a focus of
supervisory attention.
Third Quarter 2017 Quarterly Banking Profile
November 21, 2017
Good morning, and welcome to our release of third quarter 2017 results for
FDIC-insured institutions.
This was another positive quarter for the banking industry. Revenue and
net income were both higher, loan balances increased, net interest margins
improved, and the number of unprofitable banks and “problem banks”
continued to fall. Community banks also reported another solid quarter of
revenue, net income, and loan growth.
While overall performance improved from the prior year, the interest-rate
environment and competitive lending conditions continue to pose
challenges for many institutions. Some banks have responded to this
environment by “reaching for yield” through investing in higher-risk and
longer-term assets.
In addition, with the economy in the ninth year of an expansion that has
been characterized by modest economic growth, the annual rate of loan
growth has slowed in recent quarters. This slowdown has occurred across
all major loan categories and banks of all sizes.
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 continue to be a focus of
supervisory attention.
Chairman’s Opening Statement Third Quarter 2017 Quarterly Banking Profile
2
Chart 1:
Our first chart shows that net income for the industry was 47.9 billion
dollars during the quarter, a 5.2 percent increase from a year earlier. Two-
thirds of all banks reported year-over-year growth in quarterly net income,
and less than 4 percent of banks reported a net loss during the quarter.
The industry’s return on assets was 1.12 percent in the third quarter. That
is up from 1.10 percent a year earlier, and is the second highest quarterly
return on assets in the past 10 years.
Community banks reported net income of 6 billion dollars in the third
quarter, an increase of 9.4 percent from a year earlier.
-$10
$0
$10
$20
$30
$40
$50
1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3
Securities and Other Gains/Losses, Net
Net Operating Income
Quarterly Net Income
All FDIC-Insured Institutions
Billions of Dollars
2011
28.7
2012
28.5
35.2
25.3
34.8
2013
34.5
37.5
34.4
2014
40.3
38.2 36.1
39.8
37.3
2015
40.1
Source: FDIC.
38.536.5
2016
39.8
43.0
40.4 40.639.0
43.6 45.6
43.2
2017
44.0
48.1 47.9
2
Chart 1:
Our first chart shows that net income for the industry was 47.9 billion
dollars during the quarter, a 5.2 percent increase from a year earlier. Two-
thirds of all banks reported year-over-year growth in quarterly net income,
and less than 4 percent of banks reported a net loss during the quarter.
The industry’s return on assets was 1.12 percent in the third quarter. That
is up from 1.10 percent a year earlier, and is the second highest quarterly
return on assets in the past 10 years.
Community banks reported net income of 6 billion dollars in the third
quarter, an increase of 9.4 percent from a year earlier.
-$10
$0
$10
$20
$30
$40
$50
1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3
Securities and Other Gains/Losses, Net
Net Operating Income
Quarterly Net Income
All FDIC-Insured Institutions
Billions of Dollars
2011
28.7
2012
28.5
35.2
25.3
34.8
2013
34.5
37.5
34.4
2014
40.3
38.2 36.1
39.8
37.3
2015
40.1
Source: FDIC.
38.536.5
2016
39.8
43.0
40.4 40.639.0
43.6 45.6
43.2
2017
44.0
48.1 47.9