Chairman’s Opening Statement
Second Quarter 2017 Quarterly Banking Profile
August 22, 2017
Good morning, and welcome to our release of second quarter 2017 results for FDIC-
insured institutions.
This was another positive quarter for the banking industry, as performance improved
compared to last quarter and a year ago. Revenue and net income growth were both
strong, profitability reached a post-crisis high, 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.
However, as the economy enters the ninth year of an expansion characterized by
modest growth, the annual rate of loan growth continued to slow for a third consecutive
quarter. Nevertheless, loan growth has remained at or above nominal GDP growth.
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 higher-risk and longer-term assets. The industry must
manage interest-rate risk, liquidity risk, and credit risk carefully to remain on a long-run,
sustainable growth path. These challenges will continue to be a focus of supervisory
attention.
Second Quarter 2017 Quarterly Banking Profile
August 22, 2017
Good morning, and welcome to our release of second quarter 2017 results for FDIC-
insured institutions.
This was another positive quarter for the banking industry, as performance improved
compared to last quarter and a year ago. Revenue and net income growth were both
strong, profitability reached a post-crisis high, 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.
However, as the economy enters the ninth year of an expansion characterized by
modest growth, the annual rate of loan growth continued to slow for a third consecutive
quarter. Nevertheless, loan growth has remained at or above nominal GDP growth.
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 higher-risk and longer-term assets. The industry must
manage interest-rate risk, liquidity risk, and credit risk carefully to remain on a long-run,
sustainable growth path. These challenges will continue to be a focus of supervisory
attention.
Chairman’s Opening Statement Second Quarter 2017 Quarterly Banking Profile
2
Chart 1: Quarterly Net Income
Our first chart shows that net income for the industry was 48.3 billion dollars during the
quarter, a 10.7 percent increase from a year ago. Nearly two-thirds of all banks reported
year-over-year growth in quarterly net income, and only 4 percent of banks reported a
net loss during the quarter.
The industry’s return on assets was 1.14 percent in the second quarter. That is up from
1.06 percent a year ago, and is the highest quarterly return on assets since the second
quarter of 2007.
Community banks reported net income of 5.7 billion dollars in the second quarter, an
increase of 8.5 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
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.
38.5 36.5
2016
39.8
43.0
40.4 40.6 39.0
43.6 45.6
43.2
2017
44.0
48.3
2
Chart 1: Quarterly Net Income
Our first chart shows that net income for the industry was 48.3 billion dollars during the
quarter, a 10.7 percent increase from a year ago. Nearly two-thirds of all banks reported
year-over-year growth in quarterly net income, and only 4 percent of banks reported a
net loss during the quarter.
The industry’s return on assets was 1.14 percent in the second quarter. That is up from
1.06 percent a year ago, and is the highest quarterly return on assets since the second
quarter of 2007.
Community banks reported net income of 5.7 billion dollars in the second quarter, an
increase of 8.5 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
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.
38.5 36.5
2016
39.8
43.0
40.4 40.6 39.0
43.6 45.6
43.2
2017
44.0
48.3