WASHINGTON -- Bank earnings rose in the third quarter to their highest level in more than four years, while the number of troubled banks fell for the second straight quarter, the FDIC reported this morning.
The banking industry earned $35.3 billion in the third quarter, up 48% from $23.8 billion in the same period last year. More than 60% of banks reported improved earnings.
NCUA has yet to report third quarter earnings for credit unions, which are expected to be negative or insignificant because of the agency’s $2 billion corporate credit union assessment in September.
The FDIC said there were 844 banks on its confidential "problem" list in the quarter. That was down from 865 the second quarter, which was first quarter in five years to show a decline.
The biggest banks, those with assets over $10 billion, drove the bulk of the earnings growth. They made up 1.4% of all banks but accounted for about $29.8 billion of the industry's earnings in the third quarter.
A majority of all institutions, or 63%, reported improvements in quarterly net income from a year ago. Also, the share of institutions reporting net losses for the quarter fell to 14.3%, down from 19.5% a year earlier. The average return on assets (ROA), the main yardstick of profitability, rose to 1.03%, from 0.72% a year ago.
Asset quality indicators continued to improve as noncurrent loans and leases (those 90 days or more past due or in nonaccrual status) fell for a sixth consecutive quarter. Insured banks and thrifts charged off $26.7 billion in uncollectible loans during the quarter, down $17.2 billion, or 39.2%, from a year earlier.
So far this year, 90 banks have failed, down from the 157 banks closed last year — the most for one year since the height of the savings and loan crisis in 1992 — and 140 in 2009.
