WASHINGTON — Banks and thrifts enjoyed asset growth for the first time in nearly two years last quarter, the Federal Deposit Insurance Corp. said Tuesday.
Institutions had registered slight growth in reported assets in the first quarter, but the FDIC said that was due to new reporting rules taking effect. With improvements in banks' securities portfolios in the third quarter, the agency's Quarterly Banking Profile said the 1.2% growth in assets — to nearly $13.4 trillion — was "the first real growth in industry assets since fourth quarter 2008."
Overall, institutions earned $14.5 billion, thanks in significant part to the lowest quarterly loss provision since 2007, of $34.9 billion. Total earnings were well over the year-earlier total of $2 billion, but about 3% below the profit in the second quarter.
The agency said the quarterly earnings decline was due to a sizable net loss at one big institution, which had to take a $10.4 billion charge for goodwill impairment. If it were not for that institution, the FDIC said, earnings would have reached a three-year high. Overall, nearly two out of three institutions reported higher net income than a year earlier.
Despite the asset growth, the report said institutions' loan balances still declined, for the eighth time in nine quarters. Total loans fell by 0.1% to $7.4 trillion. The growth in assets was largely due to other investments made by banks, including a 4.5% rise in securities portfolios and a 12.8% rise in assets kept in trading accounts.
The QBP said institutions on the "Problem" list rose by 31 to 860, while assets of institutions on the list declined for the second straight quarter, to $379 billion. Meanwhile, the agency's insurance reserves to insured deposits rose by 13 basis points to negative-0.15%.