Slideshow Four Reasons Why Bankers Loved the Second Quarter

Published
  • September 03 2013, 1:45pm EDT
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Banks hit another earnings record in the second quarter, but there were other pieces of good news tucked away inside the Federal Deposit Insurance Corp.'s recently released Quarterly Banking Profile as well. From better credit quality to a falling number of "problem" banks, the industry had a lot to celebrate — even if it must also face the grim prospect that falling loan loss provisions won't boost earnings much longer.

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Credit Quality Continues to Improve

Noncurrent loans fell for the 13th straight quarter, dropping $21.7 billion in the second quarter. Charge-offs, meanwhile, were at their lowest level since 2007, dropping 30% from a year earlier to $14.2 billion.

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Profitability Is Up for Most Banks

More than half of the banks reported higher quarterly net income than a year ago, and only 8.2% of banks reported negative net income, the lowest proportion of unprofitable institutions in nearly seven years.

Banks Are Making More Loans

Total loans and leases grew by $73.8 billion in the second quarter, with most loan categories seeing a boost. C&I lending was up by $30.4 billion while auto loans and credit card balances each increased by roughly $10 billion.

The Number of Troubled Banks Continues to Fall

The number of problem banks fell below 600 in the second quarter, the lowest level in four years. Assets at such institutions fell to $192.5 billion.