Slideshow Six insights from the FDIC's 1Q earnings scorecard

Published
  • May 24 2017, 5:47pm EDT

Loan quality

The news was mostly positive for loan quality in the first quarter, with noncurrent loans falling by 5.3%, the 27th time in the last 28 quarters that they've declined. Charge-offs were not quite as good news, however, as they increased year over year for the sixth consecutive quarter. In the first quarter, banks charged off $11.5 billion in loans, a 13.4% increase from the same point in 2016. That said, as a percentage of loans and leases, charge-offs were up only slightly, to 0.5%.

The good with the bad

The number of banks reporting income growth in the first quarter fell to 57.3% from 61% a year earlier, but the number of banks facing losses also fell, dropping to 4.1% from 5.1% in the first quarter of 2016.

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Where are the loans?

By far the biggest cause for worry is loan growth. Despite record profits, bank lending has slowed. Institutions blame a combination of lack of demand and compliance red tape, but policymakers are increasingly interested in fixing the situation.

Problems on the horizon?

The FDIC said much of the drop in loan balance was seasonal, but it was still stark.

Still high

The share of longer-term assets held by banks decreased slightly in the first quarter compared with last year's first quarter — but it remained at a near-record high since the crisis, with 35.4% of loans and securities with maturities of three years or more.

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Hovering in record territory

Although banks complain about regulatory compliance headaches, earnings remain high for the industry overall. Their profit totaled $44 billion in the first quarter, up by more than 12% year over year, primarily on higher noninterest and interest income.