Slideshow The Good and Bad Signs in the FDIC's Latest Banking Report

Published
  • June 02 2016, 12:39pm EDT
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Bank earnings fell by 2% in the first quarter, mostly due to higher loan loss provisions because of troubles in the energy sector. But there were other alarming signs — and some positive ones — in the FDIC's Quarterly Banking Profile report. Following are the most significant:

Noncurrent Loans

The overall picture for noncurrent loans was worrying, as they rose by $3.3 billion during the first quarter, the first quarterly increase in two years. But the lion's share of that was due to noncurrent commercial and industrial loans, which rose by $9.3 billion, the largest quarterly increase in such loans in 29 years.

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Loan Loss Reserves

Banks set aside $12.5 billion in provisions for loan losses in the first quarter, a 50% increase, the largest such jump in more than three years. Slightly more than one-third of all banks reporter higher loan loss provisions than the year before. Most of the increase was at larger institutions.

Net Interest Margins

The average net interest margin rose to 3.10%, up from 3.02% a year earlier, with 57% of banks reporting year over year improvements. Still, net interest margins remain low by historical standards due to the low interest rate environment.

Loan Growth

Total loans and leases jumped by $100 billion during the first quarter of the year, driven mostly by a $71 billion increase in commercial and industrial loans. That was mostly due to Wells Fargo's acquisition of GE Capital's commercial lending and leasing business.

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DIF Ratio

The FDIC's Deposit Insurance Fund continues to make steady progress, nearly reaching the minimum 1.15% ratio of reserves to insured deposits after the financial crisis wiped out the fund.