Community banks made $8.7 billion in net income in Q2

The nation’s 3,818 FDIC-insured community banks made $8.7 billion in net income in the second quarter of the year, up 8.2 percent from Q1. The rise was due to higher net interest income and noninterest income along with securities gains, according to the Q2 FDIC Quarterly Banking Profile. .Pretax ROA increased 11 basis points from Q1 to 1.53 percent, 17 basis points higher than 12 months ago, according to the Aug. 25 report. Community banks’ net interest income increased 4.0 percent or $945.9 million in Q2 as more than two-thirds saw an increase. Net operating revenue increased 4.6 percent or $1.3 billion to $29.8 billion.Community banks’ NIM increased 10 basis points from Q1 to 3.81 percent, up 19 basis points from a year ago. The share of community banks unprofitable during Q2 was 4.4 percent, down from 4.9 percent in the first quarter. Total assets at community banks grew less than 1 percent from Q1 and 4.8 percent from a year ago to $2.8 trillion. Total loans and leases rose 1.6 percent or $31 billion from the previous quarter to $1.9 trillion.Community banks’ efficiency ratio fell to 60.52 percent from 61.88 percent in Q1. Provision expenses increased 37.2 percent from the previous quarter but were down 8.1 percent from a year ago. The share of community bank loans and leases 30 days or more past due fell 10 basis points to 1.34 percent. Community banks’ domestic deposits increased less than a half percent to $2.3 trillion. The nation’s 4,238 insured commercial banks and savings institutions made $90.1 in aggregate net income in the second quarter, up 12 percent or $9.7 billion from the previous quarter. The increase was fueled by a 6.1 percent rise in noninterest income amid higher trading revenue and fee income. Also sparking income growth were securities gains from one-time increases on equity security transactions along with higher net interest income and lower provision expenses. Industry-wide ROA was 1.37 percent, up from 1.26 percent in Q1 as the yield on earning assets increased at a higher rate than cost of funds. Industry NIM increased one basis point from Q1 to 3.32 percent. Domestic deposits increased 0.8 percent, the eighth straight quarterly increase. Total loans and leases increased 1.8 percent from the previous quarter to $13.9 trillion, up 6.8 percent from the prior year. “The banking industry continued to maintain strong capital and liquidity levels, which support lending and protect against potential losses,” according to the report. “Asset quality metrics improved, as both the past-due and nonaccrual and net chargeoff rates declined from the prior quarter.”