September 26, 2022
Main Street Monday – No Community Bank Failures in the Second Quarter of 2022
“The banking industry reported generally positive results in the second quarter as loan balances strengthened, net interest income grew, and credit quality remained favorable, although net income declined as a result of increased provision expenses. Looking forward, downside risks from inflation, rising interest rates, slowing economic growth, and continuing pandemic and geopolitical uncertainties will continue to challenge bank profitability, credit quality, and loan growth,” says the FDIC Acting Chairman, Martin Gruenberg.
Here are the facts from the FDIC Quarterly Banking Profile from the second quarter of 2022:
- Banks’ quarterly net income in the second quarter of 2022 was $64.4 billion, a $6 billion decrease (8.5%) from the same quarter last year.
- 51.8% of all banks reported that they experienced an annual reduction in quarterly net income.
- The net interest margin in the second quarter of 2022 was 2.8%.
- The average yield on earning assets increased 36 basis points to 3.05%.
- Net operating revenue increased 6.2% due to net interest income growth (9.5% increase) and a small rise in noninterest income.
- Banks’ noninterest expenses rose $8.7 billion or 6.9% year over year.
- Quarterly commercial and industrial (C&I) loans increased by $92.3 billion in the second quarter of 2022.
- Total loan growth was 11.5% from a year ago when not considering PPP.
- Loans and leases 30 to 89 days past due increased 25% from the second quarter of 2021.
- 0.75% of loans and leases are 90 days or more past due, which is a 7.6% decline.
- 83.4% of community banks reported quarterly loan growth in the second quarter of 2022.
- Community banks’ PPP loan balances decreased by $90.6 billion or 93.8% from the second quarter of 2021.
- Annual C&I loan growth at community banks increased almost 22% when excluding PPP loans.
- There was a 5% increase in loans and leases 30 to 89 past due, but total past-due loan balances declined by 10.3% at community banks.
- Over half of community banks reported a decrease in the balance of loans and leases 90 days or more past due.
- There were no community banks that failed during the second quarter of 2022.