FDIC reports bank earnings up in fourth quarter

Financial institutions insured by the Federal Deposit Insurance Corp. saw earnings grow by nearly 12 percent in the fourth quarter of 2015, according to a news release.

FDIC-insured institutions earned $40.8 billion in net income last quarter, a rise of 11.9 percent from fourth-quarter results in 2014, according to an FDIC release.

The corporation said the increase was largely due to a $6.8 billion increase in net operating revenue and a $2.7 billion decline in non-interest expenses for the roughly 6,200 insured institutions that reported figures.

“Revenue and income were up from the previous year, and there were fewer banks on the problem list,” said Martin Gruenberg, FDIC chairman, in the release. “The banking industry continued to improve in the fourth quarter. Banks are, however, operating in a challenging environment. Revenue growth continues to be held back by narrow interest margins.”

Gruenberg added that there are signs of a growing credit risk, particularly among loans related to energy and agriculture. Community banks – about 90 percent of FDIC-insured institutions – reported $5.1 billion in net income for the fourth quarter, an increase of 4 percent from the same period in 2014.

In another positive sign for banks, loan and lease balances increased about 2 percent to $197.3 billion in the fourth quarter, ending a solid year that saw balances increase by 6.4 percent ($530 billion) when compared with 2014 numbers. The 12-month 2015 growth rate was the largest reported since a period between mid-2007 to mid-2008, according to the release.

In a separate news release, the American Bankers Association said the FDIC-insured fourth-quarter results signaled the finish of a strong year for the industry.

“Strong, broad-based loan growth was the driving factor behind another solid year for America’s banking industry,” said James Chessen, an economist for the association, in the release. “Lending is the big story as banks of all sizes steadily increase their loans to small, medium and large businesses.”

Citing “global concern” and low confidence among businesses, Chessen added that he thinks banks are well-prepared for any possible domestic or global economic slowdown in the coming months.

This story was originally published February 24, 2016 at 10:59 AM with the headline "FDIC reports bank earnings up in fourth quarter."