The nationʻs banks had a strong quarter as they generated net income of $70.4 billion in second quarter, an increase of $51.9 billion, or 281 percent, from the second quarter of 2020, according to data from the Federal Deposit Insurance Corporation (FDIC).
The FDIC aggregates the performance of the nationʻs 4,951 commercial banks and savings institutions each quarter.
The increase was driven by further economic growth and improved credit conditions and lower provision from credit losses. The banking industry reported an aggregate return on average assets ratio of 1.24 percent, up 89 basis points from a year ago. However, this total was down 14 basis points from first quarter 2021.
Also, the average net interest margin (NIM) contracted 31 basis points from a year ago to 2.50 percent – the lowest level on record. This was accompanied by a decline in net interest income of $2.2 billion, OR 1.7 percent, from the same quarter a year ago.
“The banking industry reported strong earnings in second quarter 2021, supported by continued economic growth and further improvements in credit quality,” FDIC Chair Jelena McWilliams said.
In addition, community banks, which make up the bulk of FDIC-insured banks, reported annual net income growth of $1.9 billion, supported by a decline in provision expense and an increase in net interest income. Provision expenses declined $2.3 billion, or 98.1 percent, from a year ago and $345.1 million, 88.2 percent, from the previous quarter. Also, loan volumes increased slightly, 0.3 percent, driven by an increase in credit card balances. Overall, 53.1 percent of 4,490 FDIC-insured community banks reported higher quarterly net income.
Finally, three new banks opened in the quarter while 28 institutions merged with other FDIC-insured institutions. No banks failed in second quarter 2021.