Community banks reported a 13.5% increase in net income during the third quarter from the previous quarter and a 3.9% increase from a year ago, according to the FDIC's latest Quarterly Banking Profile.
Key Driver: Higher net interest income more than offset lower noninterest income and higher noninterest expense, driving a 3.9% increase in net income. The FDIC said 74% of community banks reported higher net income from last quarter and 63% reported higher net income from a year ago.
Community Bank Numbers: For the third quarter, community banks also reported:
The community bank pretax return on average assets ratio rose 17 basis points from last quarter to 1.51%.
The average community bank quarterly net interest margin rose 30 basis points from the prior quarter and 32 basis points from a year ago to 3.63%, its pre-pandemic average.
The average yield on earning assets rose 48 basis points from the previous quarter and 49 basis points from last year, while average funding costs rose 18 and 17 basis points, respectively.
Quarter-over-quarter growth in net interest income of 9.4% outpaced growth in earning assets of 1.0%.
Unrealized losses on securities totaled $76.1 billion in the third quarter, up from $55.3 billion in the second quarter, reflecting increased market interest rates.
Total assets increased 1.2% from the second quarter and 5.4% from the previous year.
Capital: The tier 1 risk-based capital ratio for community banks that did not file the community bank leverage ratio was 13.73%, down 26 basis points from the prior quarter on growth in higher-risk-weighted assets. The average CBLR for the 1,591 community banks that elected to use the CBLR framework was 11.81%, up 26 basis points from the second quarter.
Overall Industry: The overall banking industry reported an 11.3% increase in net income from the second quarter on higher net interest income.
Deposit Insurance Fund: The DIF balance increased $1.0 billion to $125.5 billion. The reserve ratio was unchanged at 1.26% on a 0.1% increase in insured deposits.
Mergers and Closings: During the quarter, 26 institutions merged, three new banks opened, and none failed.