Community bank net income rose 6.1% in the first quarter but remained down 13.9% from a year ago, according to the FDIC’s latest Quarterly Banking Profile.

Key Drivers: Community banks booked a securities gain of $47.3 million, up from a loss of $322.3 million in the previous quarter. In addition, a 1.7% decrease in noninterest expense and a 28.9% decrease in provision expense more than exceeded a 1.6% decrease in noninterest income and a 2.1% decline in net interest income.

Additional Data: For the first quarter, community banks reported:

  • The pretax return on assets ratio increased 6 basis points from the previous quarter but was down 14 basis points from a year ago to 1.13%.

  • The net interest margin declined from the last quarter to 3.23% and was down 26 basis points from a year ago.

  • Net operating revenue decreased 2.0% due to lower net interest income.

  • Total assets increased 0.8% from the fourth quarter and 4.0% from the previous year.

  • Loan and lease balances increased from the prior quarter across all major portfolios except construction and development loans and agricultural production loans and increased 7.1% from the previous year.

  • Deposits increased 1.0% from the previous quarter and were up 2.9% from a year ago.

  • The share of noncurrent loans and leases increased 5 basis points from the previous quarter, while the net charge-off rate decreased 7 basis points.

Overall Industry: The overall banking industry reported a 79.5% increase in net income from the previous quarter due to a large decline in noninterest expense.

Deposit Insurance Fund: The DIF balance increased $3.5 billion to $125.3 billion on higher assessment revenue, while the reserve ratio increased 2 basis points during the quarter to 1.17%.

Mergers and Closings: During the quarter, the total number of FDIC-insured institutions declined by 19 to 4,568. One bank opened, four banks did not file a call report, and 16 institutions merged with other banks during the quarter.