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Community bank net income rose 6.7% in the third quarter on higher net interest income and was up 3.9% from a year ago, according to the FDIC’s latest Quarterly Banking Profile.
Key Drivers: Higher net interest income (up 2.7%) and higher noninterest income (up 0.9%) offset higher noninterest expense (up 0.8%) and higher provision expenses (up 13.9%).
Additional Data: For the third quarter, community banks reported:
The pretax return on assets ratio increased 8 basis points from the previous quarter to 1.21%.
The net interest margin increased 6 basis points from the last quarter to 3.35%.
Net operating revenue grew 2.4% quarter-over-quarter as net interest income and noninterest income increased.
Noninterest expense increased 0.8% from the previous quarter and 5.1% from a year ago, and quarterly provision expense was up 13.9% and 30.5%, respectively.
Unrealized losses on securities declined 27.3% from the previous quarter and 47.0% from the previous year.
Total assets increased 1.5% quarter-over-quarter and 4.7% year-over-year.
Loan and lease balances grew 1.1% from the previous quarter and 5.5% from the prior year, and loan growth was broad-based across categories.
Deposits increased 1.7% from the previous quarter and were up 4.2% from a year ago.
Mergers and Closings: The number of FDIC-defined community banks declined to 4,082 in the third quarter, down 19 from last quarter. One community bank closed voluntarily, three community banks were sold to credit unions, several banks transitioned from community to noncommunity banks or vice versa, and 15 merged or consolidated during the quarter. No community banks failed during the quarter.
Overall Industry: The overall banking industry reported an 8.6% decrease in net income from the previous quarter driven by the absence of about $10 billion in one-time gains on equity security transactions reported in the previous quarter.
Deposit Insurance Fund: The Deposit Insurance Fund balance increased $3.9 billion to $133.1 billion, while the reserve ratio increased four basis points during the quarter to 1.25%.