This is the 12th consecutive quarter that earnings have registered year-over-year increases, the FDIC reported today.
In another positive sign of a rebounding banking industry, the number of “problem” institutions fell for the fifth quarter in a row, declining from 772 to 732. This is the smallest number of “problem” banks since the fourth quarter of 2009.
Total assets of “problem” institutions declined from $292 billion to $282 billion.
“The banking industry continued to make gradual but steady progress toward recovery in the second quarter,” FDIC Acting Chairman Martin J. Gruenberg said. “Levels of troubled assets and troubled institutions remain high, but they are continuing to improve.”
Fewer Americans are defaulting on their loans, bolstering the earnings of banks and requiring less provisions for losses. Banks also have seen higher gains on sales of loans and other assets.
Almost two-thirds of all institutions (62.7 percent) reported improvements in their quarterly net income from a year ago.
Meanwhile, the share of institutions reporting net losses for the quarter fell to 10.9 percent from 15.7 percent a year earlier.
The average return on assets (ROA), a basic yardstick of profitability, rose to 0.99 percent from 0.85 percent a year ago.
Bank loan balances have increased for the fourth time in the last five quarters.