US bank earnings up 5.2 percent in 2Q

Published on NewsOK Modified: August 28, 2014 at 5:15 pm •  Published: August 28, 2014
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WASHINGTON (AP) — U.S. banks' earnings rose 5.2 percent in the April-June quarter from a year earlier, as banks reduced their expenses and lending marked its fastest pace since 2007.

The data issued Thursday by the Federal Deposit Insurance Corp. showed a robust picture as the banking industry continues to recover from the financial crisis that struck six years ago. The improving economy has brought greater demand for loans and stepped-up lending.

The FDIC reported that U.S. banks earned $40.2 billion in the second quarter of this year, up from $38.2 billion in the same period in 2013.

The number of banks on the FDIC's problem list fell to 354 in the second quarter, the lowest number in more than five years and down from 411 in the January-March period.

The FDIC said 57.5 percent of banks reported an increase in profit in the second quarter from a year earlier, and only 6.8 percent of banks were unprofitable — down from 8.4 percent a year earlier.

Banks reduced expenses by setting aside less in reserves to cover bad loans and making smaller payrolls, the report said.

FDIC Chairman Martin Gruenberg said the industry continued to improve in the latest quarter. However, he said, "challenges remain" for banks as their revenue is chipped away by lower income from mortgage business.

Total loan balances rose by $178.5 billion, or 2.3 percent, from the first quarter, led by increases in commercial and industrial loans, home mortgages, credit card lending and auto loans. The 2.3 percent increase was the biggest quarterly rise since the fourth quarter of 2007, about a year before the financial crisis struck.

Demand for loans has grown as the economy has improved, new jobs have been added over the past six months and business confidence has rebounded. Improved prospects for repayment of loans have prompted bankers to extend more credit.

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