FDIC Quarterly

The FDIC Quarterly provides a comprehensive summary of the most current financial results for the banking industry, along with feature articles. These articles range from timely analysis of economic and banking trends at the national and regional level that may affect the risk exposure of FDIC-insured institutions to research on issues affecting the banking system and the development of regulatory policy. The FDIC Quarterly brings together data and analysis that were previously available through three retired publications -- the FDIC Outlook, the FDIC Banking Review, and the FYI: An Update on Emerging Issues in Banking. Past issues of these publications are archived under their original publication names.

FDIC Quarterly, 2024, Volume 18, Number 3

Quarterly Banking Profile: Second Quarter 2024
Net income for the 4,539 FDIC-insured commercial banks and savings institutions increased $7.3 billion (11.4 percent) from the prior quarter to $71.5 billion. A decline in noninterest expense (down $3.6 billion, or 2.4 percent), along with higher noninterest income (up $1.2 billion, or 1.5 percent) and higher gains on the sale of securities (up $937 million), drove the increase in net income. Higher provision expenses offset some of the increase in net income. The banking industry reported an aggregate return-on-assets ratio (ROA) of 1.20 percent in second quarter 2024, up 12 basis points from first quarter 2024, but down 1 basis point from second quarter 2023.

Community Bank Performance
Community banks—which represent 90 percent of insured institutions—reported quarterly net income of $6.4 billion in second quarter 2024, an increase of $72.6 million (1.1 percent) from first quarter 2024. Higher net interest income (up $546.4 million, or 2.7 percent) and higher noninterest income (up $253.9 million, or 5.0 percent) more than offset higher noninterest expense (up $365.7 million, or 2.1 percent) and higher provision expense (up $140.5 million, or 18.2 percent). The community bank pretax ROA increased 1 basis point from last quarter to 1.14 percent.

Insurance Fund Indicators
The Deposit Insurance Fund (DIF) balance increased by $3.9 billion to $129.2 billion. The rise in the DIF was primarily driven by assessment income of $3.2 billion. Interest earned on securities and negative provisions added a combined $1.3 billion to the fund during the quarter. These gains were partially offset by operating expenses of $0.6 billion. One insured institution failed during the second quarter at an estimated cost to the Fund of $667 million. The DIF’s reserve ratio was 1.21 percent on June 30, 2024, up 4 basis points from the previous quarter and 10 basis points higher than the previous year.

Featured Article:

U.S. Industrial Transition and Its Effect on Metro Areas and Community Banks

The economies of Metropolitan Statistical Areas (metros) across the country changed significantly in the five-decade span from 1970 to 2019. The national economy shifted away from the manufacturing sector, and U.S. industries such as steel and textiles were hollowed out by the forces of automation and globalization. This article explores this industrial transition in the United States and its implications for areas that may experience similar transitions as alternative forms of energy and lower carbon technologies emerge. The authors create a novel metric called a Transition Score to measure industrial transition across metros, use this metric to determine which metro areas were most affected by industrial transition, and compare the economic and banking performance of affected areas to areas with lower levels of transition.

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FDIC Quarterly, 2024, Volume 18, Number 3

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