The FDIC released its Quarterly Banking Profile today for Q3 2012, here are some highlights:
1. U.S. banks earned a total of $37.6 billion from July through September, a 6.6% increase compared to Q3 2011, and the most profitable quarter for the banking industry in six years, since Q3 2006 (see chart above).
2. The Q3 increase in bank profits from a year ago was the 13th consecutive year-over-year gain in quarterly bank profits starting in Q3 2009, following ten consecutive decreases from Q1 2007 to Q2 2009.
3. At $37.6 billion, Q3 was the third most profitable quarter in history for the industry (not adjusting for inflation), and just slightly behind all-time record high bank profits of about $38 billion in both Q2 2006 and Q3 2006.
4. More than half of all 7,181 FDIC-insured banks (57.5%) reported higher profits in Q3 than a year ago, and only 754 (10.5%) reported negative net income for the quarter. This is the lowest proportion of unprofitable banks in more than five years, since Q2 2007.
5. Only 12 institutions failed in Q3 of this year, which is the smallest number of bank failures in a quarter since Q4 2008.
6. The number of institutions on the FDIC’s “Problem List” fell from 732 to 694, which is the smallest number of “problem” institutions since Q3 2009.
7. Banks set aside $14.8 billion in Q3 for loan losses, which was down from $18.6 billion in the same quarter last year, and the 12th consecutive quarter of year-over-year declines. Bank provisions for loan and lease losses of about $14.5 billion on average so far in 2012 is the lowest level since the first half of 2007.
MP: Overall, this is a very positive report for the financial performance of U.S. banks in Q3: profits are the highest in six years and close to an all-time high, the proportion of unprofitable banks is now the lowest in five years, quarterly bank failures fell to the lowest level in almost five years, the number of “problem” institutions is at a three-year low, and bank provisions for loan losses are the lowest in five years. Today’s FDIC report indicates that the profitability and overall financial health of the U.S. banking industry has gradually returned to the pre-recession levels that prevailed in 2007.