FDIC-Insured Banks' Q1 Earnings Impressive, Revenues Up
Zacks Investment Research | May 22, 2018 09:40PM ET
Federal Deposit Insurance Corporation (FDIC)-insured commercial banks and savings institutions reported first-quarter 2018 earnings of $56 billion, up 27.5% year over year. Notably, community banks, constituting 92% of all FDIC-insured institutions, reported net income of $6.1 billion, up 17.7% on a year-over-year basis.
Banks’ earnings were driven by higher net operating revenues and a lower effective tax rate. Further, rise in loans and net interest margin were tailwinds. Moreover, decline in number of ‘problem banks’ was a positive. However, higher non-interest expenses and provisions were undermining factors.
Banks, with assets worth more than $10 billion, accounted for a major part of earnings in the reported quarter. Though such banks constitute only 1.8% of the total number of domestic banks, these accounted for approximately 80% of the industry’s earnings. Leading names in this space include JPMorgan (NYSE:JPM) , Bank of America (NYSE:C) , Citigroup (NYSE:C) and U.S. Bancorp (NYSE:USB) .
All the above-mentioned banks carry a Zacks Rank #3 (Hold). You can see Zacks Investment Research
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