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Bank Income Rises as Problem Firms Decline: FDIC

FDIC
Patrick Fallon | Bloomberg | Getty Images
FDIC

The Federal Deposit Insurance Corp released on Tuesday a fairly rosy quarterly banking profile for the second quarter of 2012, saying net income and lending were on the rise as the number of problem banks fell.

The FDIC reported that banks earned $34.5 billion in the quarter, a $5.9 billion or 20.7 percent increase over the second quarter of 2011. More than 62 percent of banks reported higher earnings than a year ago. (Read More: Here's What Banks Are Buying This Summer.)

Only 10.9 percent were unprofitable, the agency noted, down from 15.7 percent in the second quarter of 2011.

And the FDIC noted that noncurrent loan balances, those 90 days or more past due, declined for a ninth consecutive quarter, falling by $12.9 billion, or 4.2 percent. The largest declines took place in real estate construction and development loans, where noncurrent balances fell by $5.1 billion, or 17.8 percent. The FDIC said well over half of all institutions reported reductions in noncurrent balances. (Read More: US Home Builders Begin to See Credit Thaw.)

Loans increased for the fourth time in the last five quarters, the FDIC said, with total assets increasing by $105.3 billion, or 0.8 percent. Total loans and leases grew by $102 billion, or 1.4 percent. The fastest growing category was commercial and industrial borrowers, which increased by $48.9 billion, or 3.6 percent.

At the same time, the FDIC’s list of problem banks shrank for the fifth consecutive quarter, from 772 to 732. Total assets of those problem institutions declined from $291 billion to $282 billion.

—By CNBC's Eamon Javers
@EamonJavers

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