Federal Deposit Insurance Corp.

Matt Gunn, Managing Editor | TechComply

Commercial and savings bank profits have continued their steady march upward in the wake of the financial crisis, according to new data from the Federal Deposit Insurance Corp.

FDIC-insured institutions reported an aggregate net income of $40.3 billion in the first quarter of this year. That’s a 15.8% — or $5.5 billion — increase in profits from the fourth quarter of 2012, and the 15th-straight quarter of year-over-year growth for FDIC institutions. The agency today released its Quarterly Banking Profile for the first quarter of 2013.

“Today’s report shows further progress in the recovery that has been underway in the banking industry for more than three years,” FDIC chairman Martin Gruenberg said in a press release. “We saw improvement in asset quality indicators over the quarter, a continued increase in the number of profitable institutions, and further declines in the number of problem banks and bank failures. However, tighter net interest margins and slow loan growth create an incentive for institutions to reach for yield, which is a matter of ongoing supervisory attention.”

According to the FDIC, more than half of the 7,019 commercial and savings institutions that reported financial results experienced year-over-year increases in earnings. And fewer institutions were unprofitable this year (8.4%) than this time last year (10.6%). The average return on assets for the first quarter was 1.12%, the highest margin since 2007.

That’s generally good news for banks and credit unions, many of which suffered a squeeze on profits since the financial crisis took hold in 2008. Today fewer institutions are on the FDIC’s “Problem List,” down from 651 late last year to 612. There were as many as 888 problem institutions as recently as 2011. As more institutions climb out from the difficult recent years, they may regain the ability to invest in themselves — updating systems and processes to ensure a more efficient cost structure and profits in the future.