U.S. banks’ income hit a record high in the second quarter, the Federal Deposit Insurance Corporation announced Wednesday.
Net income was $43 billion in the second quarter, up 7 percent from a year ago.
Community banks performed especially well, with their income rising 12 percent to $5.3 billion.
“On balance, the industry and community banks in particular experienced another positive quarter,” FDIC Chairman Martin Gruenberg said at a press conference Wednesday.
One bank insured by the FDIC failed in the second quarter, and only five have failed so far this year.
Gruenberg warned, however, that the industry faces some “challenges.” In particular, he cited that low interest rates have kept revenues lagging asset growth and have pushed some banks to respond by “reaching for yield” — that is, make riskier bets to earn more.
The record-high earnings of banks does not necessarily negate the case for the regulatory relief that the industry, and particularly community banks, have been pushing for, Gruenberg said.
“I actually don’t see an inconsistency between the two,” he said, explaining that the banks’ profitability may be attributable to the strength of the economy. There may be ways to “prudently reduce” regulatory burdens on small banks to make business easier for them, he said.
Senate Banking Committee Chairman Richard Shelby, R-Ala., has sought to advance a package of financial regulatory reforms that would ease a number of rules on smaller banks. That measure, which also would change the rules for big banks and alter a number of features of the financial regulatory system, has run into opposition from Democrats and the White House.
