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For Immediate Release
August 23, 2018
ABA Media Contact: Ian McKendry
(202) 663-5473
Email:
imckendry@aba.com
Follow us on Twitter: @ABABankers

ABA Statement on FDIC’s Second Quarter Bank Earnings Report

By James Chessen, ABA’s chief economist

​“The banking industry’s strong performance reflected the robust economy in the second quarter. While banks, like other industries, benefited from tax reform, the FDIC noted that bank earnings grew roughly 12% independent of the lower effective tax rate. The real driver of earnings was strong lending by banks. Business and commercial real estate lending together grew by more than $50 billion in this quarter alone, which shows how banks are meeting the strong demand for credit. With strong capital and high credit quality, banks will continue pushing the economy forward, supporting job growth and business expansion.
 
“With industry capital at nearly $2 trillion, the overwhelming majority of banks are well-capitalized and continue to exceed very high domestic and international regulatory capital standards. Banks have diligently built their capital, and intend to strategically deploy it to meet increased loan demand while maintaining a strong cushion to protect against losses. Loan quality continues to improve, which reflects banks’ careful approach to underwriting and their customers’ vigilance in managing debt levels.
 
“Besides credit risk, banks manage interest rate risk carefully, particularly with the possibility of further Fed rate increases over the next 18 months.
 
“The recently passed regulatory reform law will also be a tailwind for community banks in particular, helping them lend to consumers and businesses in all parts of our country. Altogether, tax reform, regulatory relief and the strong economic expansion have created an environment to support job and income growth in the future. All of these factors are helping an already strong banking industry deliver the kinds of services and loans that customers have come to expect and that our economy needs to thrive.”
 
The American Bankers Association is the voice of the nation’s $17 trillion banking industry, which is composed of small, regional and large banks that together employ more than 2 million people, safeguard $13 trillion in deposits and extend nearly $10 trillion in loans.
 
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The American Bankers Association is the voice of the nation’s $17 trillion banking industry, which is composed of small, regional and large banks that together employ more than 2 million people, safeguard $13 trillion in deposits and extend nearly $10 trillion in loans.