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For Immediate Release
August 30, 2016
ABA Media Contact: Jeff Sigmund
(202) 663-5439
Follow us on Twitter: @ABABankers

ABA Statement on FDIC’s Second Quarter Bank Earnings Report

By James Chessen, ABA’s chief economist

​“The second quarter was a solid one for banks as lending rose sharply to meet increased demand.  With interest rates still far below normal, loan demand was strong practically across the board.  While loan growth was a key earnings driver, non-interest income also played an important role, boosted by a strong increase in trading revenue.”
Lending Grows Sharply
“Even with the economy less than robust, banks continue to see a steadily increasing demand for loans, particularly in business lending and commercial real estate.  Total lending reached more than $9 trillion in the second quarter, helping to support businesses and communities.  Historically low interest rates continue to encourage businesses to borrow, which is so essential to job growth.  All sizes and types of businesses were borrowing, with loan growth to small businesses exceeding pre-recession levels. Increases in real estate lending — from land development to finished residential and commercial projects — reflect an optimism that the economy will continue to improve.”
Banks Ready for Rise in Rates
“Banks remain sensitive to interest rate risk as it becomes increasingly likely the Fed will resume the path toward a normalization of rates by year-end.  The industry has been prepared for this for many years, and will adapt easily to any changes.  The Fed’s rate-hike path will be slow, which will keep borrowing costs down and lending up.”
Capital Levels Increase
“As lending has increased, so has bank capital.  Banks’ strong capital positions provide the necessary foundation for future economic growth. It serves as insurance against any downturn in the economy and ensures that banks will be there for the long haul. Institutions remain highly capitalized at levels far exceeding the most stringent regulatory standards.  Total industry capital now stands at $1.87 trillion, up 5 percent compared to the same period a year ago and more than 33 percent higher than at the end of the recession.”
The American Bankers Association is the voice of the nation’s $16 trillion banking industry, which is composed of small, regional and large banks that together employ more than 2 million people, safeguard $12 trillion in deposits and extend nearly $8 trillion in loans. Learn more at
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