Banking profits

The banking industry reported a second quarter profit of $21.6 billion, the highest earnings since the third quarter of 2007. Earnings were boosted by lower loan loss provisions and asset quality improvement. Net charge-offs totaled $49 billion in the second quarter, a $214 million decline from a year earlier and the first year-over-year decline since the fourth quarter of 2006. Further, non current loans declined by $19.6 billion during the second quarter, the first quarterly decline since the first quarter of 2006.

Equity capital increased $27.4 billion in the quarter to total $1.5 trillion. Assets declined for the fifth time in the last six quarters, falling $136.2 billion or one percent from the first quarter. All major loan categories reduced balances during the quarter. Equity to assets was 11.25 percent, the highest level for FDIC-insured institutions since 1938.

The Deposit Insurance Fund reduced its deficit for the second consecutive quarter, rising from -0.38 percent of insured deposits in the first quarter to -0.28 percent in the second quarter. The fund balance was -$15.25 billion at the end of the quarter. Insured deposits, at $5.4 trillion, were 12.9 percent higher than they were one year ago, but down $34 billion or 0.63 percent from the first quarter.