Banks boost profits despite energy slowdown

23 June, 2015 (12:14) | Blog | By: admin

By Don Mecoy -The Oklahoman(TNS)

Coming off a record year for bank earnings in Oklahoma and with oil prices down significantly from last year’s summer peak, Oklahoma Bankers Association head Roger Beverage was expecting a modest decline in first-quarter aggregate profits for the state’s 218 banks.

Instead, net income jumped nearly 15 percent when compared to last year’s January-March period.“I think Oklahoma looks pretty good, actually. It’s a reflection that we’ve had well-managed banks,” Beverage said Wednesday.

Oklahoma’s FDIC-insured institutions banked $318 million in aggregate income in the quarter, up from $277 million in the same period a year ago. Assets, deposits and loans also grew when compared to the year ago period, according to FDIC figures released Wednesday.

Meanwhile, the percentage of loans and leases in which customers’ payments are lagging have decreased steadily over the past three years at state banks, Beverage noted.

“That’s a reflection, I think, of everything that’s going right, right now,” he said.

But low oil prices worry Beverage.

“I’m a little concerned about going forward what happens with the oil price issue if it remains at a low point where it is now,” he said. “It’s probably going to have an impact on these earnings I would guess. It just hasn’t shown up yet on these earnings that I can see.”

However, profits were flat for Oklahoma’s 92 banks that control assets of less than $100 million. Beverage said the cost of complying with regulations has made profits more elusive for those small banks.

Just two of the state’s 218 banks failed to turn a profit, while more than 60 percent registered earnings gains in the quarter.

Nationally, U.S. banks’ earnings rose 6.9 percent in the first quarter from a year earlier as revenues increased, delinquent loans continued to fall and the number of “problem” banks reached a six-year low.

Gradual improvement

The data showed “gradual but steady improvement” for the banking industry, FDIC Chairman Martin Gruenberg said at a news conference. Still, low interest rates continued to crimp banks’ profit margins on loans during the period.

The FDIC reported that U.S. banks earned $39.8 billion in the first quarter, up from $37.2 billion a year earlier.

Nearly 63 percent of banks reported an increase in profit in the first quarter from a year earlier. Only 5.6 percent of banks were unprofitable — the lowest percentage of unprofitable institutions since the second quarter of 2005. “

Community banks performed well during the quarter,” Gruenberg said. “Their earnings were up 16 percent from the previous year, and loan growth and margins at community banks were higher than the rest of the industry.”

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