On Wednesday, a quarterly report released by the Federal Deposit Insurance Corporation (FDIC), indicated that almost 11% of the banks and thrifts in Illinois reported zero profits in the first quarter, compared with just 7% banks in US, that did not make any money.
However, the banks of Illinois showed some signs of improvement, as in 2012, almost 16% were unprofitable.
Moreover, the banks also reported an aggregate net income of USD 697 million in Q1, which indicated a 20% increase compared to the last year’s same period.
The profits of Illinois banks were still impressive compared to the profits of banks nationwide. The private banks and thrifts which are insured by FDIC, reported an aggregate net income of USD 37.2 billion in Q1 of 2014, which indicated a 8% decrease compared to the last year. The government agency claimed that the drop in income was due to a decrease in non-interest income, caused mainly due to a decrease in trading revenue and reduced mortgage activity.
However, despite the decline in cumulative earnings, 54% of 6,730 insured institutions of US reported year-over-year growth in earnings. Similarly, 51% of 539 Illinois banks saw an increase in their profits from the last year’s same period.
In a statement, Martin Gruenberg, the Chairman of FDIC, said, “Asset quality continues to improve, loan balances are trending up, fewer institutions are unprofitable, and the number of problem banks continues to decline.”
However, the revenues of the industry have been squeezed due to limited loan growth and a decrease in non-interest income, as higher interest rates suppress mortgage activity.
Furthermore, during the first quarter, the number of banks that listed in the “problem list” of FDIC, fell from 467 to 411.