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U.S. Banks' Earnings Rise Again

The industry's aggregate net interest margin -- the average yield on loans and investments, less the average cost for deposits and wholesale borrowings -- narrowed to 3.46% during the second quarter, from 3.52% the previous quarter, and 3.61% a year earlier.

A very bright note for the industry was that total loans and leases grew by $102 billion, or 1.4%, during the second quarter, with commercial and industrial loans increasing by $48.9 billion, or 3.6%; while residential mortgage loans increased by $16.6 billion, or 0.9%; and credit card balances grew by $14.7 billion, or 2.3%. The industry's total loans and leases grew by 2.7% year-over-year, to $7.513 trillion, as of June 30.

There were 732 "problem institutions" as of June 30, according to the FDIC, declining from 772 the previous quarter, and 865 a year earlier. During the second quarter, 15 banks and thrifts failed.

Illustrating the difficult environment for raising money, gaining state or federal approval for a new banking charter, and operating a small community bank in the face of myriad new regulatory requirements, the FDIC said that "this is the fourth quarter in a row in which no new charters have been added," and that "it has been more than six quarters since the last time a new charter was created other than to absorb a failed bank."


-- Written by Philip van Doorn in Jupiter, Fla.

>Contact by Email.

Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.
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