The nation’s banks saw earnings increase, failures fall and troubled institutions ease. While the sector cut its residential loan assets, mortgage-backed securities investments have been on the rise. Bank earnings were concentrated at only three bank-holding companies, while staffing was concentrated at just four firms.
Banks owned $1.859 trillion in one- to four-family residential loans as of March 31, cutting their holdings from $1.878 trillion as of Dec. 31, 2011, according to the Federal Deposit Insurance Corp.’s Quarterly Banking Profile.
The total was $1.836 trillion a year prior.
Another $0.590 trillion in home-equity lines of credit were on banks’ books, shrinking from $0.603 trillion three months earlier and $0.624 trillion a year earlier.
“Non-current loans secured by 1-4 family residential real estate properties increased by $7.5 billion (4.1 percent) as a result of the application of more stringent methodologies for recognizing impairment in junior-lien mortgages, as well as a $10 billion (14.3 percent) increase in non-current re-booked ‘GNMA loans’ that carry federal guarantees,” the report stated. “Excluding rebooked GNMAs, non-current first-lien mortgage balances declined by $7.2 billion (7.2 percent) during the quarter.”
Nonfarm, nonresidential real estate loans totaled $1.057 trillion, and the balance of construction-and-development holdings was $0.228 trillion.
FDIC-insured institutions additionally held $1.730 trillion in MBS, growing their investments from $1.646 trillion as of the end of the fourth quarter and $1.519 trillion a year previous.
Earnings at the nation’s federally insured banks climbed to $35.3 billion — the best performance since prior to the financial crisis in the second-quarter 2007 when the number was $36.7 billion.
Three companies — Citigroup Inc., JPMorgan Chase & Co. and Wells Fargo & Co. — collectively reported $16 billion in first-quarter earnings before income taxes.
Industry earnings were $26.3 billion in the prior quarter and $28.8 billion in the same quarter during the prior year. It was the 11th consecutive year-over-year improvement.
The report indicated that bank equity increased by $18.1 billion. Average tier-one risk-based capital ratio reached a record 13.28 percent.
The number of banks reporting data, excluding two institutions that had not yet submitted data, fell to 7,307 from 7,357 three months earlier. In the first quarter of last year, 7,574 banks were included in the report. The most recent number included 6,263 commercial banks and 1,044 savings institutions.
The decline reflected 27 mergers and 16 bank failures — the fewest number of quarterly failures since the 12 during the fourth-quarter 2008. The FDIC was named receiver of 18 banks in the fourth-quarter 2011, while 26 failed in the same period last year.
The regulator said that the number of problem banks have fallen to 772 from 813 as of the end of last year and 888 as of the first quarter of last year. The number of problem institutions has fallen in each of the last four quarters and stood at its lowest level since the final quarter of 2009.
Banks with an asset concentration in mortgages represented 714 of the first-quarter total.
Assets held by problem banks have also been on the decline, falling to $292 billion from $319 billion at the end of last year.
Headcount in the banking sector finished March at 2,102,226. Staffing contracted from 2,108,565 at the end of December but has grown from 2,094,710 at the same point last year.
Around 1.1 million people were employed at Bank of America Corp., Citi, Chase and Wells Fargo as of March 31, according to earnings data from the individual institutions.
