Earnings rise, despite record low NIM

By Maria Tor, SNL Financial staff writer

The U.S. banking industry's net income rose to $39.83 billion in the first quarter of 2015 from $36.58 billion in the fourth quarter of 2014 and $37.25 billion in the first quarter of 2014, despite another plunge in the aggregate net interest margin.

The industry's aggregate net interest margin sank below 3.00% for the first time since SNL began tracking bank regulatory data in 1991. The combined net interest margin for commercial banks and savings banks in the first quarter was 2.97%, down from 3.07% in the fourth-quarter of 2014 and 3.12% in the first quarter of 2014. (SNL did not adjust the net interest margin to be on a fully taxable equivalent basis due to limited disclosure by savings institutions in periods before 2012.)

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The first-quarter margin is calculated based on $105.70 billion in aggregate net interest income divided by $14.24 trillion in average earning assets, annualized. Average earning assets reached new heights in the first quarter while net interest income fell compared to the fourth quarter. Average earning assets totaled $14.24 trillion, up from $14.02 trillion in the prior quarter and $13.37 trillion in the first quarter of 2014. Net interest income declined to $105.70 billion from $107.66 billion in the prior quarter, but increased from $104.18 billion a year ago.

Loans grew to $8.36 trillion at March 31 from $8.31 trillion at Dec. 31, 2014, and $7.93 trillion at March 31, 2014. Deposits also grew, increasing to $11.96 trillion from $11.76 trillion at the end of the prior quarter and $11.32 trillion at the end of the first quarter of 2014.

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Alongside the growth in loans, the aggregate provision for loan losses taken by the industry also increased in the first quarter to $8.37 billion from $8.25 billion in the prior quarter and $7.61 billion in the year-ago quarter.

On the noninterest segment of the income statement, total noninterest income grew to $62.57 billion from $59.95 billion in the prior quarter and $59.83 billion a year ago, while total noninterest expense fell to $103.43 billion from $108.52 billion in the prior quarter, but increased from $102.24 billion a year ago.

SNL's data, which is not adjusted for inflation, is based on financial results reported by banks in call reports filed with regulators. Results prior to 2012 include data filed in thrift financial reports. Some banks may amend their results in the weeks leading up to the FDIC's official release of its quarterly banking profile. Data points for prior periods stated above may not match previous articles due to companies subsequently amending their call reports. The data does not include credit unions.

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