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About three-quarters of Connecticut’s banks have had losses so far in 2020 as the pandemic and margin pressure continue to affect earnings.
According to the FDIC’s Quarterly Banking Profile for the third quarter of 2020, Connecticut’s 34 FDIC-insured institutions together had year-to-date net income of $678 million, down 37.2 percent compared to the same time period last year.
About 23 percent of Connecticut banks have reported gains this year compared to 57 percent at the same time last year. More banks reported gains compared to the second quarter, when only 11 percent of banks reported earnings.
FDIC Chair Jelena McWilliams said in a statement that the banking industry reported better results in the third quarter compared to the first half of 2020. But she noted the ongoing effects on the industry from economic uncertainty and the low interest rate environment. She added that banks in the third quarter faced additional downward pressure on net interest margins, an increase in nonperforming loans and a decline in loan volume.
“Community banks continued to outperform the industry with stronger improvements in annual net income and loan growth,” McWilliams said. “Nonetheless, community banks continued to report an annual increase in provisions, further net interest margin compression, and a modest increase in nonperforming loans.”
Net interest margin was 3.07 percent at the end of the third quarter compared to 3.34 percent on Sept. 30 last year. Connecticut institutions have seen a collective 3.56 percent yield on all earning assets this year, down from 4.29 percent at the same time last year.
The percent of unprofitable institutions is now at 8.8 percent, an improvement over the first and second quarters, when 34.3 percent and 11.8 percent, respectively, were unprofitable. Last year in the third quarter, about 3 percent of the state’s banks were unprofitable.
The 2020 deposit surge continued, with statewide deposits increasing to $104.58 billion, up slightly from $103.8 billion on June 30. Deposits were 14 percent higher compared to the first nine months of 2019, when Connecticut banks held $91.74 billion in deposits.
Connecticut’s FDIC-insured institutions together had total assets of $127.56 billion on Sept. 30 compared to $118.83 billion on the same date last year. Total loans and leases were $91.88 billion, up 5.9 percent year-over-year from $86.78 billion.
The number of full-time-equivalent employees in these institutions fell to 13,795 on Sept. 30 compared to 13,930 on June 30 and 14,588 on Sept. 30, 2019.
