High-profile bank failures weighed down the banking industry’s aggregate profitability, according to the Federal Deposit Insurance Corp.’s quarterly banking profile.
Overall profit fell by 11.3% in the second quarter from a quarter earlier, to $70.8 billion. The FDIC said that net income would have been flat when excluding the impact of the failures of Silicon Valley Bank, Signature Bank and First Republic Bank.
“Despite the period of stress earlier this year, the banking industry continues to be resilient,” FDIC Chairman Martin Gruenberg said in a press release.
“The banking industry still faces significant challenges from the effects of inflation, rising market interest rates and geopolitical uncertainty,” he added.
Deposit fell for a fifth straight quarter, decreasing by 0.5% from a quarter earlier, to $98.6 billion, largely due to a reduction in estimated uninsured deposits. Insured deposits rose by 0.8% from the first quarter.
Unrealized losses on securities rose by 8.3% from the first quarter, to $558.4 billion, though that represents a decrease from a year earlier. Unrealized losses on held-to-maturity securities totaled $309.6 billion, compared to $248.9 billion for available-for-sale securities.