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Most Connecticut 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 second quarter of 2020, Connecticut’s 34 FDIC-insured institutions together had year-to-date net income of $389 million, down 49.4 percent compared to the same time period last year.
Less than 12 percent of banks have reported gains this year compared to 64.9 percent at the same time last year. Gains were reported at 14.3 percent of banks in the first quarter, while 57.1 had positive earnings at the end of 2019.
FDIC Chair Jelena McWilliams said in a statement that bank earnings nationwide continued to reflect economic stress related to the pandemic. She added that the industry had remained a source of strength for the economy, including by participating in the Paycheck Protection Program.
“Nevertheless, lower levels of business activity and consumer spending – combined with uncertainty about the path of the economy and the low interest-rate environment – contributed to higher provisions for loan and lease losses, as well as a decrease in net interest margins,” McWilliams said. “Notwithstanding these disruptions, however, the banking industry maintained strong capital and liquidity levels at the end of the second quarter, which will protect against potential losses in the future.”
Net interest margin was 3.11 percent at the end of the second quarter compared to 3.37 percent on June 30 last year. Connecticut institutions have seen a collective 3.68 percent yield on all earning assets this year, down from 4.31 percent at the same time last year.
The percent of unprofitable institutions is now at 11.8 percent, an improvement over the first quarter, when 34.3 percent were unprofitable, but still more than the second quarter last year, when 5.4 percent of the state’s banks were unprofitable.
Banks have reported PPP, other government aid, less spending and tax deadline extensions as some of the factors contributing to higher deposits this year. Statewide, banks held $103.8 billion in deposits on June 30, a 12.9 percent increase year-over-year.
Connecticut’s FDIC-insured institutions together had total assets of $127.51 billion on June 30 compared to $117.36 billion on June 30, 2019. First quarter total assets were $122.8 billion.
Total loans and leases were $92.09 billion, up 6.7 percent year-over-year from $86.3 billion.
The number of full-time-equivalent employees in these institutions fell to 13,930 on June 30 compared to 14,201 on March 31 and 14,649 on June 30, 2019.
