Second-Quarter 2021 Bank Earnings in Review: Record Earnings–There Is More to the Story Than Meets the Headline.

KBRA Financial Institutions Group analysts Brian Ropp, Senior Director, and John Rempe, Director, break down five key factors that have contributed to the banking industry’s record profits in 1H21 that may be transitory in nature and not necessarily reflective of core bank earnings. The fifth episode of Bank Compendium Insights, highlights:

1) Loan loss reserve releases impact on earnings

2) Excess liquidity’s impact on net interest margin and how Paycheck Protection Program (PPP) fees has partially masked declines in net interest income

3) Weak loan growth hampering industry’s ability to replace PPP loan runoff

4) Mortgage banking income impact on noninterest income

5) Operating cost reductions that helped offset declining revenues may be slowing