Banks based in the Washington area are coming off their most profitable year ever, according to data released Tuesday by the Federal Deposit Insurance Corp.
The area's 37 local banks posted a median annual profit of $3.5 million in 2012. That's up 44 percent from 2011, which held the previous record.
Check out the slideshow for details on the five most profitable and least profitable local banks in 2012.
The big reason: fees. Noninterest income soared last year from 9 percent of revenue to 15 percent, as banks took big gains off of home mortgage lending and other fee-generating businesses.
Interest income — the money banks get from loans — actually fell 6 percent to a median of $17.4 million. That happened even though the total amount of loans on banks' books soared 21 percent to $331 million.
Why the disconnect? Loan rates are at rock bottom right now compared with where they were five years ago. As those older loans either mature or get refinanced at a lower rate, it eats into the revenue banks generate off each loan. This will become even more of a problem when interest rates, and, thus, deposit rates, begin to rise.
As far as profitability goes, Reston-based Access National Bank was way ahead of all other local banks relative to its size, with $18.5 million in earnings. That's a 2.2 percent return on assets. The next closest was McLean-based Cardinal Bank, which posted $48.2 million in profits, or a 1.73 percent return on assets.
© 2013 American City Business Journals, Inc.