COMMERCIAL BANKS EARNED RECORD $12 BILLION IN THE SECOND QUARTER
FOR IMMEDIATE RELEASE
Commercial banks posted record earnings of $12 billion in the
second quarter of 1995, according to preliminary data released
today by the FDIC. This tops the $11.1 billion earned in the first
quarter of the year and the previous all-time high of $11.8 billion
in the third quarter of 1994. Profits for the first six months of
1995 totaled $23.2 billion, also a record.
FDIC Chairman Ricki Helfer said "the banking industry's recent
performance has been extraordinary" and that "the industry has
recapitalized the Bank Insurance Fund far faster than anyone could
have anticipated just a few years ago." Given that the industry
"has never been stronger financially," she said, the opportunity
exists to protect the deposit insurance funds by addressing the
problem of the seriously undercapitalized Savings Association
Insurance Fund and to eliminate unnecessary restrictions on banks.
The FDIC cited near-record loan growth and higher noninterest
income as key factors in commercial banks' strong earnings
performance during the second quarter. Banks continued to shift
investments to loans from securities, resulting in higher yields.
Loan growth was broad-based and at the same rapid pace set in the
Chairman Helfer noted: "The lending mix has continued to shift
toward loans that traditionally reflect relatively more diversified
credit risk, primarily mortgage loans, credit cards and other loans
to individuals, and away from types of loans that reflect more
concentrated credit risk, such as commercial real estate loans."
Total loans increased 12.5 percent ($75 billion) during the
second quarter, led by gains in residential real estate loans (up
$24 billion), commercial and industrial loans (up $18 billion) and
consumer loans (up $13 billion). The growth in commercial loans
slowed from the $33 billion increase recorded in the first quarter
of the year. Loans to small businesses and small farms, which are
reported annually each June, showed a gain of seven percent during
Other factors contributing to second-quarter profits included
higher noninterest income (up nearly $1 billion over the first
quarter) and gains of $350 million on sales of securities.
As for improved asset quality, noncurrent loans and leases
declined after a brief uptick in the first quarter, and foreclosed
assets declined for the 11th consecutive quarter. In the
aggregate, troubled assets were 0.94 percent of total assets,
compared to 1.27 percent a year ago and 3.24 percent four years
Second-quarter results for the nation's 10,168 insured
commercial banks and 2,081 insured savings institutions are
presented in the latest Quarterly Banking Profile (QBP). The
latest QBP analyzes bank and thrift results for the second quarter
and first half of 1995.
FDIC-insured savings institutions earned $1.9 billion in the
second quarter, which trails only the $2.4 billion the industry
earned in the first quarter of 1993 when one-time accounting gains
boosted profits. Thrifts' aggregate return on assets (ROA) was
0.76 percent for the second quarter, compared to 0.69 percent in
the first quarter and 0.72 percent in the second quarter of 1994.
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The Quarterly Banking Profile is available as follows:
On the Internet: Via the World Wide Web at www.fdic.gov. Or, it
can be accessed through Gopher at gopher.fdic.gov.
By Fax: Use the phone attached to your fax machine, dial 1-804-
862-0003 and follow the voice prompts to request Document No. 216.
Mail or Messenger: Contact the FDIC's Office of Corporate
Communications at 202-898-6996.