FDIC ANNOUNCES RECORD BANKING INDUSTRY EARNINGS;
RETURNS AT LARGE BANKS CLIMB MOST
FOR IMMEDIATE RELEASE PR-60-2002 (6-3-2002)
Phil Battey (202) 898-6993
Commercial banks had record earnings of $21.7 billion in the first quarter, surpassing the previous quarterly record by 9.6 percent, the Federal Deposit Insurance Corporation reported today. The industry's return on assets (ROA), a basic yardstick of earnings performance, rose to 1.33 percent, the third-highest ever. The biggest gains in profitability occurred at large banks, where rising net interest income more than offset higher expenses for loan-loss provisions and lower market-sensitive revenues. Almost two-thirds of all banks -- 64 percent -- reported higher earnings than a year ago.
"The driving force behind this performance was net interest income, particularly at larger institutions," said Don Powell, FDIC Chairman. "Earnings would have been even higher but for increased expenses for loan losses and lower market-sensitive revenues."
Profits from core operations benefited from banks' control of operating expenses, as well as the improvement in net interest income. Credit-quality problems continued to grow, particularly in the commercial loan portfolios of large banks, and in banks' credit-card lending.
The number of commercial banks on the FDIC's "problem list" increased from 95 to 102 in the quarter. The last time the list had more than 100 commercial banks was year-end 1995. The assets of the banks on the list inched up by $1 billion to $37 billion. In addition, six commercial banks failed during the quarter. Chairman Powell's Opening Statement from the press briefing is attached.
Congress created the Federal Deposit Insurance Corporation in 1933 to restore public confidence in the nation's banking system. The FDIC insures deposits at the nation's 9,613 banks and savings associations and it promotes the safety and soundness of these institutions by identifying, monitoring and addressing risks to which they are exposed. The FDIC receives no federal tax dollars - insured financial institutions fund its operations.
FDIC press releases and other information are available on the Internet at www.fdic.gov or through the FDIC's Public Information Center (800-276-6003 or (703) 562-2200).