PRESS RELEASE
Federal Deposit Insurance Corporation
September 11, 1996
Media Contact:
Robert M. Garsson (202-898-6993)
Congress created the Federal Deposit Insurance Corporation in 1933 to restore public confidence in the nation's
banking system. 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, by subscription electronically
(go to www.fdic.gov/about/subscriptions/index.html) and may also be obtained through the FDIC's Public Information
Center (877-275-3342 or 703-562-2200). PR-75-96
FDIC REPORTS COMMERCIAL BANKS EARNED
$13.8 BILLION IN THE SECOND QUARTER
FOR IMMEDIATE RELEASE
Strong growth in fee income and other noninterest revenues helped lift commercial bank
earnings to a near-record $13.78 billion in the second quarter of 1996, according to
preliminary data from the FDIC. The second-quarter earnings, just $45 million below the
all-time high of $13.83 billion earned in the third quarter of 1995, mark only the second
time that the industry's profits exceeded $13 billion.
The noninterest income in the second quarter (a record $24.1 billion) combined with
improved net interest income from loans and other assets outweighed rising loan-loss
expenses. The resulting $13.78 billion net profit was a 15 percent improvement over the
$12 billion banks earned in both the first quarter of 1996 and in the second quarter of
last year.
In addition, the FDIC reported that insured savings banks and savings and loan
institutions together had record quarterly earnings of $2.6 billion, surpassing the
previous quarterly record of $2.5 billion set in the first quarter of 1996. Increased net
interest income contributed to the increase in earnings.
Second-quarter performance results for 9,689 FDIC-insured commercial banks and
1,981 FDIC-insured savings institutions are contained in the agency's latest Quarterly
Banking Profile, which is based on quarterly income and condition reports filed by
insured commercial banks and savings institutions. The latest Profile analyzes trends in
banking performance from April through June of this year. Highlights follow.
Federal Deposit Insurance Corporation
September 11, 1996
Media Contact:
Robert M. Garsson (202-898-6993)
Congress created the Federal Deposit Insurance Corporation in 1933 to restore public confidence in the nation's
banking system. 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, by subscription electronically
(go to www.fdic.gov/about/subscriptions/index.html) and may also be obtained through the FDIC's Public Information
Center (877-275-3342 or 703-562-2200). PR-75-96
FDIC REPORTS COMMERCIAL BANKS EARNED
$13.8 BILLION IN THE SECOND QUARTER
FOR IMMEDIATE RELEASE
Strong growth in fee income and other noninterest revenues helped lift commercial bank
earnings to a near-record $13.78 billion in the second quarter of 1996, according to
preliminary data from the FDIC. The second-quarter earnings, just $45 million below the
all-time high of $13.83 billion earned in the third quarter of 1995, mark only the second
time that the industry's profits exceeded $13 billion.
The noninterest income in the second quarter (a record $24.1 billion) combined with
improved net interest income from loans and other assets outweighed rising loan-loss
expenses. The resulting $13.78 billion net profit was a 15 percent improvement over the
$12 billion banks earned in both the first quarter of 1996 and in the second quarter of
last year.
In addition, the FDIC reported that insured savings banks and savings and loan
institutions together had record quarterly earnings of $2.6 billion, surpassing the
previous quarterly record of $2.5 billion set in the first quarter of 1996. Increased net
interest income contributed to the increase in earnings.
Second-quarter performance results for 9,689 FDIC-insured commercial banks and
1,981 FDIC-insured savings institutions are contained in the agency's latest Quarterly
Banking Profile, which is based on quarterly income and condition reports filed by
insured commercial banks and savings institutions. The latest Profile analyzes trends in
banking performance from April through June of this year. Highlights follow.
Commercial Banks
The average return on assets (ROA) -- a basic yardstick of profitability -- stood at 1.27
percent for the quarter, up from 1.12 percent the previous quarter and 1.16 percent a
year ago. This is the third-highest quarterly average ROA in the industry's history (after
the 1.32 percent in the third quarter of 1995 and the 1.28 percent in the third quarter of
1993). The average ROA at commercial banks now has exceeded one percent for 14
consecutive quarters.
Earnings strength was evident throughout the industry. About seven out of 10 banks (72
percent) reported higher earnings than a year earlier, and a similar proportion (70
percent) reported ROAs above one percent.
The record level of noninterest income was responsible for much of the improvement in
earnings. Increased fee income and gains on merger-related sales of assets by large
banks helped lift noninterest revenues by 19.8 percent compared to the second quarter
last year. Net interest income was 5.3 percent higher than a year ago and helped boost
bank profits in the second quarter. Net interest margins (essentially the difference
between earnings on interest-bearing assets and interest paid to depositors and other
creditors, expressed as a percentage of average earning assets) increased for the
industry as a whole, with the greatest improvement coming at smaller banks.
Commercial bank assets increased by $88.6 billion in the second quarter, with a large
share of the increase coming in loans (up $57.5 billion). Most loan categories registered
strong growth during the quarter, with large percentage gains coming in loans to
commercial borrowers and consumers. Net loan losses were 36 percent higher than a
year ago, but overall charge-off rates remain low by historic standards. The $3.8 billion
banks charged off in the quarter was the second-highest total in the last 10 quarters,
after the $4.0 billion banks charged off in the fourth quarter of 1995. On the positive
side, there was an $832 million reduction in banks' noncurrent loans (loans past due 90
days or more or in nonaccrual status) during the quarter.
The number of commercial banks declined by 149 during the second quarter, to 9,689.
Although 175 banks were absorbed by mergers and two were lost through failures, 30
new banks were chartered in the second quarter. A total of 59 new banks were
established during the first six months of the year, which suggests that new charters for
1996 may exceed the 102 for last year. At mid-year, 99 banks with $8 billion in assets
were on the FDIC's "problem list," down from 127 banks with $13 billion in assets at the
start of the second quarter.
Savings Institutions
The record $2.6 billion in second-quarter net income for FDIC-insured savings
institutions represents an increase of $687 million from a year earlier and $50 million
more than the previous record set in the first quarter of 1996. The average ROA for the
quarter, at 1.02 percent, also represents a new industry record. The increase in second-
The average return on assets (ROA) -- a basic yardstick of profitability -- stood at 1.27
percent for the quarter, up from 1.12 percent the previous quarter and 1.16 percent a
year ago. This is the third-highest quarterly average ROA in the industry's history (after
the 1.32 percent in the third quarter of 1995 and the 1.28 percent in the third quarter of
1993). The average ROA at commercial banks now has exceeded one percent for 14
consecutive quarters.
Earnings strength was evident throughout the industry. About seven out of 10 banks (72
percent) reported higher earnings than a year earlier, and a similar proportion (70
percent) reported ROAs above one percent.
The record level of noninterest income was responsible for much of the improvement in
earnings. Increased fee income and gains on merger-related sales of assets by large
banks helped lift noninterest revenues by 19.8 percent compared to the second quarter
last year. Net interest income was 5.3 percent higher than a year ago and helped boost
bank profits in the second quarter. Net interest margins (essentially the difference
between earnings on interest-bearing assets and interest paid to depositors and other
creditors, expressed as a percentage of average earning assets) increased for the
industry as a whole, with the greatest improvement coming at smaller banks.
Commercial bank assets increased by $88.6 billion in the second quarter, with a large
share of the increase coming in loans (up $57.5 billion). Most loan categories registered
strong growth during the quarter, with large percentage gains coming in loans to
commercial borrowers and consumers. Net loan losses were 36 percent higher than a
year ago, but overall charge-off rates remain low by historic standards. The $3.8 billion
banks charged off in the quarter was the second-highest total in the last 10 quarters,
after the $4.0 billion banks charged off in the fourth quarter of 1995. On the positive
side, there was an $832 million reduction in banks' noncurrent loans (loans past due 90
days or more or in nonaccrual status) during the quarter.
The number of commercial banks declined by 149 during the second quarter, to 9,689.
Although 175 banks were absorbed by mergers and two were lost through failures, 30
new banks were chartered in the second quarter. A total of 59 new banks were
established during the first six months of the year, which suggests that new charters for
1996 may exceed the 102 for last year. At mid-year, 99 banks with $8 billion in assets
were on the FDIC's "problem list," down from 127 banks with $13 billion in assets at the
start of the second quarter.
Savings Institutions
The record $2.6 billion in second-quarter net income for FDIC-insured savings
institutions represents an increase of $687 million from a year earlier and $50 million
more than the previous record set in the first quarter of 1996. The average ROA for the
quarter, at 1.02 percent, also represents a new industry record. The increase in second-