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1996 FDIC Q. Banking Profile 1 (1996)

handle is hein.journals/fdicqubkp1996 and id is 1 raw text is: First Quarter 1996 neFDIC uarterly Ricki Helfer, Chairman anking rofile COMMERCIAL BANKING PERFORMANCE - FIRST QUARTER 1996 * First-Quarter Earnings Surpass $12 Billion * Industry ROA Exceeds One Percent For Thirteenth Consecutive Quarter * Higher Fee And Trading Income, Growth In Earning Assets Lift Industry Profits * Asset-Quality indicators Show Slight Deterioration Insured commercial banks reported net income of $12.0 billion for the first quarter, an 8.2-percent ($908-million) increase over the first quarter of 1995. The average return on assets (ROA) was 1.12 percent, a slight improvement from 1.10 percent a year ago, and a slight decline from 1.13 percent in the fourth quarter of 1995, when industry earnings also totaled $12.0 billion. Com- pared to one year earlier, higher noninterest income and increased net interest income out- weighed the impact of increased loan-loss pro- visions and merger-related expenses. Although the improvement in ROA was greatest at banks with less than $100 million in assets, a majority of banks in all asset-size groups reported in- creased earnings. More than two out of every three banks (69 percent) reported higher earnings than a year ago, while 70 percent of all banks reported ROAs above one percent. $ Bill 15 10 5 .1 Quarterly Net Income, 1992 - 1996 ions 0 Net Operating Income U Securities and Other Gains, Net 11.8 F-1 13.8 The growth in noninterest revenues reflected higherfee income and increased earnings from trading activities. Industry profits also received a boost from gains on sales of securities, which totaled $487 million. This was the highest level in two years, and a $532-million improvement from a year earlier, when securities sales pro- duced a net loss of $45 million. The largest contribution to the earnings improvement was the $2.2-billion increase in net interest in- come. This was primarily the result of a 6.7-per- cent increase in interest-earning assets over the past twelve months. Net interest margins were generally lower than a year ago. The average margins for the industry declined for the tenth time in the last thirteen quarters, as average asset yields fell more rapidly than average fund- ing costs. At 4.26 percent, the industry margin is 29 basis points below the peak level of 4.55 Quarterly Net Interest Margins, 1992 - 1996 Net Interest Margin (%) 12.0 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 1992 1993 1994 1995 1996 4.5 4 3.5 1992 1993 1994 1995 1996 Requests for copies of and subscriptions to the FDIC Quarterly Banking Profile should be made through the FDIC's Public Information Center, 801 17th Street, NW, Washington, DC 20434; telephone (202) 416-6940. Internet address: World Wide Web, www.fdic.gov. or Gopher, gopherfdic.gov. FDIC Division of Research & Statistics Don Inscoe Associate Director, Statistics Branch (202) 898-3940 Tim Critchfield (202) 898-8557 Jim McFadyen (202) 898-7027 Ross Waldrop (202) 898-3951 Assets <$100 Million 4.5 % Assets > $100 Million 4 231 12 34 12 34 1 234 12 34 1 5 I

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