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2002 FDIC Q. Banking Profile 1 (2002)

handle is hein.journals/fdicqubkp2002 and id is 1 raw text is: First Quarter 2002 The FDIC uart rlyonad . Powe, Charman anking rofile COLANCE - FST UART 2002 Bank EarningsRs To New Record Of $21.7 Billion Net Interest M rn provement At Large Banks Gives Lift To Proi ts Asset- ?uallt Wanesses Continue To Grow Contraction In lndustry's Loan Portfolio Is First in Five Y ears Division of Research & Statistics Don Inscoe Associate Director Statistics Branch (202) 898-3940 Kevin Brown (202) 898-6817 Tim Critchfield (202) 898-8557 Ross Waldrop (202) 898-3951 Jim McFadyen 1946-2002 Wider net interest margins at large banks, com- bined with slow growth in noninterest expenses, helped propel commercial bank profits to a record $21.7 billion in the first quarter. Banks achieved the record results despite the drag on earnings from rising expenses for loan losses and lower gains on sales of securities. This is the first time that the industry's quarterly earn- ings have surpassed $20 billion, and easily eclipses the previous record of $19.8 billion, set in the first quarter of last year. While the largest improvements in profitability occurred at large banks, the trend toward improvement was rela- tively widespread. A majority of banks (55.1 per- cent) reported higher returns on assets (ROAs) than in the first quarter of 2001, almost two- thirds of all banks (64.0 percent) reported high- er net income than a year ago, and only 6.7 percent of all banks reported quarterly losses, compared to 7.0 percent a year earlier. The quarter's ROA of 1.33 percent is the third-high- est quarterly ROA ever reported by the industry. Net Interes income Growth Is Key to Earnings Stren gth Net income was $1.9 billion (9.6 percent) higher than a year earlier, largely because of a $6.8-bil- lion (13.1-percent) rise in net interest income. Noninterest income grew by only $1.3 billion (3.3 percent), but this growth outstripped the $1.1-billion (2.0-percent) rise in noninterest expenses. Extraordinary losses were $213 mil- lion (64.0 percent) lower than a year ago, giving a boost to pre-tax earnings. Among the items that held down earnings, provisions for loan losses were up by $3.7 billion (46.5 percent),

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