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2004 FDIC Q. Banking Profile 1 (2004)

handle is hein.journals/fdicqubkp2004 and id is 1 raw text is: Quarterly Banking Profile Earnings Climb To Fifth Consecutive Quarterly Record Lower Loss Provisions, Strong Gains On Securities Sales Lift Net Income Nortgage Demand Contributes To Record Growth In Interest-Earning Assets Falling Interest Rates Reduce Net Interest Margins ROA Remains at Historically High Level Strength in mortgage lending and lower expenses for loan losses helped bank and thrift earnings reach a new record in the first quarter of 2004. Industry earnings of $31.9 billion were $858 million (2.8 percent) higher than the previous quarterly record, set in the fourth quarter of 2003. Lower interest rates helped sustain mortgage refinancing activity and made it possible for institutions to realize higher gains on sales of fixed-rate securities and other assets. The industry's return on assets (ROA) was 1.38 percent, slightly below the all- time quarterly record of 1.39 percent recorded in the first quarter of 2003. More than half of all institutions (55 percent) reported higher earnings than in the first quarter of 2003, while half (50.3 percent) reported higher ROAs. The percentage of unprofitable institu- tions fell to 5.5 percent, compared to 5.9 percent a year earlier. This is the lowest percentage of unprofitable Chart 1 Industry Earnings Continue to Set New Records $ Billions 40 - Securities and Other Gains/Losses, Net 30 Net Operating Income 29.5 30.2 30.5 310 31 22 4 218 227224 2 2 20JH13 H~ institutions the industry has had in almost six years, since the second quarter of 1998. Lower Servicing Income Causes Dedine in Noninterest Revenue Insured banks and thrifts realized gains of $2.6 billion on sales of securities and other assets during the quarter. This was up from $736 million in the fourth quarter, but below the $3.7 billion in gains recorded in the first quarter of 2003. The industry's net operating income, which excludes these gains as well as other extraordi- nary items, was down slightly, by $155 million, from the level of the fourth quarter, but still represented the sec- ond-highest quarterly total ever reported. Provisions for loan losses totaled $7.6 billion, the lowest quarterly amount since the third quarter of 2000, and $1.3 billion (14.6 percent) less than banks and thrifts set aside in Chart 2 Fewer Institutions Are Able to Sustain Earnings Growth Percent of Institutions with Quarterly Earnings Gains 75 7 . 70 65 60 55.2 55 50 50.6 45 1 2 3 4 1 2 3 4 1 2002 2003 2004 F~ivii~ DEPoSIT INSURANCE CC) RFO RATION Am FDIC-INsuP~ IN~FflUTIONS 10 0 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2000 2001 2002 2003 2004 FEDEP,4L DEroSfT1ZVSURANCE CORPOR4770N ALL FDIC - IzvsuRED LvsT=o Ns

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