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1999 FDIC Q. Banking Profile 1 (1999)

handle is hein.journals/fdicqubkp1999 and id is 1 raw text is: First Quarter 1999 .. n e. FDIC Donna Tanoue, Chairman anking Profile COMMERCIAL BANKING PERFORMANCE-1ST QUARTER, 1999 Industry Earnings Soar To Record-High $18 Billion a Margins And Profitability Decline At Smaller Banks a Trading Revenues Set Quarterly Record * Growth In Commercial Lending Remains Strong, But Credit Quality Declines Insured commercial banks earned $18.0 bil- lion in net income in the first quarter of 1999, eclipsing the previous record of $16.1 billion set in the second quarter of 1998. The indus- try's first-quarter results were $2.1 billion (12.9 percent) higher than in the first quarter of 1998. The average return on assets (ROA) rose to 1.32 percent, matching the quarterly record set in the third quarter of 1995. More than half of all commercial banks-59.0 per- cent-reported ROAs of 1 percent or higher for the quarter, but only 39.3 percent had high- er ROAs than a year ago, when the industry average was 1.26 percent. A majority of banks with less than $100 million in assets reported lower earnings than a year ago. The surge in net income came from higher operating results. Net operating income (net $ Billions K4 *4 *4 4* *4 42 QUARTERLY NET INCOME, 1995-1999 U Securities and Other Gains, Net 1 Net Operating Income 14.514647 1381 I 138 13.i 120 :12.0 12.C I IIy 4 I [ ~~ 4.61.7 1234 1995 1234 1996 I 15.9161 5.3' 4 4K I *4 *< 4 4K 4K *4 i *4 4 *4 *4 *4 1180 1 w I I18.0 I: 1 2 3 4 12 3 4 1 1997 1998 1999 income before gains on sales of securities and extraordinary items) rose by $2.8 billion (18.6 percent), compared to the first quarter of 1998. Nonrecurring items such as gains from sales of securities and other assets con- tributed less than 2 percent of industry net income in the first quarter, compared to 6.6 percent a year ago. The strongest-growing component of operating income remained noninterest income, which was $5.7 billion (19.5 percent) higher than in the first quarter of 1998. Income from trading activities set a quarterly record of $3.6 billion, which was $939 million (35.4 percent) more than a year ago. Net interest income was $3.1 billion (6.9 percent) higher. Net income from internation- al operations totaled $2.3 billion, an increase of $582 million (33.1 percent). Noninterest expenses were $5.3 billion lower than in the INTERNATIONAL OPERATIONS CONTRIBUTION TO BANK EARNINGS, 1994-1999 Earnings from International Operations, % of Net Income 16 12 8 4 0 I 19 I I I I I 99 1994 1995 1996 1997 1998 1999 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 or (800) 276-6003; or Email: publicinfo @fdic.gov. Also available on the Internet at www.fdic.gov. Comparable financial data for individual institutions can now be obtained from the FDIC's Institution Directory (I.D.) System on this Web site. FDIGe 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

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