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2001 FDIC Q. Banking Profile 1 (2001)

handle is hein.journals/fdicqubkp2001 and id is 1 raw text is: The FDIC Donna Tanoue, Chairman uartrkn rofil lanking PRofile First Quarter 2001 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 MMERC AL ANK PERFORMANCE - Insured commercial banks earned a record $19.9 billion in the first quarter, surpassing the previous record of $19.5 billion, set a year earlier. The high- er profits were made possible by a $1.9-billion improvement in banks' proceeds from securities sales. Sales of securities in the quarter yielded gains of $1.2 billion, whereas a year ago, when interest rates were higher, securities sales pro- duced net losses totaling $730 million. The aver- age return on assets for the quarter was 1.27 percent, down from 1.35 percent in the first quarter of 2000. A majority of commercial banks-53.6 percent-reported lower ROAs in the first quarter, compared to a year ago. More than half (55.8 percent) of all commercial banks reported an ROA of 1 percent or higher for the first quarter. Excluding nonrecurring items such as the gains on securities sales, banks' net operating income was $586 million (2.9 percent) lower than a year ago. ~ARTER. Narrower net interest margins have meant slower growth in net interest income, while a less-robust economy and lackluster stock market have con- tributed to a slowdown in growth in noninterest rev- enues. Provisions for loan losses continue to rise, particularly at large banks, in response to increas- ing levels of troubled loans to commercial borrow- ers. Net interest income was up by only 3.5 percent ($1.7 billion), even though interest-earning assets were 7.9 percent higher. Noninterest income was 4.5 percent ($1.7 billion) above the level of a year ago, down from the 6.2-percent growth rate registered in 2000. Banks set aside $7.9 billion in loan-loss provisions during the quar- ter, a $2.1-billion (36.4-percent) increase over the first quarter of 2000. Loss provisions absorbed 8.6 percent of commercial banks' net operating rev- enue (net interest income plus total noninterest income) in the first quarter, up from 6.6 percent a year earlier. * Gains On Securities Sales Lift Industry Profi s To N w Records Despite Decline In Operating Earnings Troubled Commer ial & Indus na! Loans Continue To Grow Narrower Net Interest Margins Hurt SmaThBank Profits Loans Register Smallest Quarterly Increase In Four Years

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