COMMERCIAL BANK EARNINGS SOAR TO RECORD $13.8 BILLION IN THIRD QUARTER
FOR IMMEDIATE RELEASE
Commercial banks posted record earnings of $13.8 billion in the third
quarter of 1995, according to preliminary data released today by the
FDIC. This surpasses the previous all-time high of $12.0 billion earned
in the second quarter of this year, and it marks the 11th straight
quarter that bank profits exceeded $10 billion. Profits for the first
nine months of 1995 totaled $36.9 billion, also a record for any three
The FDIC cited the following as major contributing factors in banks'
third-quarter earnings performance:
Strong loan growth. Banks continued to stress loan growth over
other types of assets, with particular emphasis on home mortgage
loans and other loans to consumers.
Stable net interest margins. The increased proportion of loans in
banks' asset portfolios helped lift average yields and maintain net
interest margins, even as funding costs were rising.
Reduced deposit insurance premiums. The recapitalization of the
Bank Insurance Fund at the end of May led to a sharp reduction in
the premiums banks pay to insure their deposits. The lower
premiums reduced banks' third-quarter operating costs by $1.5
The FDIC also noted that the picture for the industry remains positive
going forward. For example, noncurrent loans (those more than 90 days
past due or not accruing interest) declined for the 17th time in the
last 18 quarters, to $31.5 billion, which is 1.23 percent of total loans. This is the lowest noncurrent loan rate in the 14 years that
banks have reported their noncurrent loans.
One spot -- consumer lending -- may cloud the picture, however.
Although noncurrent loans declined during the third quarter, short-term
delinquencies and net loan losses increased. These delinquencies and
loan losses were concentrated in banks' consumer loan portfolios. In
general, delinquent loans (30-89 days past due) increased by 8.3 percent
and net loan losses were 17 percent higher than in the second quarter of
Retained earnings (net income minus cash dividends paid) totaled $6.8
billion for the period, also a quarterly record. The previous quarterly
high for retained earnings was $6.5 billion in the first quarter of
1993. The record retained earnings helped lift commercial banks' equity
capital to 8.14 percent of total assets, the highest industry average
FDIC-insured savings institutions earned $2.2 billion in the third
quarter. This is second only to the $2.4 billion thrifts earned in the
first quarter of 1993, when earnings were bolstered by one-time
Third-quarter results for the nation's 10,054 insured commercial banks
and 2,058 insured savings institutions are presented in the latest
Quarterly Banking Profile (QBP). The latest QBP analyzes bank and thrift
results for the third quarter and first nine months of 1995.
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Congress created the Federal Deposit Insurance Corporation in
1933 to restore public confidence in the nation's banking
system. The FDIC insures deposits at the nation's 12,000
banks and savings associations and it promotes the safety
and soundness of these institutions by identifying,
monitoring and addressing risks to which they are exposed.
The Quarterly Banking Profile is available on the Internet
(via the World Wide Web at www.fdic.gov or through
Gopher at gopher.fdic.gov), by fax (use the phone attached
to your fax machine, dial 1-804-642-0003 and follow the voice
prompts to request Document No. 219), or by mail or messenger
(contact the FDIC's Office of Corporate Communications at