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PR-17-2003 (3-04-2003)
Media Contact:
David Barr (202) 898-6992

Commercial banks and savings institutions insured by the Federal Deposit Insurance Corporation (FDIC) earned a combined $105.4 billion during 2002, the first time annual earnings of the industries topped $100 billion. The FDIC released the numbers today in a new format that presents the condition and performance of both sectors as a single industry. Previously, the FDIC reported numbers separately for commercial banks and savings institutions.

"The slow pace of the economic recovery last year failed to slow down the performance of FDIC-insured commercial banks and savings institutions," said Rich Brown, the FDIC's Chief Economist. "While the 2001 recession contributed to higher loan losses in 2002, low interest rates and strong consumer demand helped boost earnings to record levels."

Return on Assets (ROA)—a basic yardstick of industry profitability—reached a new high of 1.31 percent, surpassing the old record of 1.25 percent reached in 1999. According to Brown, "This report card reflects a strong performance by the banking and thrift industries in a slow-growth economic recovery. The ingredients remain in place for continued earnings growth once the recovery picks up steam, as expected later this year."

While credit losses rose again for the year as a whole, signs emerged in the fourth quarter that problem loans are leveling off. Noncurrent loans (delinquent 90 days or more or nonaccruing) at FDIC-insured institutions declined in the fourth quarter of 2002 by $21 million, the first decrease since the fourth quarter of 1999. The largest decrease came in noncurrent Commercial and Industrial (C&I) loans, which fell by $1.2 billion. Provisions for loan losses were $2.5 billion lower in the fourth quarter than a year earlier, a 15.7-percent decrease. This is the first year-over-year decline in quarterly loss provisions since the fourth quarter of 1999.

The FDIC's Bank Insurance Fund (BIF) ended the year with a reserve ratio of 1.27 percent, up two basis points from the third quarter. Meanwhile, the reserve ratio for the Savings Association Insurance Fund (SAIF) dipped slightly in the quarter to end the year at 1.37 percent.

The new reporting format was released today in the FDIC's quarterly publication, the Quarterly Banking Profile. The revamped format contains new groupings of institutions that are based on specific business line concentrations. These changes recognize the elimination of most of the restrictions that differentiated commercial banks from savings institutions in the past, as well as the fact that specialized charters account for a significant segment of the industry.


Attachments: Chief Economist’s Opening Statement
Quarterly Banking Profile

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 9,354 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 FDIC receives no federal tax dollars-insured institutions fund its operations.

FDIC press releases and other information are available on the Internet at and may also be obtained through the FDIC's Public Information Center (877-275-3342 or (703) 562-2200).

Last Updated 03/04/2003

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