Wednesday, June 13, 2012

USA Banks Return on Assets Rise to Post-Crisis High

USA Banks Return on Assets of +1.02% for the quarter ended March 31, 2012 signals continued improvement in profitability and ongoing stability in the banking system. There were 7,307 financial institutions reporting. The prior year quarter, the QE 3-31-11, was +0.86%. The current ROA is the highest since the full-year 2006 (+1.28%).

Return on assets reflects the overall performance, and health, of the banking system and takes into account all of the income statement components, including net interest margins, loan loss provisions, operating expenses, and income taxes. Return on assets also indicates how effectively and efficiently assets are being deployed and if the asset mix is ultimately profitable. An ROA of +1.00% is a banking benchmark.

USA Banks Return on Assets by Year The USA Banks Return on Assets (ROA) was +1.28% for the years ended 2004, 2005, and 2006. The ROA decreased to +0.81% and +0.03% in 2007 and 2008. The ROA then turned negative to -0.07% in 2009, before rebounding to +0.65% in 2010 and +0.88% in 2011.

USA Banks Return on Assets by Segment For the 3 months ended March 31, 2012, the Annualized ROA by banking segments were:
All institutions +0.88%
Credit card banks +3.33%
International banks +0.85%
Agricultural banks +1.27%
Commercial lenders +0.84%
Mortgage lenders +0.81%
Consumer lenders +1.78%
Other specialized (< $1 billion total assets) +1.73%
All other (< $1 billion total assets) +1.00%
All other (> $1 billion total assets) +1.02%

Earnings Rise to Post-Crisis High (FDIC Quarterly Banking Profile, May 24, 2012) FDIC-insured commercial banks and savings institutions reported $35.3 billion in net income for first quarter 2012. This represents a $6.6 billion (22.9 percent) improvement over first quarter 2011 results, and is the highest quarterly net income reported by the industry since second quarter 2007. The average return on assets (ROA) rose above the 1 percent threshold for only the second time since second quarter 2007 (third quarter 2011 ROA was 1.03 percent). Quarterly net income has now improved year over year for 11 consecutive quarters. More than two-thirds of all institutions (67.5 percent) reported year-over-year improvement in their quarterly earnings, and only 10.3 percent were unprofitable, the lowest level since second quarter 2007.

FDIC Deposit Insurance Fund Balance at 10-Quarter High

FDIC Problem Bank List Decreases to 9-Quarter Low

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