'Where's The Beef?' Ask CUs As Bank Profits Soar

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The U.S. banking industry closed out the fourth quarter of 2003 with record performance, making it a record year for profits for banks.

And CUNA wasted little time in pointing to the industry's performance, asking where the "competitive threat" from credit unions lies.

New FDIC data shows banks earned a record $31.1 billion in the fourth quarter of 2003, the fourth consecutive quarter of record earnings. The FDIC said that earnings for the full year were also a record at $120.6 billion for the 9,182 commercial banks and savings institutions insured by FDIC.

"Banks again have posted record returns on assets (ROA) and equity (ROE), but still they say credit unions are a competitive threat," said CUNA's John McKechnie, senior vice president of governmental affairs. "Where's the beef? Apparently they're hungry for even more profits!"

According to the FDIC, earnings during the fourth quarter surpassed the total for the previous quarter by $755 million (2.5%) and were $5.7 billion (22.3%) more than in the fourth quarter of 2002. The $120.6 billion earnings for the year easily surpassed the previous record of $105.1 billion set in 2002.

FDIC data show that net interest income increased by $2.5 billion (3.6%) over the previous quarter, and that noninterest income, including fees, service charges, and gains on certain transactions, was $1.8 billion (3.5%) higher than in the third quarter. FDIC said ROA in the fourth quarter equaled the record highs registered in the first two quarters of 2003, at 1.3%. This basic yardstick of profitability also averaged 1.38% for the full year, easily surpassing the all-time high set in 2002 of 1.30%.

More than half of all institutions -52.7%-reported higher quarterly earnings compared to the fourth quarter of last year, and 58.8% reported higher full-year earnings.

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