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Banking Conditions

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The latest statistics on insured U.S. commercial banks confirm the industry's strength. In 1996, banks' $52.4 billion earnings produced a 1.19% return on assets (ROA), the second-highest annual posting ever and just below 1993's record high 1.20%. in 1995, banks earned $48.8 billion, which resulted in a 1.17% ROA. The improvement in banks' profitability can be traced mainly to non-interest income. Between 1995 and 1996, the ratio of non-interest income and total assets increased from 2.29% to 2.45%. Banks' profits were affected only slightly by the lower yield on earning assets because their cost of funding fell by nearly an equal amount.


Suggested citation: “Banking Conditions,” Federal Reserve Bank of Cleveland, Economic Trends, no. 97-05, pp. 16-17, 05.01.1997.

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