In the second quarter of this year, commercial banks posted their lowest earnings since 1997:IIQ as net income fell to $14.7 billion, $4.8 billion less than the record earnings reported in the first quarter. Most of this decline is due to a few large banks’ unusually high expenses for restructuring and additions to loanloss reserves. For the second consecutive quarter, securities and other gains were a drag on net income, as losses grew from $460 million to $860 million. Similarly, return on assets dropped from 16% to 12%, and return on equity slumped from 1.35% to 1% between the first and second quarters.
Suggested citation: "Banking Conditions," Federal Reserve Bank of Cleveland, Economic Trends, no. 00-10, pp. 16-17, 10.01.2000.