OCC says earnings picture strong

Northwestern Financial Review, May 1-May 14, 2003

Earnings at national banks reached record levels in the fourth quarter of 2002, according to the Office of the Comptroller of the Currency: National banks averaged 1.51 percent return on assets and 14.64 percent return on equity for the fourth-quarter. The OCC, however, said it does not expect the industry to maintain the level of earnings given ongoing problems in the commercial loan portfolio at some of the nation's largest banks.

In addition, a slowdown in the housing market is expected to hurt earnings. Still, lower earnings are not expected to affect the safety and soundness of the industry as capital levels remain good. The OCC said 80 percent of the banks with less than $1 billion in assets have an 8 percent capital to assets ratio, or higher.