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WASHINGTON-Commercial banks and savings associations earned a net income of $33.1 billon in the second quarter of 2005, just short of the current record. The most recent reporting came in $1.1 billion below last quarter’s record-setting level. Securities sales and net interest income-due to strong loan demand-ruled the day at increases of $1.4 billion (167.1%) and $672 million (0.9%), respectively. Profits in the second quarter were up 6.3% from the same period last year. Large banks weakening non interest income and higher expenses were to blame for the decline in industry earnings, according to the FDIC. “Yet another quarter of solid earnings reflects the soundness of the banking industry,” FDIC Chairman Don Powell said. “The slowdown in revenue growth, however, will be a continuing challenge for the industry.” Upon seeing the results, CUNA President and CEO Dan Mica stated, “Second-highest-ever quarterly profits by the nation’s banks and thrifts, reported today by The Federal Deposit Insurance Corp., indicate that the nation’s banks and thrifts are facing little if any direct competitive threats-especially from credit unions.” He pointed out that banks’ second quarter earnings pushed them to their highest equity capital level in 67 years to 10.38%. “Banks and thrifts are seeing healthy growth, they are richer than they have been in nearly seven decades, and they consistently post record or near-record profits,” Mica said. “These historical achievements invalidate any banker threats, complaints and arguments that credit unions are hurting their business.”

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