This study reports the results of a longitudinal analysis of the nature of the association between selected international banking measures and relative profitability. International banking is a major component variable in bank financial management. Conceptually, every decision should be considered for its impact on the maximization of shareholder wealth. However, in a world of uncertainty, regulation and limited reaction /action time and resources, it is not possible to follow the conceptually correct approach for the multitude of decisions bankers face. One practical approach to the complex, interactive nature of bank decisions is to disaggregate this system of interrelationships into key variables, such as domestic and foreign banking activities, for daily bank financial management. In addition to the services provided domestic customers, many U.S. banks also provide international banking services.1 The number of banks providing international banking services has increased significantly over the past decade or so. In addition, the variety of international banking services and their dollar volume relative to domestic banking activities have grown tremendously in recent years. These international banking activities have become an extension of the services provided domestic customers. The primary types of international banking activities include: (1) foreign exchange transactions, arising from travel, trade and international capital flows; (2) short-term trade financing, such as letters of credit and bankers' acceptances; (3) international trade services, including funds transfer and collection and information concerning foreign customer credit and developments in foreign countries; (4) access to the Eurodollar and Eurocurrency markets to obtain funds for loans under the practice of liability management; and (5) intermediate-term loans to overseas based multinational corporate customers, local firms in foreign countries, less-developed countries, foreign governments and their agencies, and other banks in the Asian dollar market. Traditionally, U.S. banks primarily provided international services through their international banking departments in conjunction with foreign correspondent banks. International departments are important profit centers in major national and regional money-center banks. Also, as in domestic banking, banks engaged in international banking have foreign correspondent banking relationships. A major or regional moneycenter bank provides international banking services to its domestic customer banks. It also exchanges international services with other large banks, both in the U.S. and abroad. International banking departments and their correspondent banking relationships allow banks to provide international banking services without a physical