Magazine article American Banker

Bank Profits Hit New High in '94 with a 3.7% Jump

Magazine article American Banker

Bank Profits Hit New High in '94 with a 3.7% Jump

Article excerpt

Powered by robust lending, bank profits jumped 3.7% last year to a record $44.7 billion, the Federal Deposit Insurance Corp. reported Wednesday.

The earnings "are really quite astounding," said FDIC Chairman Ricki Tigert Helfer. "These were the highest profits essentially ever."

Separately, Ms. Helfer warned that banks may lose part of their promised deposit insurance premium reduction as thrifts charter banks to escape that industry's high rates. Her remarks, expanding on comments made Tuesday to thrift executives, came in a speech Wednesday to the Exchequer Club.

So far, six large thrifts have said they plan to form new institutions insured by the Bank Insurance Fund. Those "born-again banks," as Ms. Helfer labeled them, hold approximately $80 billion in deposits which would be added to the BIF.

"BIF-insured members have to come up with an additional $1 billion in assessments to cover the growth in insured deposits," Ms. Helfer said. That could add four basis points to banks' insurance premiums for a year, she said.

Bank premiums had been expected to drop from the current average of 24 cents for each $100 of insured deposits to 4 cents.

While banks' annual earnings increased, profits for the fourth quarter dipped to $10.7 billion, down from the third quarter's $11.8 billion and $55 million lower than the year-earlier quarterly earnings. The FDIC attributed the decline in quarterly profits to a loss of $914 million on sales of securities.

But the drop was overpowered by sizzling loan growth over the course of last year. …

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