
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: THURSDAY, June 16, 1994                   TAG: 9406220080
SECTION: BUSINESS                    PAGE: B8   EDITION: METRO 
SOURCE: Associated Press
DATELINE: WASHINGTON                                 LENGTH: Medium

BANKS, S&LS CALLED INCREASINGLY SAFE AS EARNINGS REMAIN STRONG

Commercial banks recorded their second-best profits ever during the first three months of this year, but problems at three big savings and loans dampened the thrift industry's earnings, the government said Wednesday.

The nation's 10,840 commercial banks earned $11.1 billion, up from $10.8 billion a year earlier, the Federal Deposit Insurance Corp. said. That was second only to the $11.5 billion earned during the July-September quarter last year.

``Both banks and thrifts are safer now than we've seen in some time, perhaps ever,'' said economist Martin Regalia of the U.S. Chamber of Commerce.

During the first quarter, no commercial banks failed - the first time that has happened in 16 years. So far during the April-June period, four have failed.

The number of problem banks is down to 383 with $53 billion in assets, compared with 981 with $535 billion just two years ago.

Meanwhile, earnings at the 2,240 savings banks and savings and loan institutions fell to $1.3 billion from $2.4 billion a year earlier. However, the FDIC attributed more than $500 million of the decline to ``balance sheet restructuring'' at three of the top 20 thrifts.

Virginia's commercial banks posted combined profits of $184 million in the first quarter, compared with $167 million a year earlier. The state's savings and loan institutions and savings banks reported $6 million in first-quarter profits, compared with a loss of $21 million a year earlier.

In California, Glendale Federal Bank and California Federal Bank recognized losses on real estate loans. First Federal of Michigan lost $139 million on interest rate swaps.

Other signs, however, pointed to increasing strength in the thrift industry during the first quarter. No thrifts failed, for the second consecutive quarter, although one has failed so far in the second quarter.

The number of problem institutions is down to 118 with $89 billion in assets, compared with 381 institutions with $274 billion two years ago. The industry's capital cushion was 7.6 percent of assets, up from 7 percent a year ago.

``What we see is a very stable and strong core of earnings,'' said economist Bob Davis of the Savings & Community Bankers of America, trade group for the savings business.

FDIC Chairman Andrew C. Hove Jr. and private analysts said lending institutions probably would be able to offset declining net-interest income with increased fee income by making more loans and from declining losses on bad loans.

by CNB