Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: FRIDAY, December 16, 1994 TAG: 9412190036
SECTION: BUSINESS PAGE: A21 EDITION: METRO
SOURCE: ASSOCIATED PRESS
DATELINE: WASHINGTON LENGTH: Medium
Bank earnings were at an all-time high of $11.8 billion in the third quarter and profits are headed toward another record for the year, the Federal Deposit Insurance Corp. said Thursday.
``The commercial banking industry has never been in better shape,'' FDIC Chairman Ricki Tigert told a news conference. ``We see nothing in these figures that suggests any change in the positive outlook any time soon.''
The nation's 10,700 commercial banks made more loans at higher interest rates and also benefited from a drop in bad loans and the lowest loan losses in nearly a decade.
Meanwhile, the industry's capital, which acts as a cushion against loss, grew by $6.8 billion in the July-September quarter for the best showing of the year. Capitalization is at its highest level in 30 years.
The only concerns, Tigert said, are that banks will lower loan underwriting standards and will become too active in risky derivatives markets.
Tigert noted that there have been scattered reports of banks lowering loan standards but said FDIC examiners have found no evidence of systemic problems.
Bank earnings for the third quarter are $300 million above the previous $11.5 billion record set in the same quarter last year. The latest earnings also are 5.4 percent higher than the $11.2 billion mark of the second quarter this year.
Seven commercial banks failed in the third quarter, bringing the total for the first nine months of 1994 to 11. That contrasts with 36 failures during the first three quarters last year.
Loans grew by $60.2 billion in the third quarter and 96 percent of banks showed a profit, the FDIC said. The number of banks on the FDIC's problem list fell to 293, the lowest total in 12 years.
by CNB