FDIC Lowers Estimate on Bank Failures in ’93 : Thrifts: Agency expects banks with $25 billion in assets to go under in 1993, down from previous projection of $76 billion.

Federal regulators Tuesday slashed projections on the number of likely bank failures this year and said the fund protecting accounts against losses had less red ink, yielding further evidence that the banking industry crisis is receding.

The Federal Deposit Insurance Corp. expects that banks with a total of $25 billion in assets will go bust in 1993. The agency did not, however, release the specific number of banks.

That compares to projections last fall that 120 banks with $76 billion in assets would go under this year.

FDIC officials attributed the reduction to the improved health of the industry, which last year chalked up record earnings as banks took advantage of low interest rates paid to depositors.

Also, the quality of loans and other assets on their books improved, and banks had to set less money aside for problem loans.

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“The prospects of failure faded for a number of institutions and disappeared entirely for others,” acting FDIC Chairman Andrew Hove said at an agency board meeting.

The FDIC also reported that its bank insurance fund, which protects depositors against losses at failed institutions, had a deficit at the end of 1992 in the range of $100 million to $250 million, down from $7 billion in red ink in 1991.

The agency expects the fund to be in the black by $1.1 billion this year and to reach government-mandated levels by 2002, four years ahead of schedule.

That level is a ratio equal to $1.25 for every $100 of insured deposits in the industry. At the end of last year, the ratio was in the red by one penny for every $100 of deposits.

Despite a healthier industry, the FDIC voted to leave unchanged for the second half of the year the fees banks pay to cover the bank insurance fund. Those fees average 24.8 cents for each $100 in deposits.

Some industry experts have suggested a fee cut. But FDIC officials were more cautious in their outlook for the future.

“It’s not time to declare victory and go home,” said Roger Watson, head of FDIC research. He said significant uncertainties remain in the marketplace.

FDIC officials signaled earlier this month that they would like the fee structure to remain the same to replenish the insurance fund.

The fund has been depleted since the late 1980s after the industry faced its worst crisis since the Great Depression. Hundreds of banks have failed over the last few years, undone by the woes of the oil, real estate and farming sectors.

Last year, the FDIC said banks with $44 billion in assets failed. It earlier put that figure at $37 billion.

Looking ahead, the agency expects banks with $45 billion in assets to fail in 1994, down from an earlier projection of $68 billion.

Last year, the nation’s 11,416 commercial banks earned a record $32.2 billion, the best performance since $24.8 billion in 1988.