Banks Continue Trend of Strong Profit Performances

Commercial banks made $11.13 billion in profits for the first quarter of this year, nearly duplicating their strong performance of the last three months of 1994.

Bank profits have exceeded $10 billion in each of the last nine quarters, the Federal Deposit Insurance Corp. said Wednesday.

FDIC Chairman Ricki Helfer said loan growth was the main reason for the earnings performance. All loans held by commercial banks increased by $65.1 billion for the first quarter; that includes a record gain of $32.7 billion in commercial loans.

“Clearly, bank lending is fueling the economy, which is good news,” Helfer said. She said, however, that the FDIC is keeping close tabs on the banks to make sure lending standards do not deteriorate.

The one negative note in the latest earnings report is that the January-March quarter saw the first increase--by $1.6 billion--in non-current loans in four years. Non-current loans are those 90 days or more past due or that are not accruing interest.

“One quarter does not make a trend,” Helfer said. “I want to emphasize that . . . the financial condition of commercial banks as a whole remains strong.”

The FDIC said just three banks failed during the first quarter and that nearly 97% were profitable. Twenty-two new banks were chartered.

The agency listed 215 troubled commercial banks, with assets totaling $27 billion, at the end of the quarter. That is 32 fewer than at the end of 1994.

The banks’ return on assets, a measure of profitability, was 1.10% in the first quarter, down from 1.17% a year earlier. The FDIC regards a 1% return on assets as a standard of profitability.