Banks Earned Record Profits in 3rd Quarter : Finance: Lower premiums and stable interest rates helped the bottom line.

The banking industry posted record earnings of $13.8 billion in the third quarter, compared with $11.8 billion in the third quarter of 1994, the Federal Deposit Insurance Corp. said Wednesday.

The third quarter earnings were higher than the previous record of $12 billion in the second quarter, the FDIC said.

FDIC Chairman Ricki Helfer said the outlook for the banking industry “remains positive going forward.”

The reduction of the premiums that banks pay for deposit insurance added about $1 billion to earnings in the third quarter, the FDIC said.

“The picture may be clouded by one small trouble spot--consumer lending--and even that spot is not a generalized problem,” she said.

The third quarter was the 11th consecutive quarter in which bank earnings exceeded $10 billion. Strong loan growth and stable net interest margins, along with reduced premiums, contributed to earnings in the third quarter, the FDIC said.

The banking industry’s return on assets rose to a record 1.32% from 1.16% in the second quarter, and the return on equity set a record at 16.3%, Helfer said.

She added that the industry’s asset quality “in general, remains strong.”

The Bank Insurance Fund reached 1.31% of insured deposits at the end of the third quarter, and the Savings Assn. Insurance Fund was at 0.43%.

She also said her outlook for the fourth quarter for the industry was “quite positive.”

FDIC analyst Ross Waldrop told a news briefing that the fourth quarter was likely to be similar to the fourth quarter of 1994, when the industry posted $10.7 billion in earnings.

In the fourth quarter, the premium reduction is expected to add about $800 million to earnings.