U.S. commercial banks earned $12 billion in the first quarter of 1996, fueled by higher net interest income, Federal Deposit Insurance Corp. Chairwoman Ricki Helfer said.
Rising credit card losses and personal bankruptcies are cause for concern, however, Helfer said.
Filings for personal bankruptcies reached a record 253,000 in the first quarter of 1996. Banks charged off $2.2 billion in credit-card losses in the quarter, up from $1.35 billion in the year-earlier quarter.
Commercial banks’ first-quarter earnings were less than the record $13.8 billion set in the third quarter last year but more than the $11.1 billion in earnings posted in the first quarter of 1995.
Helfer said prospects for the banking industry were “excellent” for the next two years, despite rising personal bankruptcies and credit-card losses.
She also said that banks specializing in agricultural lending saw a slightly above-average increase in non-current loans, those behind in payment by 90 days. Agricultural banks, with total assets of $117 billion, primarily serve farmers.
Helfer attributed the rise in delinquent loans to a drought in the southern plains and record-high grain prices that have raised feeding costs for livestock producers.
Separately, savings banks and thrifts insured by the FDIC reported record first-quarter earnings of $2.5 billion, an increase of $817 million, or 47 percent, from last year’s first quarter.
The rise in earnings was due to one-time gains from branch sales and securities transactions.
The number of banks on the FDIC’s problem list continued to drop, to 127 banks with $13 billion in assets at the end of the first quarter from 144 problem banks with $17 billion in assets at the end of the previous quarter.
