Banks earned a record $14.5 billion in the first quarter, 20% more than in the year-earlier period, the Federal Deposit Insurance Corp. reported Tuesday.

The industry improved noninterest income by 11.6%, to $24.7 billion, with fees accounting for half the increase.

Yet loan chargeoffs rose 12.5% to $4 billion. Losses on credit cards accounted for more than two-thirds of that total.

Net interest income increased 5.5%, to $42.1 billion. But the net interest margin fell 4 basis points to 4.22%, its lowest level since the end of 1991.

Banks cut payroll, premises, and other noninterest expenses by $136 million to $40.4 billion in the first quarter.

Higher loan-loss provisions and lower income from the sale of securities dampened profitability, the FDIC said. Banks set aside $4.3 billion to cover loan losses in the first quarter, an increase of 18.6% from a year earlier.

The credit card losses of $2.8 billion were up 25% from the first quarter of 1996. But writeoffs in real estate, commercial, and other lending categories declined by $113 million, the FDIC said.

The high yields on credit card and other personal loans enable banks to sustain these writeoffs, said Andrew C. Hove Jr., the FDIC's acting chairman. However, the record 321,242 bankruptcy filings in the first quarter raises concerns among regulators, he said.

"We continue to monitor closely the continued parallel rise" in card writeoffs and bankruptcies, Mr. Hove said in his first press conference since taking charge at the agency June 2.

He noted that credit card loans are a relatively small portion of borrowings-about 8.5% of outstanding loans-and that anecdotal evidence suggests bankers are curtailing their marketing solicitations and tightening underwriting standards.

Meanwhile, commercial and industrial loans increased by $22.3 billion to $732 billion in the first quarter, while real estate loans rose $16.9 billion to $1.2 trillion. Credit card loans on balance sheets fell by $15.6 billion to $216 billion, in large part due to securitizations.

The record earnings translated to an average return on assets of 1.26%, the fourth-best ever and up from 1.12% from the first quarter of 1996.

Equity capital increased by $14.9 billion to $390.1 billion, or 8.4% of industry assets-the highest level since 1941.

Profits at thrifts insured by the FDIC slumped 5.4% to $2.4 billion in the first quarter. In the 1996 period, industry earnings benefited from a large number of branch sales, the FDIC said. Agency officials said they were not concerned because the thrifts turned in one of their three best quarters overall.

"They are still earning very well," Mr. Hove said.

For the second consecutive quarter, no FDIC-insured banks or thrifts failed. Institutions on the agency's problem list dropped to 112 from 117 at the end of 1996.

Loans more than 90 days past due declined $1.9 billion to $29.1 billion. Reductions in noncurrent consumer loans outweighed increases in noncurrent commercial, agricultural, and real estate loans, the FDIC said.

However, delinquent loans-those less than 90 days late-jumped 11.1% to $38.1 billion in the quarter compared to a year ago.

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