WASHINGTON - Bank earnings soared 17% in the third quarter to a record $13.8 billion, the Federal Deposit Insurance Corp. reported Wednesday.

"I remember saying in the first quarter of this year that it would be difficult for banks to keep up this string of high profits," FDIC Chairman Ricki Helfer told reporters. "I was wrong."

The sharp increase was due mainly to the FDIC's $1.5 billion premium refund, which contributed about $1 billion to banks' after-tax earnings. But Ms. Helfer said loan growth and stable net interest margins also were big factors.

"The picture for the industry remains positive going forward," she said, citing high capital levels and relatively few problem loans.

Not counting the boost from reduced deposit insurance premiums, third- quarter earnings for the 10,054 commercial banks were still up more than 8% from a year ago.

The banking industry's return on assets also broke records in the third quarter, hitting an annualized average of 1.32%. So did return on equity, at 16.30%.

Thrifts - which in the FDIC's accounting include both federally chartered savings institutions and state savings banks - also saw earnings rise in the third quarter, but didn't set any records.

Thrifts earned $2.2 billion, up 16% from third quarter 1994 but shy of the first quarter 1993 record of $2.4 billion. The 1993 earnings peak, however, was a one-time event due to accounting rule changes.

Return on assets for thrifts was 0.87% in the third quarter, and return on equity 10.60%.

During the year ended Sept. 30, the industry lost 538 banks, but assets grew 7.8% to $4.23 trillion. Total loans and leases rose 12.3% to $2.55 trillion, or 60% of assets.

Net interest income was up 5%, to $38.4 billion. The net interest margin - the percentage difference between interest earned on loans and investments and interest paid to depositors - was 4.23%, down from 4.46% a year before. But Ms. Helfer lauded the industry's ability to maintain stable margins in the face of fluctuating interest rates.

Loan quality remained strong in the third quarter, with net chargeoffs at 0.51% of all loans and leases. That's up slightly from 0.44% a year earlier, but much lower than the 1.31% reported in the third quarter of 1992.

Banks also continued to shift their focus from commercial to retail lending. As of Sept. 30, 55% of bank loans were to commercial borrowers, down from 62% in 1990 and 69% in 1986.

Consumer loans were the most troubled category, with 2.06% delinquent - that is, 30 to 89 days past due - and 1.60% charged off. But Ms. Helfer said she did not see these problem-loan levels as cause for concern.

In fact, she said, the increasing reliance on consumer loans and other retail lending "probably makes banks somewhat less susceptible" to economic downturns, because credit risk is spread out among far more borrowers than is the case with commercial loans.

She added, however, that "if a recession is deep enough, banks are not going to be protected. The best protection from a recession is capital."

At the moment, banks have a lot of that. The ratio of equity capital to total assets hit 8.14% in the third quarter, the highest level since 1941.

The Bank Insurance Fund also has ample capital, with reserves at 1.31% of insured deposits as of Sept. 30. That's the highest reserve ratio since 1967.

The number of banks on the FDIC's problem list dropped 46% to 152, the lowest number since 1973. The total assets of those banks added up to $20 billion, down 44% from a year earlier.

Noninterest income was up 10.3% to $21.7 billion.

The dollar amount of securities held in bank portfolios shrank 2.2% to $818.7 billion in the third quarter. But securities gains totaled $134 million, reversing a $332 million loss in the third quarter of 1994.

Revenues from bank trading activities, including derivatives, also rose in the third quarter, the Office of the Comptroller of the Currency reported Wednesday.

Trading revenues hit $4.6 billion - a 19% jump from the second quarter. Because regulators just started collecting this information in 1995, year- to-year comparisons are not possible.

The notional amount of commercial banks' off-balance-sheet derivatives was $17.6 trillion as of Sept. 30, up 12% from a year before. Nine banks accounted for 91% of the total.

- Olaf de Senerpont Domis contributed to this report.

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