The Bank Insurance Fund reached $26.9 billion in 1996, up $1.7 billion from a year earlier, while the Savings Association Insurance Fund grew $5.5 billion to $8.9 billion, the government reported Tuesday.

The bulk of the bank fund's income, $1.4 billion, came from interest income. The thrift fund was bolstered by the $4.5 billion bailout Congress ordered last year, the Federal Deposit Insurance Corp. said.

Bank fund operating expenses rose $34 million, or 7.2%, from 1995 because fewer costs were covered by income from assets in liquidation, the FDIC said. Thrift fund operating expenses increased $63 million, nearly 60% over 1995, because it absorbed more FDIC costs.

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