Paying higher deposit insurance premiums than banks is starting to squeeze thrift profits, America's Community Bankers reported Friday.

"While 1995 earnings for the year will likely set an industry record, fourth-quarter performance shows troubling signs," said Robert R. Davis, director of economics and research at the thrift trade group. "The industry is currently strong, but the fourth-quarter decline suggests that an erosion of earnings capability may have begun."

Fourth-quarter earnings at the 16 largest thrift companies totaled $380.5 million, down 45% from the third quarter. Much of that change was due to nonrecurring items connected to mergers and branch sales. But core earnings dropped as well, although much less sharply. Fourth-quarter core earnings were $480.7 million, down 1% from the previous quarter.

From this data, the trade group projected total thrift industry earnings of $1.85 billion for the fourth quarter, down 17% from the previous quarter but up 11% from the fourth quarter of 1994.

The thrift trade group's numbers were compiled from company earnings reports. The Federal Deposit Insurance Corp. and Office of Thrift Supervision will release complete earnings data - based on fourth-quarter call reports - next month.

Most thrifts - and most of the 16 companies in the survey - are Savings Association Insurance Fund members that pay a minimum of 23 cents per $100 of domestic deposits for deposit insurance. Members of the Bank Insurance Fund used to pay that much, but their premiums dropped in most cases to 4 cents in the second half of 1995, and this year to almost zero.

Mr. Davis said that if Congress and President Clinton don't act soon to fix the premium disparity, more big thrift companies will follow in the footsteps of California's Golden West Financial Corp. and entice customers to move their deposits from institutions insured by the thrift fund to affiliates covered by the bank fund.

Smaller thrifts that don't have this option will shrink, Mr. Davis said, or take dangerous risks. "If you put people at a competitive disadvantage, they'll struggle, they'll make mistakes," he said.

Assuming that the premium disparity will lead to deposit shrinkage and increased thrift failures, Mr. Davis sketched what he called a "plausible pessimistic" scenario in which the savings insurance fund would go belly up within 10 years.

The American Bankers Association doesn't buy this. In a letter sent to Congress last week, ABA president James M. Culberson Jr. said that if current trends continue the thrift fund will be fully capitalized by 1999.

"It is quite clear that there is no need for congressional action in this area in 1996," Mr. Culberson wrote.

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