WASHINGTON -- The Federal Deposit Insurance Corp. on Wednesday is expected to report that banks earned record profits of more than $9 billion in the first quarter, according to industry and government sources.

Commercial banks earned a record $32.2 billion in 1992 and $8.2 billion in the fourth quarter.

While banks are still making money off low interest rates, first quarter profits got a big boost from an accounting change that lowered their tax bills. The Financial Accounting Standards Board, in statement 109, allowed banks to more liberally recognize deferred tax assets.

First-Time Reduction

Some large banks reduced their tax expenses under this change for the first time in the first quarter.

Jim McDermott, president of Keefe, Bruyette & Woods in New York, said the 50 largest banks, which hold $2.2 trillion of the industry's assets, had net income of $5.1 billion in the first quarter, up from $4.7 billion in the fourth quarter and $4.1 billion a year ago.

He noted that these figures do not count extraordinary items such as accounting changes.

"There's no question that banks are reporting record profits," he said.

'Genuine Concern'

But Mr. McDermott noted that "bank stocks have been soft while the underlying profits have been strong."

"I think there is genuine concern about the sustainability of bank profits."

Nonetheless, Keefe Bruyette is bullish.

"We don't anticipate any material change in bank prospects at this point," Mr. McDermott said. "Even an increase in interest rates would not materially threaten profit expectations."

Profits Seen as Sustainable

Frank J. Barkocy, a banking analyst at Advest Inc. in New York, said big profits are attributable to the wide interest rate spread, continued asset quality improvement, and good control over noninterest expenses.

But the Office of the Comptroller of the Currency argued Monday that banks are not profiting from low interest rates alone and that the profits are sustainable.

Conscious changes to both sides of banks' balance sheets accounted for at least half of 1992's record $32.2 billion in earnings, said Mark Winer, director of banking research at the Comptroller's office.

Switching Funding Sources

He explained that banks are switching from funding sources such as jumbo certificates of deposit into lower-cost liabilities such as demand-deposit accounts.

He said banks also are reducing the amount of construction loans they make in favor of residential mortgages, which cost less and are safer investments.

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