State-chartered banks' earnings soared in '92 Low interest rates pushed Md. profits to $177.5 million

March 04, 1993|By David Conn | David Conn,Staff Writer

Maryland's state-chartered banks, buoyed by the continued drop in interest rates, posted sharply higher earnings in 1992, the State Bank Commissioner reported.

The 69 state-chartered banks, two mutual savings banks and two trust companies earned a total of $177.5 million in 1992, contrasted with a loss of $68.5 million in 1991.

The biggest participants in the turnaround were the Bank of Baltimore, which turned a $65 million loss in 1991 into a $16

million profit last year, and Signet Bank/Maryland, whose $58 million loss two years ago was followed by a $9 million gain in 1992.

NationsBank of Maryland, which lost $47.5 million in 1991, converted to a national bank last year, and therefore wasn't included in the 1992 totals.

According to State Bank Commissioner Margie H. Muller, the biggest moneymaker during the year was Mercantile-Safe Deposit & Trust Co., which earned $26.6 million in 1992. Second was Citizens Bank of Maryland, with a $24.1 million profit. Chase Bank of Maryland was third with a gain of $18.7 million in 1992.

Nationally chartered banks, including Maryland National Bank and First National Bank of Maryland, were not included in the tally.

Maryland's banks benefited the most last year from the drop in interest rates.

Short-term rates, which banks paid on savings deposits and money market accounts, fell to 3.1 percent from 3.9 percent during 1992, while rates on 30-year bonds fell less than one-tenth of 1 percentage point, to 7.39 percent at the end of the year.

That, in turn, allowed banks to lower the rates they paid on deposits, while still earning higher rates on longer-term loans and mortgages.

While the total interest Maryland banks earned on loans fell by 27.5 percent in 1992, the interest they paid on deposits fell even more, by 38.8 percent. The industry's total return on year-end assets in 1992 was 0.76 percent, compared with an industry average of about 0.99 percent, according to analysts at Keefe, Bruyette & Woods.

At the same time, the state's banks trimmed some fat. In 1991, operating expenses totaled 10.1 percent of assets, but last year that number had dropped to 7.6 percent.

Total assets fell by 14.4 percent, to $23.4 billion from $27.3 billion the year before, partly because of the conversion of two companies into national banks.

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