A Review of Bank Performance in the Fifth District, 1983

9 Pages Posted: 24 Aug 2012

See all articles by F. McCarthy

F. McCarthy

affiliation not provided to SSRN

Date Written: 1984


The profitability of Fifth District banks improved dramatically in 1983. The .98 percent return on average assets and 15.2 percent earned on average equity capital were well above the average returns of recent years. With interest rates well below prevailing yields of the previous few years and loan demand that lagged the increase in business activity by several months, most banks found it difficult to generate a strong stream of interest revenue. Consequently, noninterest revenue sources and cost reductions contributed more to increased profits than did growth in interest income. Despite changes in liability structure and lower market rates, which caused a significant decrease in average interest expenses, net interest as a share of average assets still fell 17 basis points. A strong gain in noninterest income offset most of the decline in net interest margins, however. Reductions in provisions for loan loss and losses on securities transactions, and lower noninterest expense growth were major factors in increased net earnings.

Suggested Citation

McCarthy, F., A Review of Bank Performance in the Fifth District, 1983 (1984). FRB Richmond Economic Review, Vol. 70, No. 4, July/August 1984, pp. 21-29, Available at SSRN: https://ssrn.com/abstract=2120079

F. McCarthy (Contact Author)

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