David L. Mengle and John R. Walter
1984 was another strong year for Fifth District banks. Average return on assets, though slightly lower than in 1983, was still higher than the national average. This article, by David L. Mengle and John R. Walter, analyzes the factors affecting the profitability of District banks in 1984 to explain this relatively strong performance.
District banks were successful in reducing noninterest expense in 1984, and maintaining net interest margins higher than the national average. Increases in provisions for loan losses, however, reduced returns slightly below 1983 levels. District banks' capital positions, which were already above the national average, were further strengthened in 1984, leaving those banks well-equipped for continued growth.