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A review of bank performance in the Fifth district, 1983

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  • F. Ward McCarthy

Abstract

Many observers expected 1983 to be a bad year for bank profits because of deposit deregulation, but F. Ward McCarthy Jr. shows in A Review of Bank Performance in the Fifth District, 1983 that last year proved to be the most profitable of the last five. In this article, McCarthy examines the revenues and expenses of Fifth District banks in order to explain the significant improvement in performance. McCarthy finds the most successful banks last year were the ones that had cost structures that were relatively sensitive to the level of interest rates. He forecasts that in the current year the strength of the economy, the growth in loan demand, and increases in interest rates will increase banks gross return on assets. McCarthy also points out that if banks are to increase profitability in an environment of deregulation and rising interest rates, they must be able to contain interest expense and increase revenues from noninterest services.

Suggested Citation

  • F. Ward McCarthy, 1984. "A review of bank performance in the Fifth district, 1983," Economic Review, Federal Reserve Bank of Richmond, vol. 70(Jul), pages 21-29.
    • Handle: RePEc:fip:fedrer:y:1984:i:jul:p:21-29:n:v.70no.4
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    File URL: https://fraser.stlouisfed.org/title/economic-quarterly-federal-reserve-bank-richmond-960/july-august-1984-477325?page=19
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    References listed on IDEAS

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    1. John R. Walter, 1983. "A review of bank performance in the Fifth District, 1982," Economic Review, Federal Reserve Bank of Richmond, vol. 69(Jul), pages 3-11.
    2. Frederick T. Furlong, 1983. "New deposit instruments," Federal Reserve Bulletin, Board of Governors of the Federal Reserve System (U.S.), issue May, pages 319-326.
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