fourth Quarter, 1992 

FDIC 

Division of Research 

& Statistics 

Don Inscoe 

(202) 898-3940 

Ross Waldrop 

(202) 898-3951 

The FDIC 

uarte r 1-x_____An_dr_ew_c_.H_o_ve_,J_r.,_Ch_a_irm_a_n_ 

anking R~ofile 

COMMERCIAL BANKING PERFORMANCE - FOURTH QUARTER, 1992 

• Record Year For Bank Earnings Ends On A Strong Note 

• Fourth-quarter Net Income Of $8.2 Billion Brings Total For 1992 To 

$32.2 Billion 

• Interest Rate Conditions, Improving Asset Quality Boost Earnings 

• Loan Volume At Commercial Banks Resumes Decline 

Insured commercial banks earned $8.2 billion in the 

fourth quarter of 1992 as interest-rate conditions 

remained extremely favorable and the outlook for 

asset quality improved considerably. This is the 

second highest quarterly total ever reported, after the 

$8.5 billion earned in the third quarter of 1992, and 

represents a $5.2-billion increase over the $3 billion 

banks earned in the fourth quarter of 1991 . Full-year 

earnings for 1992 totaled $32.2 billion, easily eclipsing 

the previous record of $24.8 billion set in 1988. The 

four highest quarterly earnings records all have been 

registered in 1992. Earnings continue to benefit from 

low interest rates and wide spreads between shortand long-term rates, as well as from fundamental 

improvements in asset quality. 

In addition to the record dollar level of earnings, 

industry profitability also reached new heights in 1992, 

as the average return on assets (ROA) for the year 

rose to 0.96 percent, the highest level since the 

creation of the FDIC. Fourth-quarter ROA was 0.94 

percent, up from 0.35 percent a year earlier. The 

greatest improvement in profitability was at large 

banks in the Northeast and the West, which are 

recovering from asset-quality problems. Only one of 

the twenty-five largest banks reported a net loss for 

Chart A - Return on Assets (ROA) and Equity 

(ROE) of Insured Commercial Banks, 1934 - 1992 

Return on Assets 0.2 

the fourth quarter of 1992 compared with the fourth 

quarter of 1991, when eight of the twenty-five largest 

banks were unprofitable. For the full year, two of the 

twenty-five largest banks lost money, compared with 

seven in 1991. 

The year-to-year improvement in quarterly earnings 

was mainly attributable to a $4.3 billion drop in 

loan-loss provisions and a $3.3 billion increase in net 

interest income. Loan-loss provisioning of $6.4 billion 

was the lowest fourth-quarter total since 1988. Net 

interest margins widened for the seventh consecutive 

quarter, to an average of 4.67 percent, producing a 

10.2 percent increase in net interest income over the 

fourth quarter of 1991. Unlike the first three quarters of 

1992, the improvement in earnings in the fourth 

quarter was not supported by higher gains from sales 

of investment securities. Gains of $761 million in the 

fourth quarter were substantially below the $1 .4 billion 

in gains reported in the fourth quarter of 1991. 

For all of 1992, net interest income totaled $133.5 

billion, an improvement of $11.6 billion over the 

$121.9 billion earned in 1991. Net interest margins 

averaged 4.51 percent, compared with 4.18 percent 

for 1991. Loss provisions totaled $25.9 billion in 1992, 

a decrease of $8.4 billion from 1991, and the lowest 

Chart 8 - Quarterly Net Income of FDIC-Insured 

Commercial Banks, 1988 - 1992 

$ BIiiions 

10 --------------------

5 

. . □ Net OperaUng Income . ' 

■ Seci;,r1Ues and Othf3r Gains, Net 

□ Firs(Republic Effect 

~ 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 

1988 1989 1990 1991 1992 

Requests for copies of and subscriptions to the FDIC Quarterly Banking Profile should be made through the FD/C 's 

Office of Corporate Communications, 550 17th Street, N. W. , Washington, D. C. 20429; telephone (202) 898-6996. 

For assistance contact: Section508@fdic.gov
level since 1988, when banks set aside $17.1 billion. 

Securities gains totaled $4 billion, one-third higher 

than the $3 billion in gains realized in 1991. 

Banks continued to adjust their balance sheets in 

response to the interest-rate environment and 

lackluster lending markets. The relative share of 

low-cost liabilities increased throughout 1992. Total 

liabilities grew by $43.3 billion in 1992. Demand 

deposits were up by $56.9 billion, with most of the 

growth occurring in the fourth quarter. Overnight 

borrowings increased by $21.4 billion during the year. 

NOW accounts and money-market deposit accounts 

(MMDAs) increased by $77.6 billion, while other 

savings deposits increased by $54.9 billion. Time 

deposits fell during 1992 by $160.8 billion, and 

deposits in foreign offices shrank by $17.8 billion. The 

shifts in funding sources, combined with the overall 

decline in interest rates, helped reduce banks' interest 

expense by over 27 percent in 1992. 

A substantial increase in equity capital in 1992 also 

helped limit interest expenses, by reducing the 

amount of liabilities needed to fund the industry's 

assets. Total equity capital grew by $31.9 billion in 

1992, with $6.4 billion of the increase occurring in the 

fourth quarter. The average equity-capital-to-assets 

ratio of commercial banks improved from 6.75 percent 

at the end of 1991 to 7.52 percent at the end of 1992. 

This is the highest equity capital ratio for the industry 

since the end of 1965, when it was 7.53 percent. 

Retained earnings contributed $18.4 billion to equity 

capital in 1992. Banks paid 43 percent of their 

earnings in dividends, the lowest proportion since the 

40 percent paid out in 1981 . 

Chart C - Quarterly Net Interest Margins of 

FDIC-Insured Commercial Banks, 1984 - 1992 

Net lnt...t Mlr;ln ('%) 

5 J....LLl 

I Banks< $100 MIiion 4.87% 

II ■■ i.. 

-- .. . . 4.5 

t~-

,-

\ 

~-

,-. . . "'Ill . ~, ~ ~~ WI ' 1111

~, .. . . .. . II 4 .. ~i. . ·- -· N ~ ~ ._,_ I ~ ~ 11111

~ ■~ ~ .. ..• "" 

~ ~ 

1 1 Banks> S100 MIiion 4.84% 

3.5 123412341234123412341234123412341234 

1984 1985 1986 1987 1988 19811 1e90 1991 1992 

Assets of commercial banks increased by $24.4 billion 

in the fourth quarter, bringing the growth for all of 1992 

to $75.2 billion, an increase of 2.2 percent. After 

registering a $3.7-billion increase in the previous 

quarter, total loans held by commercial banks shrank 

by $4.2 billion in the fourth quarter. This was the 

seventh time in eight quarters, dating back to the first 

quarter of 1991, that loans at commercial banks have 

declined. During this interval, total loans have declined 

by $77.2 billion. Most of the shrinkage has been in 

commercial and industrial loans, which have 

decreased by $78.8 billion. Loan shrinkage in the 

fourth quarter of 1992 and for the full year was limited 

to banks in the Northeast and West Regions, where 

asset-quality problems have been greatest. Banks in 

the other regions had modest loan growth in the fourth 

quarter, and for the full year. Commercial bank asset 

growth has resulted primarily from increased holdings 

of investment securities, mainly U.S. Treasury and 

mortgage-backed securities. Most of the new 

securities have maturities of one to five years, as 

banks have sought to boost yields by lengthening the 

average maturities of their securities holdings. Growth 

in the fourth quarter, however, consisted mainly of 

increases in U.S. Treasury securities with maturities of 

less than one year. 

For the third consecutive quarter, banks charged off a 

lower amount of loans than a year earlier. 

Fourth-quarter net loan charge-offs totaled $7.1 billion, 

an improvement of $2.7 billion from the $9.8 billion 

charged-off in the fourth quarter of 1991 . For all of 

1992, the dollar amount of net loan charge-offs was 

$25.5 billion, a decrease of $7.3 billion from the $32.8 

billion in net charge-offs taken in 1991. This is the first 

decline in full-year net charge-offs since 1978. Most of 

the decrease was in commercial and industrial loans 

and loans to foreign borrowers. 

Chart D - Annual Net Loan Charge-off Rates, 

1982-1992 

Noncurrent loans continue to shrink, despite the 

slowing rate of charge-offs, indicating that fewer new 

loans are becoming noncurrent. Noncurrent loans 

declined by $7.0 billion in the fourth quarter, the 

largest quarterly drop since the fourth quarter of 1988, 

when they fell by $7.1 billion. Noncurrent loans have 

now decreased for seven consecutive quarters. 

During this period, they have declined by a total of 

$20.9 billion, from an all-time high of $83.3 billion at 

the end of the first quarter of 1991 to $62.4 billion at 

the end of 1992. Loan-loss reserves have decreased 

slightly during the same interval, but banks still held 

87.3 cents in reserves for every dollar of noncurrent 

loans at year-end. This is the highest coverage level 

reported since banks began reporting noncurrent loan 

amounts in 1982. Commercial bank holdings of other 

real estate owned (OREO) registered their first 

quarterly decline since the second quarter of 1989. 

OREO fell by $2.3 billion in the fourth quarter, to $25.7 

billion, the lowest level since the third quarter of 1991 . 

At the end of 1992, there were 11,461 FDIC-insured 

commercial banks reporting financial results, a net 

decrease of 460 banks since the end of 1991 . During 

1992, there were 428 unassisted mergers, while 100 

commercial banks failed or required assistance to 

2 
Chart E - Noncurrent Loan Rates At Year-end, 

1982 -1992 

Total loam 

••y••·····---···· 

······•,,,,, . Contumer 

1~ 

o-------------------- 1~ 1~ 1~ 1~ 1w 1~ 1~ 1~ 1~ -

1m

avert failure. There were 72 new bank charters issued 

in 1992, but 21 of these were temporary "bridge bank" 

charters given to failed banks as part of the resolution 

process. The 51 charters issued to non-bridge banks 

represent the lowest annual number since 1951. The 

number of commercial banks on the FDIC's "Problem 

List" fell by 229 in 1992, from 1,016 at the end of 1991 

to 787 at the end of 1992. This represents the lowest 

number of "Problem" banks since 1983. Assets of 

commercial banks on the "Problem List" declined from 

$528 billion at the end of 1991 to $408.2 billion at the 

end of 1992. 

Favorable interest-rate conditions and an improving 

trend in asset quality enabled banks to strengthen and 

clean up their balance sheets in 1992. The shrinkage 

in noncurrent loans in 1992 portends a further decline 

in loan charge-offs and loan-loss provisions in 1993. 

Absent a sharp rise in interest rates or a flattening of 

the yield curve, net interest margins should remain 

wide by historical standards, due to shifts in liability 

composition. The two main components of 1992's 

record earnings - the reduced burden of troubled 

assets and wide net interest margins - should carry 

over into 1993. Commercial banks as a whole are very 

well capitalized, and the liquidity of their asset 

portfolios continues to increase with the proportion of 

investment securities. 

Chart F - Structural Changes Among FDIC-Insured 

Commercial Banks, 1980 - 1992 

Number of Banks 

700-------------------

600 

500 

400 

300 

200 # Bank Mergers , , '' 

.

# ,,,,, ,, 

100 ,,,'' ,,,,,,, Falled Banks o............._,_,,_______________72_. 

1980 19811982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 

Chart G - Troubled Real Estate Asset Rates• By State, December 31, 1992 

Midwest Central 

orth Dakota 

2.11 

Nebraeka 1.68 

Colorado KlMIMt

3.157 U7 

Southwest 

Troubled Real Estate Asset Rate: 

D Less Than 4% • Noncurrent real estate loans plus 

D Between 4% and 8% other real estate owned as a percent ~ 

■ 8% or Higher of total real estate loans plus OREO. 

3 
REAL ESTATE LOAN PERFORMANCE AND OTHER REAL ESTATE OWNED 

DECEMBER 31, 1992 

ASSET SIZE GEOGRAPHIC DISTRIBUTION 

LESS $1B $1OB NORTH- SOUTH- MID- SOUTHALL THAN $1OOMM TO OR EAST EAST CENTRAL WEST WEST WEST 

BANKS$1OOMM TO $1B $1OB MORE REGION REGION REGION REGION REGION REGION 

PERCENT OF LOANS 30-89 DA VS PAST DUE 

All real estate loans 1.95% 1.66% 1.61 % 1.83% 2.40% 2.72% 1.42% 1.49% 1.29% 1.49% 2.06% 

Construction and development 3.14 1.42 2.14 3.28 3.85 4.05 1.47 2.76 2.08 1.32 3.94 

Commercial real estate 2.24 1.44 1.52 2.00 3.54 3.65 1.29 1.43 1.77 1.22 2.46 

Multifamily residential real estate 2.64 1.58 1.34 1.86 4.76 5.40 1.36 1.45 1.42 1.18 1.80 

1-4 Family residential 1.70 1.94 1.73 1.60 1.68 2.10 1.64 1.46 1.05 1.72 1.68 

Home equity lines of credit 0.89 1.24 0.96 0.81 0.89 1.15 0.63 0.81 0.81 1.14 0.73 

Commercial R/E loans not secured by real estate 2.61 0.86 1.15 1.94 3.06 3.77 0.85 2.63 3.89 0.61 2.24 

PERCENT OF LOANS NONCURRENT* 

All real estate loans 3.90% 1.50% 1.93% 3.46% 6.52% 6.44% 2.20% 1.78% 1.27% 2.22% 4.95% 

Construction and development 13.99 2.52 4.90 11.30 22.87 21.64 5.60 6.85 2.47 4.30 18.08 

Commercial real estate 5.21 1.97 2.62 4.42 9.95 8.88 3.46 2.33 2.54 3.26 5.92 

Multifamily residential real estate 4.77 1.58 1.97 3.36 9.29 9.32 2.52 1.51 1.77 2.30 4.97 

1-4 Family residential 1.43 1.11 1.15 1.42 1.77 2.33 0.99 0.78 0.52 1.16 1.66 

Home equity lines of credit 0.72 0.84 0.79 0.63 0.77 1.10 0.44 0.49 0.35 0.82 0.55 

Commercial R/E loans not secured by real estate 7.24 2.84 2.43 4.72 8.79 13 .13 2.98 3.21 3.98 1.22 5.08 

PERCENT OF LOANS CHARGED-OFF (NET) 

All real estate loans 1.01% 0.23% 0.35% 0.90% 1.85% 2.31 % 0.83% 0.96% 0.49% 0.55% 1.24 % 

Construction and development 3.71 0.40 0.99 2.99 6.15 8.41 2.47 2.05 1.24 1.14 5.04 

Commercial real estate 1.45 0.35 0.53 1.25 2.98 2.91 1.45 2.23 1.20 0.86 1.34 

Multifamily residential real estate 1.50 0.45 0.50 1.08 2.96 4.46 0.86 0.84 1.43 0.50 1.10 

1-4 Family residential 0.22 0.16 0.15 0.23 0.31 0.60 0.22 0.11 0.11 0.27 0.20 

Home equity lines of credit 0.18 0.25 0.17 0.18 0.17 0.36 0.18 0.08 0.13 0.23 0.23 

Commercial R/E loans not secured by real estate 4.73 3.56 2.93 2.05 5.80 11.34 1.31 7.43 1.64 0.31 3.27 

TOTAL LOANS OUTSTANDING($ BILLIONS) 

All real estate loans $868.2 $98.3 $219.6 $254.1 $296.2 $263.2 $168.5 $150.1 $58.5 $56.0 $172 .0 

Construction and development 78.7 5.8 15.6 25.9 31.4 25.5 14.4 11.3 3.3 3.9 20.2 

Commercial real estate 257.6 26.6 72.1 86.8 72.2 73.3 53.6 46.0 15 .1 19.0 50.6 

Multifamily residential real estate 27.2 2.2 7.3 8.9 8.8 7.9 4.8 5.1 1.9 1.7 5.9 

1-4 Family residential 390.1 50.6 104.2 103.7 131.6 108.1 80.3 70.6 29.9 28.2 73.1 

Home equity lines of credit 73.3 2.9 14.1 26.4 29.9 27.1 11.9 11.8 2.4 0.9 19.2 

Commercial R/E loans not secured by real estate 20.0 0.5 1.7 4.3 13.5 7.1 2.9 2.2 0.6 0.8 6.4 

OTHER REAL ESTATE OWNED($ BILLIONS) 

All other real estate owned $25 .7 $1.8 $4.4 $6.4 $13.0 $12.1 $3.2 $2.0 $0.9 $1.9 $5.5 

Construction and development 6.4 0.3 1.1 2.3 2.8 2.8 0.9 0.4 0.2 0.4 1.8 

Commercial real estate 13.2 0.8 2.1 3.0 7.3 6.1 1.6 1.2 0.5 1.0 2.8 

Multifamily residential real estate 1.7 0.1 0.2 0.4 1.0 1.0 0.1 0.1 0.1 0.1 0.2 

1-4 Family residential 3.0 0.6 0.9 0.6 0.9 1.2 0.5 0.2 0.1 0.3 0.6 

Home equity lines of credit 0.4 0.1 0.1 0.1 0.1 0.0 0.0 0.0 0.1 0.1 0.1 

Other real estate owned in foreign offices 1.0 0.0 0.0 0.0 0.9 1.0 0.0 0.0 0.0 0.0 0.0 

* Noncurrent loan rates represent the percentage of loans in each category 

that are past due 90 days or more or that are in nonaccrual status. 

4 
Table I. Selected Indicators, FDIC-Insured Commercial Banks 

1992 1991 1990 1989 1988 1987 1986 

Return on assets ........................... 0.96% 0.54% 0.48% 0.49% 0.82% 0.10% 0 .63% 

Return on equity ........................... 13.35 8.05 7.55 7.78 13.30 2.00 9.94 

Equity capital to assets .. ................ 7.52 6.75 6.45 6.21 6.28 6.02 6.20 

Noncurrent loans and leases plus 

other real estate owned to assets ... 2.51 2.99 2.90 2 .30 2.14 2.46 1.94 

Net charge-offs to loans ................. 1.29 1.61 1.44 1.14 1.00 0 .92 0.98 

Asset growth rate ......................... 2.19 1.21 2.72 5.37 4.36 2 .01 7.71 

Net operating income growth .......... 93.97 -0.57 2.56 -38.53 1554.74 -89.65 N/A 

Percentage of unprofitable banks ..... 6.52 11.55 13.46 12.50 14.65 17.66 19.79 

Number of institutions .................... 11,461 11,921 12,341 12,707 13, 139 13,696 14,200 

Number of problem banks............... 787 1,016 1,012 1,092 1,394 1,559 1,457 

Assets of problem banks (billions) .... $408.2 $528.0 $341.6 $187 .9 $304.8 $329.2 $285.8 

Number of failed/assisted banks ...... 100 108 159 206 221 201 144 

Table II. Aggregate Condition and Income Data, FDIC-Insured Commercial Banks 

(dollar figures in millions) 

Preliminary 4th Otr 3rd Otr 4th Otr %Change 1992 1992 1991 91 :4-92:4 

Number of banks reporting ........................... . 11,461 11,590 11,921 -3.9 

Total employees (full-time equivalent) ............. . 1,477,619 1,474,458 1,487,199 -0.6 

CONDITION DA TA 

Total assets................................................. $3,505,843 $3,481,442 $3,430,597 2.2 

Real estate loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 868,234 864,775 851,199 2.0 

Commercial & industrial loans.................... 536,328 539,425 558,882 -4.0 

Loans to individuals.................................. 385,419 381,217 391,856 -1.6 

Farm loans.............................................. 35,016 36,706 34,980 0.1 

Other loans and leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 207, 112 214,156 215,758 -4.0 

Total loans and leases .. .. .................. ........ 2,032,110 2,036,279 2,052,674 -1.0 

LESS: Reserve for losses ......... .. . . .. ........... 54,487 55,294 55,148 -1.2 

Net loans and leases ...................... ......... ... 1,977,623 1,980,985 1,997,526 -1.0 

Temporary investments............................... 540,862 516,911 499,059 8.4 

Securities over 1 year.. ..... ... ........... ............ 569,479 575,027 514,471 10.7 

All other assets.......................................... 417,879 408,519 419,542 -0.4 

Total liabilities and capital........... ..... ... ....... .... 3,505,843 3,481,442 3,430,597 2.2 

Noninterest-bearing deposits........................ 541,155 487,561 480,397 12.7 

Interest-bearing deposits... .... ... ...... ............. 2,157,772 2,157,916 2,207,199 -2.2 

Other borrowed funds. .... ............ ....... .... .... . 406,519 422,688 379,680 7.1 

Subordinated debt............................... ..... .. 33,730 30,268 24,962 35.1 

All other liabilities.................... ......... .. ... ... .. 103,008 125,765 106,630 -3.4 

Equity capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 263,659 257,244 231,728 13.8 

Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . 6,876 6,067 4,502 52.7 

Loans and leases 30-89 days past due............ 34,618 34,128 41,832 -17.3 

Noncurrent loans and leases . . . . . . . . . . . . . . . . . . . . . . . . . . 62,382 69,384 75,990 -17.9 

Restructured loans and leases........................ 11,948 10,858 9,757 22.5 

Other real estate owned............ .................... 25,662 27,999 26,585 -3.5 

Loan commitments and letters of credit........... 1,446,320 1,427,233 1,375,878 5.1 

Domestic office assets... ......... .................. .... 3,109,583 3,064,289 3,032,676 2.5 

Foreign office assets................ ..................... 396,260 417,153 397,921 -0.4 

Domestic office deposits . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . 2,412, 127 2,343,551 2,382,954 1.2 

Foreign office deposits........... ....................... 286,800 301,926 304,642 -5.9 

Earning assets .. ..................... ...................... 3,087,964 3,072,922 3,011,055 2.6 

Volatile liabilities . . . . . . .. . .... ............ .. . . . ............ 918,895 971,129 987,280 -6.9 

Preliminary Preliminary Full Year Full Year 4th Qtr 4th Otr %Change INCOME DATA 1992 1991 %Change 1992 1991 91 :4-92:4 

Total interest income .................. $255,338 $289,230 -11.7 $63,989 $73,220 -12.6 

Total interest expense ................. 121,856 167,304 -27.2 28,197 40,740 -30.8 

Net interest income ................... 133,482 121,926 9 .5 35,793 32,479 10.2 

Provision for loan losses .............. 25,878 34,312 -24.6 6,356 10,638 -40.3 

Total noninterest income ............. 65,635 59,730 9.9 17,004 15,985 6.4 

Total noninterest expense ............ 130,868 124,783 4.9 35,324 34,702 1.8 

Securities gains (losses) .............. 3,983 2,968 34.2 761 1,433 -46.9 

Applicable income taxes .............. 14,530 8,268 75 .7 3,801 1,462 160.1 

Extraordinary gains, net .............. 421 686 -38.7 96 -75 N/M 

Net income ............................. 32,245 17,946 79.7 8,171 3 ,020 170.5 

Net charge-offs .......... ..... ....... .... 25,527 32,862 -22.3 7,104 9,800 -27.5 

Cash dividends on capital stock .... 13,852 14,297 -3.1 5,401 4,244 27 .3 

Net operating income .................. 28,895 14,897 94.0 7,510 1,953 284.6 

N/M - Not meaningful 

5 
Table Ill. Full Year 1992 Commercial Bank Data (Dollar figures in billions, ratios in %) 

ASSET SIZE DISTRIBUTION GEOGRAPHIC DISTRIBUTION 

EAST WEST Less $100 Million Greater 

FULL YEAR Preliminary ALL than $100 to $1-10 than $10 Northeast Southeast Central Midwest Southwest West 

(The way it is .. . ) BANKS Million $1 Billion Billion Billion Region Region Region Region Region Region 

Number of banks reporting ... ...... ...... . 11,461 8,290 2,791 329 51 922 1,892 2,521 2,791 2,046 1,289 

Total assets .......... ........ ........... ... .... . $3,505.8 $345.9 $680.3 $1,034.1 $1,445.5 $1,307.6 $550.4 $581.5 $242.0 $282.6 $541 . 7 

Total deposits .......... .... ....... ..... ..... .... 2,698.9 306.4 587.3 787.8 1,01.7.4 924.0 434.6 459.6 197.6 242.1 441.0 

Net income (in millions) ....... .. ........... . 32,245 3,560 6,765 10,406 11,514 10,597 5,278 5,843 3,060 3,080 4,386 

Percentage of banks losing money ...... 6.5% 6.5% 6 .1% 10.6% 7.8% 15.4% 8.0% 3.6% 2.0% 5.0% 15.8% 

Percentage of banks with earnings gains 79.9 79 .1 82 .2 79 .9 90.2 80.2 85.3 79 .9 77.9 82 .8 71.8 

Performance Ratios 

Yield on earning assets ........ ..... .... ... .. 8.64% 8 .58% 8 .44% 8.35% 8.97% 9 .09% 8.32% 8 .50% 8 .24% 7 .63% 8.10°1/o 

Cost of funding earning assets .... ... ..... 4.12 3.82 3.66 3.54 4 .87 5 .01 3 .66 3 .87 3 .74 3.27 3.31 

Net interest margin ....... ................ .... 4 .51 4 .76 4.78 4 .80 4.10 4.09 4.66 4.63 4.50 4 .37 5.38 

Noninterest income to earning assets .. 2.22 1.05 1.35 2.51 2 .75 2.73 1.71 1.67 2 .31 1.68 2.32 

Noninterest expense to earning assets . 4.43 3.90 4 .00 4 .67 4.60 4 .51 4 .23 3.99 4 .23 4.18 5.11 

Net operating income to \assets ..... ...... 0.86 0.97 0 .96 0.96 0 .72 0.68 0 .95 1.02 1.22 1.03 0.80 

Return on assets ..... .. .... .. ............... .. 0.96 1.06 1.03 1.05 0 .84 0 .84 1.02 1.07 1.32 1.1 5 0 .85 

Return on equity ........ .... ....... .. ... ... .... 13.35 11.34 12.73 14.10 13.85 12.89 13.46 13.85 15.69 16.09 11.18 

Net charge-offs to loans and leases ... . 1.29 0 .54 0 .74 1.40 1.63 1.80 0 .84 1.00 0.79 0 .67 1.29 

Loan loss provision to net charge-offs .. 101 .37 117.37 124.13 108.26 91.00 96.97 106.04 109.34 115.36 88.58 105.11 

Condition Ratios 

Loss allowance to: 

Loans and leases ............ .... ............ 2 .68% 1.78% 1.90% 2.77% 3 .16% 3.37% 1.99% 1.89% 2.04% 2.29% 3.00°1/o 

Noncurrent loans and leases ...... ...... 87.34 113.03 102.56 108.16 73.42 75.22 112.86 112.16 143.00 126.74 81 .13 

Noncurrent loans and leases plus 

other real estate to assets .. .. .... .. .... . 2 .51 1.35 1.70 2.1 5 3 .43 3.49 1.61 1.35 1.18 1.49 3.44 

Equity capital ratio .... .. ....... .. ...... .. .... 7 .52 9.40 8 .21 7 .69 6.62 6 .93 7 .60 7.86 8.44 7.32 8.19 

Core capital (leverage) ratio .... ... .. ....... 7 .23 9.36 8 .13 7.42 6 .19 6 .71 7.51 7 .66 8 .37 7.28 7.26 

Net loans and leases to deposits .. .. .... . 73.27 57.21 64.75 76.10 80.85 78.10 72.57 73.61 66.34 52.16 78 .20 

Growth Rates (year-to-year) 

Assets ... ...... ... ..... ......... ....... ... ... ... .. 2 .2% 5 .3% 6 .6% 6.9% 14.3% 1.7% 7 .0% 2.3% 3 .9% 4 .6% -3.1% 

Equity capital ....... .... .... ............ .. ...... 13.8 8.6 11 .5 17.7 35.1 16.4 12.4 10.1 8 .0 11.4 18.0 

Net interest income ..................... ...... 9 .5 12.9 13.9 14.6 24.2 11 . 1 13.7 10.9 5 .5 12.8 2.3 

Net income..... ... ... ... ........... ............. . 79.7 46.1 34.1 92.2 104.8 207.0 67.7 21.8 27.2 77.6 81.9 

Noncurrent loans and leases plus 

other real estate owned .. .. .... ...... .. .. . -14.2 -12.7 -4.3 -16.9 3.4 -14.2 -21.9 -15.3 -20.0 - 34.6 - 0 .8 

Net charge-offs ...... .. ...... .. .. ...... .. ...... -22.3 -16.3 -11 .7 -12.9 -12.4 -26.1 -31 .5 10.0 -25.5 -47.6 -12.4 

Loan loss provision .............. .... .... ...... -24.6 -18.6 -9.3 -21.0 -7.2 -19.4 -38.6 0 .9 -20.4 -45.6 -36.4 

PRIOR FULL YEARS 

(The way it was . . . ) 

Return on assets .. .......... ...... ... 1991 0.54% 0.76% 0.75% 0.56% 0 .36% 0 .28% 0.63% 0 .87% 1.07% 0 .65% 0.44°1/o 

.............................. 1989 0.49 0.77 0 .89 0.63 0 .10 -0.02 0.88 0.99 1.00 -0.09 0.99 

.............................. 1987 0 .10 0.51 0 .68 0.47 -0.64 -0.13 0 .92 0 .43 0.66 -0.89 -0.03 

Equity capital ratio .................. 1991 6.75 9.09 7.78 6.95 5.48 6.06 7 .24 7.31 8 . 12 6.87 6.73 

.............................. 1989 6.21 8.92 7.46 6.12 4.86 5.55 6.93 6.86 7 .62 5.55 6.26 

.............................. 1987 6.02 5.84 7.22 7.52 4 .43 5 .44 6.81 6.52 7 .44 5.83 5.76 

Noncurrent loans and leases plus 

other real estate owned to assets . 1991 2 .99 1.62 2.07 2 .81 3.95 4.13 2 .21 i .63 1.53 2.38 3.36 

1989 2 .30 1.76 1.73 1.86 3.12 2 .83 1.23 1.18 1.41 4.41 2.42 ······························ .............................. 1987 2.46 2 .10 1.81 1.81 3.47 2.44 1.04 1.27 1.87 5.78 3.28 

Net charge-offs to loans and leases .. 1991 1.61 0 .68 0 .97 1. 71 2.03 2.38 1.23 0 .89 1.07 1.26 1.32 

.............................. 1989 1.14 0.75 0.74 1.05 1.51 1.29 0.59 0 .91 1.19 1.91 1.18 

......................... ..... 1987 0.92 1.14 0 .87 0.91 0 .88 0.67 0 .68 0.68 1.59 2.04 1.07 

Regions: Northeast­ Connecticut, Delaware, District of Columbia, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, 

New York, Pennsylvania, Puerto Rico, Rhode Island, Vermont 

Southeast­ Alabama, Florida, Georgia, Mississippi, North Carolina, South Carolina, Tennessee, Virginia, West Virginia 

Central­ Illinois, Indiana, Kentucky, Michigan, Ohio, Wisconsin 

Midwest­ Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota 

Southwest­ Arkansas, Louisiana, New Mexico, Oklahoma, Texas 

West- Alaska, Arizona, California, Colorado, Hawaii, Idaho, Montana, Nevada, Oregon, Pacific Islands, Utah, 

Washington, Wyoming 

6 
Table IV. Fourth Quarter 1992 Commercial Bank Data (Dollar figures in billions, ratios in %) 

ASSET SIZE DISTRIBUTION GEOGRAPHIC DISTRIBUTION 

EAST WEST less $100 Million Greater 

FOURTH QUARTER Preliminary ALL t han $100 to $1-10 t han $10 Northeast Southeast Central Midwest Southwest West 

(The way it is . . . ) BANKS Million $1 Billion Bi llion Billion Region Region Region Region Region Region 

Number of banks reporting ........ ......... . 11 ,461 8,290 2,791 329 51 922 1,892 2,521 2,791 2,046 1,289 

Total assets .... ...... ......... ..... .... ... .... ... . $3,505 .8 $345 .9 $680.3 $1,034.1 $1,445 .5 $1,307 .6 $550.4 $581 .5 $242.0 $282 .6 $541 . 7 

Total deposits ...... ......... .. ............ .. ..... 2,698 .9 306.4 587.3 787 .8 1,017.4 924.0 434.6 459.6 197.6 242 .1 441 .0 

Net income (in millions) ... .. ...... .. .......... 8 , 171 759 1 ,590 2 ,561 3,260 2,717 1,188 1,606 768 781 1, 111 

Percentage of banks losing money .... ... 12.4% 13.3% 9.5% 14.9% 7.8% 17.1 % 14.5% 7.6% 10.2% 11.8% 20.8% 

Percentage of banks with earnings gains . 64.1 62 .2 68.8 70.5 80.4 68 .8 68.6 63.8 61.8 63 .6 60.7 

Performance Ratios (annualized) 

Yield on earning assets ..... ..... .. ... .... ... .. 8.34% 8 .25% 8 .20% 8 .19% 8.55% 8.84% 7 .81 % 8 .26% 7 .92% 7.68% 8.31 ° 

Cost of funding earning assets ..... ........ 3.68 3 .38 3 .25 3 .18 4.32 4.59 3 .10 3.46 3.31 2.99 2.78 

Net interest margin .......... ....... .. .... .. .... 4.67 4 .87 4.95 5 .01 4 .23 4.24 4 .70 4.80 4.61 4 .69 5 .53 

Noninterest income to earning assets .. .. 2 .22 1.12 1.41 2 .66 2 .57 2.67 1.68 1.69 2.41 1.80 2 .36 

Noninterest expense to earning assets ... 4 .60 4 .21 4.25 5 .07 4.54 4.63 4.42 4.10 4.49 4 .65 5.31 

Net operating income to assets ... ....... .. . 0 .86 0 .82 0 .90 0 .92 0 .82 0 .70 0 .84 1.10 1 .13 1.08 0 .80 

Return on assets ................ .... ..... .. .. .... 0 .94 0 .89 0 .95 1.01 0 .90 0.83 0 .88 1.12 1.29 1.13 0 .82 

Return on equity .... ..... .. ... ..... ....... ...... . 12.60 9 .37 11 .49 13.07 13 .99 12.26 11.45 14.26 15.12 15.41 10.20 

Net charge-offs to loans and leases .. .. ... 1.40 0 .73 0 .99 1.58 1.60 1.89 1.06 0 .82 0.89 0 .66 1.70 

Loan loss provision to net charge-offs ... 89.48 102.91 106.50 98 .50 77.05 91 .35 83.43 115 .14 96.24 62 .79 79.05 

Growth Rates (year-to-year) 

Net interest income .... ..... .... .. ..... .... .. ... 10.2% 12.6% 16.1 % 13.8% 26.4% 7.9% 14.9% 13.2% 4 .8% 17.1 % 7 .2% 

Net income .... ............................ .... .. .. 170.5 59.3 32.3 117.6 272.1 751 .5 146.3 36.2 35.3 93.4 1521.9 

Net charge-offs .... ..... .. ... .. ....... .. ..... ..... -27.5 -25.1 -17.0 -19.2 -10.8 -26.7 -40.4 -27.3 -27.8 -55.9 -11.4 

Loan loss provision .... .... .... ... ..... .. .. .... . -40.3 -32.6 -17.9 -30.5 -34.1 -30.8 -53.0 -25.2 -35.7 -65.1 -53.4 

PRIOR FOURTH QUARTERS 

(The way it was . . . ) 

Return on assets .. ..... .. ... ... .... .. 1991 0 .35% 0.57% 0.66% 0 .43% 0.09% 0.10% 0 .37% 0.84% 0.99% 0.60% 0 .05 % 

....................... ...... 1989 0.24 0 .37 0 .71 0 .10 0.07 -0.41 0.66 0 .92 0.75 -0.59 0 .95 

1987 0.29 0.08 0 .39 0.16 0.41 0.65 0.81 0.42 0.63 -2.33 0.20 ·· ··························· 

Net charge-offs to loans and leases 

························· ···· 1991 1.92 1.06 1.40 2 .06 2.24 2.55 1.81 1.14 1.27 1.53 1.78 

······················ ·· ····· 1989 1.90 1.16 1 .11 1.43 2.89 2 .40 0.87 1.64 1.50 3 .22 1.51 

.. .. ................. ........ 1987 1.34 1.61 1.22 1.43 1.26 0 .96 1.17 1.13 2 .36 2 .94 1.40 

Spread Between Short-Term and Long-Term Yields 

30-Year Treasury Bond Versus 3-Month Treasury Bill 

Yield 

10% 

9 Yield on 30-Year Treasury Bond 

8 ~ 

7 Spread 

6 

5 

4 

3 

2 L...1.--....J..---'---.......--........--.......--....__ ___.__.......__........__....___......, 

1990:10 1990:20 1990:30 1990:40 1991 :10 1991 :20 1991 :30 1991 :40 1992:10 1992:20 1992:301992:40 

Quarterly Average Yield: 

30-Year 

Treasury Bond 8.44 8.65 8.80 8.55 8.20 8.32 8.18 7.85 7.80 7.90 7.44 7.53 

3-Month 

Treasury Bill 7.76 7.75 7.48 6.99 6.02 5.56 5.38 4.54 3.91 3.68 3.08 3.07 

Spread 0.68 0.90 1.32 1.56 2.18 2.76 2.80 3.31 3.89 4.22 4.36 4.46 

7 
SAVINGS BANK PERFORMANCE - FOURTH QUARTER, 1992 

• BIF-lnsured Savings Banks Earn $1. 4 Billion in 1992 

• Fourth-Quarter Earnings Total $385 Million and Asset Quality Improves 

• Six Institutions Fail During the Quarter; Twenty-two Fail During the Year 

The 414 savings banks insured by the FDIC Bank Insurance Fund ("BIF") returned to profitability following three 

consecutive unprofitable years, earning $1 .4 billion during 

1992 . With fourth-quarter earnings of $385 mill ion, 

savings banks showed a profit in each of the four quarters 

in 1992. The industry's return to profitability is attributable to the benefits of low short-term interest rates, 

declining loan-loss provisions and FDIC's resolution of 

troubled institutions. 

Industry-wide return on assets reached 0. 72 percent for 

the fourth quarter and 0 .66 percent for the full year. The 

308 institutions headquartered in the New England states 

turned in a much lower full-year return on assets (0.45 

percent) compared with the 92 savings banks in the other 

Northeastern states (0.78 percent). The 14 savings banks 

located outside the Northeast reported an aggregate return 

on assets of 1.52 percent for 1992. 

Savings banks ' net interest margins continued to rise, as 

the interest they paid to depositors and other creditors 

declined by more than the interest they earned on loans 

and other assets . Interest expenses are also being reduced 

because savings banks are funding an increasing portion of 

their assets with noninterest-bearing deposits and equity 

capital. As a result, net interest income of $7. 5 billion for 

full-year 1992 was $1 .2 billion higher than the previous 

year. However, growth in net interest income slowed in 

the fourth quarter-it only increased by $9 million (0.5 

percent) compared with the third quarter. 

The industry's return to profitability also reflected improvement in the credit-quality problems that have plagued 

the industry. Troubled assets - including noncurrent loans 

and other real estate owned - declined by $1 .3 billion ( 1 2 

percent) in the fourth quarter and decreased $4.7 billion 

(34 percent) during the full year. Elimination of the most 

troubled institutions contributed to the industry-wide improvements in asset quality and to the reduced level of 

loan-loss provisions, but the 414 surviving savings banks 

also recorded substantial improvements. Troubled asset 

levels declined at these institutions by $694 million (12 

percent) during the quarter and $2 .2 billion (19 percent) 

during the year. 

Net charge-offs of $1 .4 billion taken during 1992 were 

$681 million below 1991 levels . These losses exceeded 

the loan-loss provision taken in 1992, causing reserves for 

future losses to decline . Nonetheless, the reserve 

coverage of troubled loans improved due to the larger 

reduction in troubled loans. As of December 31, 1992, institutions in the New England states held 60 cents in 

reserve for each dollar of noncurrent loans; those in the 

other Northeastern states held 33 cents. 

Capital positions improved markedly in 1992. Equity capital ratios continued to benefit from retained industry 

profits and shrinking assets . Savings banks had an aggregate equity capital-to-assets ratio of 7 .97 percent at 

the end of the fourth quarter, up from 7 .69 percent the 

previous quarter and 6.74 percent one year ago. 

Both the number of BIF-insured savings banks and the assets held by these institutions have declined four consecutive years . During 1992, total assets plunged by $22.4 

billion (9 .5 percent), dropping $7.7 billion (3.5 percent) in 

the final quarter of 1992 alone. The industry shrinkage 

resulted from the failure of 22 savings banks (including 

three of the ten largest) holding more than ten percent 

($28.5 billion) of the industry's assets . Fifteen of the 

failed institutions were located in the six New England 

states but the five largest failures were located in three 

other Northeastern states (three in New York state and 

one each in New Jersey and Pennsylvania.) Consequently, 

the industry's loans decreased $21 .5 billion during 1992, 

including a $5. 7 billion reduction in the fourth quarter. 

Loans and other assets held by the surviving 414 savings 

banks were down slightly over the 12-month period ending 

December 31, 1992. 

The number of savings banks on the FDIC's "Problem" list 

dropped during 1992's fourth quarter, from 84 as of September 30 to 76 as of December 31. Assets of "Problem" 

savings banks declined from $85.9 billion at the end of 

1991 to $56.3 billion at the end of 1992. Despite the 

removal of failed institutions, and despite improved earnings and higher asset-quality indicators for many of the 

surviving institutions, nearly one in five savings banks 

remains on FDIC's "Problem " list. These institutions account for more than 26 percent of the industry's assets. 

In 1993, savings banks' gains in net interest income are 

not expected to match the increases realized in 1992, and 

credit risks should continue to moderate. Whether reductions of troubled assets will continue at the pace seen during 1992 will be determined by the economy and real 

estate markets in the Northeast and will be less dependent 

on FDIC resolution of troubled institutions. Interest-rate 

risk may represent a greater concern, as a growing portion 

of savings banks' assets are being invested in fixed-rate 

mortgage loans and investment securities with maturities 

beyond one year. 

8 
Table I. Selected Indicators, Savings Banks Insured by the FDIC Bank Insurance Fund (BIF) 

1992 1991 1990 1989 1988 1987 1986 

Return on assets ...................................... 0.66% -0.56% -0.98% -0.27% 0 .44% 0 .84% 1.08% 

Equity capital to assets ............................. 7.97 6.67 6.62 7.06 7.44 7 .69 7.41 

Noncurrent loans and leases plus 

other real estate owned to assets* .......... 4 .29 5.87 5.13 2.64 1 .51 0.95 0.83 

Noncurrent RE loans to total RE loans* ....... 3.96 5.64 5 .32 3 .1 4 1.67 1 .01 1.02 

Asset growth rate ................... ............... .. -9.46 -8.41 -7.46 -1 .52 8.52 10.54 15.40 

Deposit growth rate .................................. -9.15 -5.68 -4.98 1.36 7.90 5.81 8 .26 

Number of institutions .............. ................ 414 441 469 489 492 484 472 

Number of problem savings banks .............. 76 74 34 17 12 16 27 

Assets of problem savings banks (billions) .. $56.3 $81 .8 $67.2 $47 .6 $47.4 $29.3 $49.7 

Number of failed savings banks ........ .. .... .. . 22 19 10 1 0 2 1 

* Excludes Federally-chartered Savings Banks before 1990. 

Table II. Aggregate Condition and Income Data, BIF-lnsured Savings Banks 

(dollar figures in millions) 

Preliminary 

4th Otr 3rd Otr 4th Otr % Change 

1992 1992 1991 91 :4-92:4 

Number of savings banks reporting ..................... 414 421 441 - 6 .1 

Total employees (full-time equivalent) ................. 63,467 65 ,185 68,366 -7.2 

CONDITION DA TA 

Total assets ......... .............. ...... ... ............. ...... ... $214,842 $222,520 $237,281 -9.5 

Mortgage loans 123,638 128,619 141,861 -12.8 ·············································· 1 - 4 family residential ............ .................... .... 88,204 90,346 96,768 -8.9 

Construction and land development ..... ........... 3 ,065 3,513 5,207 -41.1 

Commercial and multi-family ......................... 32,369 34,760 39,885 -18.8 

All other loans and leases ............................ .... 12,935 13,942 17,159 -24.6 

LESS: Reserves for losses ............................. 2,376 2,661 3,147 -24.5 

LESS: Other contra accounts .................... ..... 379 415 577 -34.3 

Net loans and leases .............................. ......... 133,818 139,485 155,296 -13.8 

Mortgage-backed securities .... ...... .. ................. . 17,735 19,751 20,746 -14.5 

Other real estate owned .................................. 3,884 4,277 4,879 -20.4 

Goodwill ...................... ....... ........... .. .............. 536 759 1,146 - 53.2 

All other assets ............................................... 58,869 58,248 55,214 6 .6 

Total liabilities and capital .................................. 214,842 222,520 237,281 -9.5 

Interest-bearing deposits .................................. 174,537 180,447 193,908 -10.0 

Noninterest-bearing deposits ............................ 7,679 7,160 6,651 15.5 

Other borrowed funds ..................................... 13,374 15,480 17,696 -24.4 

Subordinated debt .................... .. .................... 192 261 517 -62.9 

Other liabilities ................................................ 1,944 2,070 2,672 -27.3 

Equity capital .................................................. 17,115 17,101 15,837 8.1 

Loans and leases 30-89 days past due ................ 3,374 3,629 5,232 -35.5 

Noncurrent loans and leases ............................... 5,337 6,206 9,039 -41.0 

Other noncurrent assets ... .... .... ............... ........... 13 24 27 -51. 1 

Direct and indirect investments in real estate ....... 470 595 922 -49.0 

Preliminary Preliminary 

Full Year Full Year 4th Qtr 4th Otr % Change 

INCOME DATA 1992 1991 % Change 1992 1991 91 :4-92:4 

Total interest income ..................... $16,408 $20,206 - 18.8 $3,951 $4,895 -19.3 

Total interest expense.................. .. 8,927 13,891 -35.7 1,969 3,239 -39.2 

Net interest income .. .................. . 7,481 6,316 18.4 1,982 1,656 19.7 

Provisions for losses .. .. .................. 1,200 2,637 -54.5 307 927 -66.9 

Total noninterest income ................ 1,307 1,238 5.6 347 370 -6.2 

Total noninterest expense .............. 5,660 6,185 -8.5 1,573 1,766 -10.9 

Securities gains (losses) ................. 357 298 19.8 84 148 -43.2 

Applicable income taxes ................. 925 443 109.0 196 71 174.5 

Extraordinary gains, net ........... ...... 57 97 -41.0 47 21 127.7 

Net income ........................ ......... 1,415 (1,317) N/M 385 (569) N/M 

Net charge-offs ............... .. ..... .... ... 1,426 2,107 -32.4 431 633 -32.2 

N/M - Not meaningful 

9 
Table Ill. Full Year 1992 Savings Bank Data (Dollar figures in billions, ratios in %) 

All ASSET SIZE DISTRIBUTION GEOGRAPHIC DISTRIBUTION

BIF-lnsured Less $100 Million Greater 

FULL VEAR Preliminary Savings than $100 to than New Other Rest 

Banks Million $1 Billion $1 Billion England Northeast of U.S. 

Number of savings banks reporting ...................... 414 120 242 52 308 92 14 

Total deposits ....... .............................. ........... ... .. 182.2 5 .8 66.0 110.4 86.0 89.5 6.7 

Percentage of savings banks losing money ........... 11.4% 11 .7% 10.3% 15.4% 12.7% 7 .6% 7.1 o/c 

Total assets ........................................................ $214.8 $6.5 $75.8 $132 .5 $99.6 $104.0 $11 .2 

Net income (in millions)............................. .... ...... 1,415 35 431 949 442 809 164 

0 

Percentage of savings banks with earnings gains .. 89.1 90.0 88.4 90.4 90.9 83.7 85 .7 

Performance Ratios 

Yield on earning assets ......... .............................. 8.33% 8.63% 8.33% 8 .31 % 8 .37% 8 .21% 9 .04% 

Cost of funding earning assets ..................... ....... 4.53 4.49 4.46 4 .57 4.48 4.53 4.98 

Net interest margin ............................................. 3.80 4.15 3 .86 3.74 3.89 3.68 4.06 

Non interest income to earning assets ................... 0.66 0 .43 0.50 0.77 0 .67 0.56 1.65 

Noninterest expense to earning assets ........ .. ...... . 2.87 3.18 3 .00 2.78 3.31 2.45 3.02 

Return on assets .. .. ........ .................................... 0.66 0.54 0.58 0.72 0 .45 0.78 1.52 

Return on equity......................... ....... ................. 8.68 6 .62 7.13 9.75 6.06 10.25 14.66 

Net charge-offs to loans and leases ..................... 1.04 0 .66 0.72 1.24 1 .15 1.00 0.35 

Loan loss provision to net charge-offs ......... .. ....... 84.18 99.17 106.14 76.65 86.36 78.59 163.45 

Condition Ratios 

Loss allowance to: 

Loans and leases ............................................. 1.75% 1 .24% 1 .54% 1.90% 1.91 % 1 .66% 1.20% 

Noncurrent loans and leases ............................. 44.52 49.57 55.91 40.53 60.08 33.07 86.69 

Noncurrent loans and leases plus 

other real estate owned to assets ................... 4 .29 2.79 3.34 4.91 3.96 4.87 1.89 

Noncurrent RE loans to total RE loans ...... ............ 3 .96 2.46 2.75 4 .74 3 .10 5 .09 1.40 

Equity capital ratio.......................... ........... .. ....... 7.97 8 .41 8 .36 7 .72 7.65 7.80 12.34 

Core capital (leverage) ratio ............................... .. 7.67 8 .42 8 .25 7.31 7.46 7.41 12 .04 

Net loans and leases to deposits ........ .......... ........ 73.44 73.74 71 .60 74.52 74.25 70.15 107.00 

Growth Rates (year-to-year) 

Assets ....... ............ ... .. ...... .. ...... .... .......... .......... -9.5% 4.3% 5.1 % 2 .8% -5.1 % -14.0% -1.6% 

Equity capital ..................................................... 8.1 8.3 9.4 10.5 6.2 7.2 27.1 

Net interest income ..................................... ....... 18.4 25.7 24.1 26.9 20.5 17.3 12.0 

Net income .................................................. ...... N/M N/M N/M N/M N/M N/M 23.95 

Net charge-offs .................................. .. ... .. .... ... .. -32.4 -33.7 -31.9 -27.0 -37.6 -26.4 15.4 

Loan loss provision ............................................. -54.5 -39.9 -38.7 -43.8 -49.7 -61.2 20.9 

Table IV. Fourth Quarter 1992 Savings Bank Data (Dollar figures in billions, ratios in %) 

ASSET SIZE DISTRIBUTION GEOGRAPHIC DISTRIBUTION All 

BIF-lnsured Less $100 Million Greater New Other Rest FOURTH QUARTER Preliminary Savings than $100 to than 

Banks Million England Northeast of U.S. $1 Billion $1 Billion 

Number of savings banks reporting ...................... 414 120 242 52 308 92 14 

Percentage of savings banks losing money ........... 12.8% 12.5% 13.6% 9 .6% 13.3% 12.0% 7.1 % 

Percentage of savings banks with earnings gains .. 76.1 75.8 75.6 78.8 77 .6 72.8 64.3 

Net income (in millions)....................................... 385 13 114 258 147 194 43 

Performance Ratios (annualized) 

Yield on earning assets ....................................... 7.98% 8.30% 7.97% 7.97% 7.98% 7.87% 8.98% 

Cost of funding earning assets ............... ............. 3.98 3.90 3.92 4.01 3.91 3.98 4.52 

Net interest margin ............................................. 4.00 4.40 4.05 3.96 4.07 3.89 4.47 

Noninterest income to earning assets ................... 0.70 0.55 0.56 0.79 0.72 0.54 2.00 

Noninterest expense to earning assets ................. 3.18 3.35 3.30 3.09 3.57 2.75 3.70 

Return on assets ................................................ 0.72 0.79 0.61 0.78 0.60 0 .75 1.56 

Return on equity.......................................... ....... 9.13 9.50 7.27 10.26 7.83 9.61 13.86 

Net charge-offs to loans and leases ..................... 1.27 0.51 0.77 1.59 1.23 1.35 0.86 

Loan loss provision to net charge-offs .................. 71.36 99.93 113.08 59.33 76.32 64.78 97.83 

Growth Rates (year-to-year) 

Net interest income ............................................ 19.7% 24.8% 24.3% 27.7% 20.2% 19.1 % 20.0% 

Net income .......... ........ ................ ...................... N/M N/M 622.1 N/M N/M N/M 27.9 

Net charge-offs ................. ........ ......... ................ -32.2 -39.4 -40.8 -15.3 -39.4 -28.4 258.3 

Loan loss provision ............................................. -66.9 -59.5 -40.0 -66.2 -56.8 -75.5 143.4 

Geographic Distribution: New England - Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, Vermont N/M - not meaningful 

Other Northeast - Delaware, Maryland, New Jersey, New York, Pennsylvania 

Rest of U.S. - Alaska, Florida, Indiana, Oregon, Washington 

10 
Number of Commercial and Savings Banks on FDIC's "Problem List" 

1985-1992 

Number of Banks 

D Savings Banks 

1,500 

I Commercial Banks 

1,000 

500 

0 

12/85 12/86 12/87 12/88 12/89 12/90 12/91 3/92 6/92 9/92 12/92 

Number of Problem Institutions: 

42 27 16 12 17 34 74 70 88 84 76 Savings Banks 

Commercial Banks 1,098 1,457 1,559 1,394 1,092 1,012 1,016 981 956 909 787 

Assets of Commercial and Savings Banks on FDIC's "Problem List" 

1985-1992 

$ Billions 

700 ,-------------------------------. 

609.8 607.4 

600 DSavings Banks 

500 I Commercial Banks 

400 

300 

200 

100 

0 

12/85 12/86 12/87 12/88 12/89 12/90 12/91 3/92 6/92 9/92 12/92 

Assets of Problem Institutions: 

Savings Banks 63.9 49.7 29.3 47.4 47.6 67.2 81.8 72.0 73.0 70.4 56.3 

Commercial Banks 173.9 285.8 329.2 304.8 187.9 341 .6 528.0 535.4 494.5 487.9 408.2 

11 
NOTES TO USERS: 

COMPUTATION METHODOLOGY FOR PERFORMANCE AND CONDITION RATIOS 

The data on commercial banks and state-chartered savings banks were obtained from Call reports filed with the FDIC and Federal Reserve Board. Data on 

Federally-chartered savings banks were obtained from Thrift Financial Reports filed with the Office of Thrift Supervision. Certain adjustments are made to 

the Thrift Financial Reports to provide closer conformance with Call report disclosure requirements. 

All income figures used in calculating performance ratios represent amounts for that period, annualized (multiplied by the number of periods in a year). 

All asset and liability figures used in calculating performance ratios represent average amounts for the period (beginning-of-period amount plus end-ofperiod amount plus any periods in between, divided by the total number of periods). 

All asset and liability figures used in calculating the condition ratios represent amounts as of the end of the quarter. Current quarter and year-ago quarter 

income and expense amounts and performance ratios are adjusted to account for "poolings of interest" and "purchase acquisitions" beginning with the 

fourth quarter, 1991 publication. 

DEFINITIONS 

"Problem· Banks - Federal regulators assign to each financial institution a composite rating, based upon an evaluation of financial and operational criteria. 

The rating is based on a scale of 1 to 5 in ascending order of supervisory concern. "Problem• banks are those institutions with financial, operational, or 

managerial weaknesses that threaten their continued financial viability. Depending upon the degree of risk and supervisory concern, they are rated either a 

•4• or "5. • 

Earning Assets - all loans and other investments that earn interest, dividend or fee income. 

Net Operating Income- income excluding discretionary transactions such as gains (or losses) on the sale of investment securities and extraordinary 

items. Beginning with the first quarter 1992 publication, income taxes subtracted from operating income have been adjusted to exclude the portion applicable to securities gains (or losses). 

Yield on Earning Assets -total interest, dividend and fee income earned on loans and investments as a percentage of average earning assets. 

Cost of Funding Earning Assets -total interest expense paid on deposits and other borrowed money as a percentage of average earning assets. 

Net Interest Margin-the difference between the yield on earning assets and the cost of funding them, i.e., the profit margin a bank earns on its loans and 

investments. 

Return on Assets - net income (including securities transactions and nonrecurring items) as a percentage of average total assets. The basic yardstick of 

bank profitability. 

Return on Equity- net income as a percentage of average total equity capital. 

Loan Commitments and Letters of Credit - includes unused credit card commitments and overdraft plans, reflecting Call report revisions effective March 

31, 1990. 

Net Charge-offs -total loans and leases charged off (removed from balance sheet because of uncollectibility) during the quarter, less amounts recovered 

on loans and leases previously charged off. 

Noncurrent Loans & Leases -the sum of loans past due 90 days or more and loans in nonaccrual status. 

Other Real Estate Owned- primarily foreclosed property. Direct and indirect investments in real estate ventures are excluded where appropriate. 

Other Noncurrent Assets - debt securities and other assets (excluding loans, leases and other real estate owned) that are either past due at least 90 days 

or in nonaccrual status. Due to reporting differences, only defaulted debt securities are included for Federal Savings Banks. 

Core Capital - common equity capital plus noncumulative perpetual preferred stock plus minority interest in consolidated subsidiaries, less goodwill and 

other ineligible intangible assets. Eligible intangibles (including mortgage servicing rights) are limited to 100 percent of core capital for savings banks, to 50 

percent of core capital for state-chartered commercial banks that are not Federal Reserve members, and to 25 percent for National banks. 

Net Loans and Leases -total loans and leases less unearned income and the allowance for loans and lease losses. 

Temporary Investments -the sum of interest-bearing balances due from depository institutions, federal funds sold and securities purchased under agreements to resell, trading-account assets and investment securities with remaining maturities of one year or less. 

Volatile Liabilities -the sum of large denomination time deposits, foreign office deposits, federal funds purchased, securities sold under agreements to 

repurchase, and other borrowed money. 

BULK RATE FDIC MAIL 

Federal Deposit Insurance Corporation Postage& 

Washington, DC 20429-9990 Fees Paid 

FDIC 

OFFICIAL BUSINESS Permit No. G36 

Penalty for Private Use, $300 

Attn: Chief Executive Officer