The FDIC 

uarte r 1y:_______L_.W_i_llia_m_S_e_id_m_an_,_C_ha_irm_a_n 

anking Profile 

Fourth Quarter, 1990 

COMMERCIAL BANKING PERFORMANCE- FOURTH QUARTER, 1990 

• Commercial Banks Earn $1.4 Billion In Fourth Quarter; Fu/I-Year 

Profits Total $16.6 Billion 

• Noncurrent Real Estate Loans Reach Record Levels 

• Total Assets Grow By Only 2. 7 Percent In 1990 

• Banks Set Aside Record Amount For Domestic Credit Losses 

• Troubled Assets Continue To Increase In Eastern Half of U.S. 

Commercial bank earnings fell for the third Domestic operations contributed $1.1 billion of the 

consecutive quarter, as banks earned $1.4 billion in $1.4 billion in total net income, the lowest quarterly 

the fourth quarter of 1990. Industry net income was amount since the banking industry began reporting 

almost one-third less than in the last quarter of quarterly income in 1983, and half the amount 

1989, and almost two-thirds lower than in the third earned in the previous worst quarter. Higher levels 

quarter of 1990, despite the widest net interest of troubled assets and increased provisions for 

margins in two years. The average return on assets future losses were the determining factors in banks' 

was 0.17 percent. The earnings decline stemmed poor fourth-quarter results. The $11 billion that 

from rising domestic asset-quality problems that banks set aside for future domestic credit losses 

limited interest income and increased noninterest was the highest quarterly amount ever; the 

expense. More than one in five banks registered a previous record was $7.8 billion in the third quarter 

net loss in the quarter, the highest proportion since of 1990. For the full year, total provisions for losses 

the fourth quarter of 1987. Thirty-eight percent of all on domestic and foreign operations were $31.7 

banks in the Northeast Region lost money in the billion, $670 million more than in 1989. 

fourth quarter, and the Region's banks posted an 

aggregate net loss for the second quarter in a row. Chart B - Quarterly Net Income 

For the full year, commercial banks earned $16.6 from Domestic & International Operations 

billion, $1 billion more than in 1989. The average Net Income 1984 - 1990 

($ BIiiions) return on assets for 1990 was 0.50 percent, 10 I I I I I I I I

compared to 0.49 percent in 1989. I Domestic Ooerations 

Chart A - Quarterly Net Income of 5 ...... ..... ... ... - ~ .. ,, 1(- ~i--

I.J""' -

'

IJ .... .. ,. ... , FDIC-Insured Banks l"I,. 

1986 -1990 

0 ,, ' -5 

International Opera 'Iti ons 

-10 

FDIC 

Division of Research 

& Statistics -15 

Don Inscoe 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 -4 (202) 898-3940 ~ Ne;Operating ln~me 1984 1985 1986 1987 1988 1989 1990 

Ross Waldrop Ii S~curlties and Ot~er Gains 

(202) 898-3951 Troubled assets totalled 2.9 percent of all bank 

-8 "Fl~ Republic Eff~ct assets at the end of 1990. Total assets increased 

by $5. 7 billion in the fourth quarter, but -12 _______.......________......._____.._. 

interest-earning assets fell by $14.7 billion. For the 

12341234 1 23412341234 year, asset growth totalled $89.9 billion, while 

1986 1987 1988 1989 1990 

For assistance contact: Section508@fdic.gov
Chart C - Quarterly Net Interest Margins 1989, and full-year interest revenues were only one 

of FDIC-Insured Banks percent above 1989's total. At the same time, 

1983 -1990 banks were able to substitute deposits for more 

rel Interest Margin (%) expensive nondeposit borrowings, so that interest 

"" ~ , ~ "' ~ 

~ _.... 4.5 .. . . "' ' ~ . --. '

. . ~, . . ... ... ~~ .... !11111\ /"--,

' Banks < $100 MIiiion [4}~.] 

.. . . . . .. ~ - .. 4 ... ,

i~,~, .. I\ !lit, . . ' ii-~ ." 11"' ... ..i .. ' "'' Banks > $100 MIiiion • I I I 3.5 ffl 

12341234123412341234123412341234 

1983 1984 1985 1986 1987 1988 1989 1990 

earning assets increased by $68.3 billion and 

noncurrent loans plus foreclosed properties grew 

by $23 billion. The 2.7 percent growth rate for total 

banking assets in 1990 was the lowest since the 

2.0 percent in 1987. For the second consecutive 

quarter, the proportion of total assets represented 

by noncurrent loans and foreclosed real estate set 

an all-time record. 

Slow asset growth and the increased burden of 

troubled assets held down interest income in 1990. 

Fourth-quarter interest income was 2.3 percent 

below the amount earned in the fourth quarter of 

expense was lower in the fourth quarter and for the 

full year. Consequently, net interest income growth 

modestly outpaced total asset growth, and net 

interest margins widened in each of the last three 

quarters of 1990. 

Real estate lending remained one of the strongest 

areas of asset growth throughout 1990. Growth in 

real estate loans accounted for $67 billion of the 

$90 billion increase in commercial bank assets 

during the year. Home equity loans, residential 

mortgages and longer-term commercial real estate 

financing grew most rapidly, while construction and 

development loans fell. Commercial and industrial 

loans outstanding also declined, both in the fourth 

quarter and for the full year. Credit cards were the 

fastest-growing loan category in the fourth quarter, 

registering a seasonal increase of $5.5 billion. 

The proportion of noncurrent real estate loans at 

the end of 1990 was the highest since banks began 

reporting troubled loan data in 1982. A worsening 

trend in credit quality was evidenced by increases 

in noncurrent and net charge-off rates in most loan 

categories. Deterioration was greatest in real estate 

loans, where larger banks in the Northeast Region 

were hardest hit. Noncurrent real estate loans 

increased by almost $11 billion at Northeast Region 

banks in 1990. At year-end they totalled $21.3 

Chart D - Troubled Real Estate Asset Rates* By State 

December 31, 1990 

Midwest Central Northeast 

North Dakota 

3.06 

South Dakota 

2.56 

Nebraska 

2.28 

11.78 

. 15.85 

RI 17.24 T 14.86 10.64 

Kan.. 

6.82 

Southwest 

Troubled Real Estate Asset Rate: 

D Less Than 4% • Noncurrent Real Estate Loans Plus ,,.,, 

■ Between 4% and 8% Other Real Estate Owned As A Percent 

■ 8% or Higher Of Total Real Estate Loans Plus OREO. 

2 
--

billion, more than twice the $10.2 billion at the end 

of 1989. Noncurrent real estate loans were up 85 

percent at Southeast Region banks, 56 percent at 

banks in the Central Region, and 30 percent at 

banks in the West Region. 

Chart E - Noncurrent Loan Rates at Year-end 

1982 -1990 

%of Loans 6....-------------------, 

5 

4 

3 

2 Total Loans 

1 -------... ---7-----------

Consumer

1982 0-------------------~ 1983 1984 1985 1986 1987 1988 1989 1990 ·1ndudoa loans lo foreign governmenla, dopoo/tory lnatltutiona and loaoo rece!vabloa. 

Net loan losses on real estate loans at banks in the 

Northeast Region in 1990 were almost three times 

the level of a year ago. Real estate loan losses 

more than doubled at banks in the Southeast and 

Central Regions, and increased by almost 50 

percent at Midwest Region banks. In contrast, real 

estate loan losses fell at banks in the Southwest 

and West Regions. This improvement reflected the 

slow recovery in depressed real estate portfolios of 

Texas, Oklahoma and Arizona banks. Real estate 

loan losses for the banking industry totalled $6.3 

billion in 1990, an 84 percent increase over the 

$3.4 billion charged off in 1989. Net loan losses on 

Chart F - Annual Net Loan Charge-off Rates 

% of Loans 1982 -1990

3.0,-------------------, 

2.5 

2.0 

Consumer 

1.5 ~---- -

1.0 

,. 

commercial and industrial loans, at $8.3 billion, and 

consumer loans, at $7 billion, exceeded those on 

real estate loans, but did not represent comparable 

increases from 1989 levels. Net charge-offs on 

loans to foreign borrowers were approximately $8.5 

billion in 1990, an 11 percent increase over 1989. 

Growth in equity capital and reserves barely kept 

pace with the increase in noncurrent loans in 1990. 

The $31.7 billion in loan-loss provisions that banks 

added to reserves in 1990 exceeded the $29 billion 

taken out for net loan charge-offs by only $2.7 

billion. Banks' reserve coverage of noncurrent 

loans and other real estate fell to its lowest level 

since the end of 1987. At the end of 1990, the 

industry held 57 cents in reserves for every dollar 

of troubled assets, compared with 72 cents at 

year-end 1989. Retained earnings contributed only 

$2.8 billion to equity capital in 1990, as banks paid 

out more than 80 percent of their earnings in 

dividends for the second consecutive year. 

Chart G - Quarterly Dividends and Net Income 

1986 -1990 

$ Billions 10------------------

5 

-5 cJ Net Income Paid Out In Dividends 

i Net Income Retained

-10 I 

-1 5 ______....._.............. _.__._.......,_....._. ............. _.__._...... 

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

1986 1987 1988 1989 1990 

At the end of 1990, an estimated 501 banks with 

$856 billion in assets (one quarter of banking 

industry assets) fell short of the minimum 8 percent 

ratio of total capital to risk-adjusted assets 

scheduled to take effect at the end of 1992. These 

institutions are disproportionately larger banks. 

Total loans outstanding declined by 1.4 percent in 

1990 at banks with risk-adjusted capital ratios 

below 8 percent, while loans at those banks that 

met or exceeded the 8 percent threshold increased 

by 3.6 percent during the year. As risk-based 

capital standards are implemented, institutions that 

do not meet minimum requirements can be 

expected to make further adjustments to their asset 

portfolios. 

'"--.-.,:-:-;--· ·······;,JI'''' 

··· ··· · · · .. Real Estate

1O"'-------------------' 982 1983 1984 1985 1986 1987 1988 1989 1990 

"lndudoa loans lo foreign govommonla, dopoo/tory Institution• and lease rece!vabloa. 

The number of insured commercial banks fell by 

369 in 1990, as consolidation within the banking 

industry continued. New bank charters, at 165, 

remained well below the peak levels of the early 

1980s. There were 390 mergers during the year, 

continuing a recent declining trend, but merger 

3 

0.5 
Chart H - Assets of Banks According to Their 

Risk-Based Capital Ratio* Year-end 1990 

$ Billions 

□ Rllk-baNd capital 1,330 ratio of 8% or more 

■ Rllk-baNd capital ratio below 8% 

1,044 

655 

360 

I 

11 

$1 - $10 $100 Million Less Than 

or More Billion to $1 Billion $100 Million 

I$10 Billion 

Bank Asset Size 

'The ratio of total capital to risk-weighted assets, using 

standards that will take effect at year-ilnd 1 992. 

"Includes Bank of New England , N.A. with $13.4 billion 

in assets. 

activity remained above historical levels. One 

hundred fifty-nine banks either failed or received 

assistance to avert failure in 1990, down from 206 

failures in 1989. 

There were 1,012 banks on the FDIC's "Problem 

List" at the end of 1990, fewer than at the beginning 

of the year, but up slightly from 1,006 at the end of 

the third quarter. The largest numbers of "problem" 

institutions continue to be found in the western half 

of the country, but growth in troubled institutions 

during the past year has been most rapid in the 

Chart I - Structural Changes Among 

FDIC-Insured Commercial Banks 

1980 - 1990 

Number of Banks 

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

600 ,, ; ; \ 

I \ 

500 I \ 

I \ 

New Charters I \ I .... 400 

I 

300 

200 

100 

Chart J - Number of "Problem" Banks 

By Region At Year-end 

1989 and 1990 

Number of Banks 

700 

CJ 1989 

600 

e,1990 

500 

400 

300 

200 

100 

NE SE 

eastern states, particularly in the northeast and 

mid-Atlantic areas. 

The growth in relative levels of troubled assets 

points to higher credit losses in 1991. Banks in the 

eastern states in particular will continue to confront 

weakness in real estate and commercial loan 

portfolios. It remains to be seen whether the 

problems in domestic real estate and commercial 

loans that have beset banks in the eastern U.S. will 

spread to banks in those western states that have 

experienced rapid lending growth. Asset growth is 

likely to remain sluggish, with continued emphasis 

on high-yield revolving consumer lending. 

Chart K - Number of Failed Banks 

By Region, 1989 and 1990 

Number of Banks 

180 CJ 1989 167 

160 

140 91990 

120 

100 

80 

60 

40 

20 

0 

NE SE MW - SW w 

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

1900 1989 1988 1987 1986 1985 1984 

Return on assets . . . .......... . .. .. .. . . .. . 0.50% 0.49% 0.82% 0.12% 0.63% 0.70% 0.65% 

Return on equity ... . ... . . ... .. ...... .. . . . 7.84 7.78 13.30 2.00 9.94 11.31 10.73 

Equity capital to assets .... .. ... ...... ... . 6.47 6.21 6.28 6.04 6.20 6.20 6.15 

Primary capital ratio .... . ... . .... .. .... . .. 7.98 7.92 7.84 7.70 7.22 6.91 6.91 

Noncurrent loans and leases plus 

other real estate owned to assets .. ....... 2.92 2.28 2.14 2.46 1.94 1.87 1.97 

Net charge-offs to loans . .. . . . . . ' .......... 1.40 1.16 1.00 0.92 0.98 0.84 0.76 

Asset growth rate .... . ... . . . ............. 2.72 5.37 4.36 2.01 7.71 8.86 7.11 

Net operating income growth . ...... . ..... .. 6.88 -38.30 1905.16 -91 .04 -20.65 6.30 3.40 

Percentage of unprofitable banks ..... . . .. . . . 12.60 12.45 14.65 17.66 19.79 17.09 13.06 

Number of problem banks ... ..... . .. . . .... 1,012 1,092 1,394 1,559 1,457 1,098 800 

Number of failed/assisted banks ............ 159 206 221 201 144 118 78 

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

(dollar figures in millions) 

Preliminary 

4th Otr 3rd Otr 4th Otr %Change 

1900 1900 1989 89:4-00:4 

Number of banks reporting . . . ....... .. .. ..... . . . ........ . ....... . 12,338 12,408 12,707 -2.9 

Total employees (full-time equivalent) . .. . . . ... . ... . .. . ........... .. . 1,517,470 1,517,774 1,531 ,355 -0.9 

CONDITION DATA 

Total assets ..................... 1•••••••• • ••••••••••• • •• •• • ••• $3,388,896 $3,383,188 $3,299,025 2.7 

Real estate loans .. ... . ....... .... . . . . ........ .. .......... . . 828,986 820,157 761,506 8.9 

Commercial & industrial loans ... . ................. .. ... . ... . . 615,523 620,963 618,610 -0.5 

Loans to individuals .......... .. ................... . . . ...... . 402,876 400,070 400,581 0.6 

Fami loans ..... ... ..... .. .. ........... .. .... . . . . ... .. .... . 33,323 33,638 31,115 7.1 

Other loans and leases . ......... .. ............ . . . .. ...... . . . 228,676 231 ,119 245,525 -6.9 

Total loans and leases . . . . . . . . . . . ... .. . ........ .. ......... . 2,109,356 2,105,948 2,057,337 2.5 

LESS: Reserve for losses .............. . . . .. ... .. . .... ...... . 55,333 52,384 53,732 3.0 

Net loans and leases . . . . . . . . . . . ..... . . . .. . . .. .. . .. .. . . . 2,054,024 2,053,564 2,003,605 2.5 

Temporary investments ......... . . .. . .. .. . . ... .. ......... . ... . . 451,489 467,007 481,829 -6.3 

Securities over 1 year ......... . .. .. .. . . . .. .. . . . . . . .. ..... . ... . 450,363 449,978 402,166 12.0 

All other assets .... . . .... . . . . . . ... .. ... . . .. .. . .... . ....... . 433,025 412,639 411,424 5.3 

Total liabilities and capital ... . .. . . .. .... .. . .. . . . . .. . . . .. .. . . . . .. . . 3,388,896 3,383,188 3,299,025 2.7 

Noninterest-bearing deposits . . . . ... ... ... . ... . . . ... .. .... . ... . 488,994 441,194 483,442 1.1 

Interest-bearing deposits ...... . ..... . ... . .......... . .... . .. ... . 2,161,005 2,162,182 2,065,080 4.6 

Other borrowed funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. ... . 384,760 421,313 418,758 -8.1 

Subordinated debt ........... .. ... .... .. . ........ •. .......... 23,834 19,133 19,529 22.0 

All other liabilities ................ . ... . •............ .... .... . 111,207 121,099 107,423 3.5 

Equity capital . . . . . .. ... .... ... .. . ..... ... . . .. ... . 219,098 218,266 204,793 7.0 

Primary capital ......... . ........... . ... •• ......... • ... . .. . . . ... 272,912 270,327 261,233 4.5 

Noncurrent loans and leases . . . . . . . . . . . . . . . . . . . . ... . ..... .. . . . .. . 78,083 71,732 62,101 25.7 

Other real estate owned . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. .. . 19,853 17,291 12,528 58.5 

Loan commitments and letters of credit . .. . . .. . . . . .. . . ........ . ... . 1,306,635 1,300,495 N/A N/A 

Domestic office assets .... .. . . .... .. .. . . . ... .. . . . .. ...... . . ... . . 3,081,328 2,966,341 2,896,888 6.4 

Foreign office assets ...... . .. . ..... . .. . . . .. . . . . . ... . . . ... . . .... . 307,568 416,847 402,137 -23.5 

Domestic office deposits . . . . . . . . .... . . . . . . . . . .. .. . ........ . . . .. . . 2,356,552 2,273,787 2,236,755 5.4 

Foreign office deposits ..... .. . . . .... . ... ... . . . ..... .. . . ....... . . 293,448 329,589 311,766 -5.9 

Earning assets ..... . .... .. . . . . . .. . .. .. . . .. . . . ... .. . ... ... . . 2,955,871 2,970,549 2,887,601 2.4 

Volatile liabilities . .. ..... .. ... . ....................... . 1,055,103 1,136,422 1,128,530 -6.5 

Preliminary Preliminary 

INCOME DATA Full Year Full Year 4th Otr 4th Otr 

1900 1989 % Change 1900 1989 % Change 

Total interest income . .... . . . . . . . . . . .. . .. .. $320,438 $317,323 1.0 $82,243 $84,209 -2.3 

Total interest expense .... .......... 204,937 205,123 -0.1 51,928 55,113 -5.8 

Net interest income ..... . .. . . . .. ... . . ... 115,501 112,200 2.9 30,314 29,095 4.2 

Provision for loan losses .... . .... .. ........ 31,695 31,025 2.2 11,526 10,673 8.0 

Total noninterest income . ... ... .. . .. . ... . .. 55,111 51 ,075 7.9 14,850 14,325 3.7 

Total noninterest expense ......... .... .. . .. 115,531 108,090 6.9 31,585 29,396 7.4 

Applicable income taxes . . . ..... ···· ··· .. .. 7,885 9,654 -18.3 1,146 1,632 -29.7 

Net operating income .... ... . . ... .. . ..... 15,503 14,505 6.9 908 1,719 -47.2 

Securities gains, net ...... . . ..... . ..• .. . •. . 473 800 -40.8 250 278 -10.1 

Extraordinary gains, net .. . ... .. . ..... . . . .. . 650 306 112.4 234 16 1381 .5 

Net income . .... . . . . ... .. .... .. ...... 16,626 15,611 6.5 1,392 2,013 -30.8 

Net charge-offs ... .. . . . . .. . . . .. . . . . .. ... .. 29,032 22,868 26.9 8,262 9,716 -15.0 

Net additions to capital stock .... . ... . .. . . . . 1,965 1,489 32.0 57 24 136.0 

Cash dividends on capital stock .. ... . ·•·· . . 13,867 14,070 -1 .4 4,330 4,157 4.2 

N/A-Not available 

5 
Table Ill. Full Year 1990 Bank Data (Dollar figures in billions, ratios in %) 

Asset Size Distribution Geographic Distribution 

EAST WEST Less $100 Million Greater 

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

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

Number of banks reporting . . . .... . ...... 12,338 9,249 2,715 325 49 1,008 1,956 2,716 2,954 2,179 1,465 

Total assets . . .. .. . . .... . ... . . ....... . $3,388.90 $359.52 $655.19 $1,044.44 $1,329.75 $1,290.65 $507.82 $ 551 .07 $ 231 .26 $267.63 $ 540.45 

Total deposits . . .. . ..... . ... .. . . . .. .... 2,650.00 319.42 563.05 806.00 961 .53 941 .66 406.82 442.15 190.07 230.55 438.76 

Net income /in millions) .. . . ... . . . . .. . . .... 16,626 2,577 4,976 3,824 5,250 555 3,116 4,450 2,240 1,269 4,997 

Percentage of banks losing money .. . . ... 12.6% 13.3% 8.9% 20.6% 24.5% 27.1% 16.2% 5.4% 5.4% 17.3% 17.8% 

Percentage of banks with earnings gains .. 55.8% 55.4% 58.2% 46.8% 53.1% 41 .2% 56.6% 59.3% 54.6% 58.5% 57.0% 

Performance Ratios 

Yield on earning assets ..... . . .. .... . • . . 11.06% 10.38% 10.62% 10.63% 11.82% 11.78% 10.58% 10.45% 10.47% 10.13% 11.11% 

Cost of funding earning assets . ..... .. ... 7.08 5.92 6.09 6.44 8.39 8.27 6.38 6.51 6.20 6.30 6.15 

Net interest margin .. . .... . . .... ....... 3.99 4.45 4.52 4.19 3.43 3.51 4.20 3.95 4.26 3.83 4.96 

Net noninterest expense to earning assets . 2.09 2.81 2.57 2.08 1.64 1.84 2.31 2.08 1.93 2.46 2.38 

Net operating cash flow to assets .. . . .. . . 1.67 1.50 1.76 1.86 1.52 1.46 1.68 1.67 2.09 1.17 2.25 

Net operating income to assets .. . . . .. .. . 0.47 0.72 0.79 0.36 0.33 0.00 0.60 0.83 1.02 0.45 0.92 

Return on assets .. . .... . . . . . . .. . .. . .. 0.50 0.74 0.80 0.38 0.40 0.04 0.64 0.84 1.03 0.49 0.95 

Return on equity . . . . . . . . . . . . . . . . . . . . . . 7.84 8.11 10.26 5.91 7.83 0.77 8.93 11.94 13.21 7.50 14.70 

Net charge-offs to loans and leases . . . . . . 1.40 0.68 0.82 1.37 1.86 1.99 0.90 0.90 0.99 1.38 1.15 

Loan loss provision to net charge-offs ..... 109.18 123.55 129.70 151 .54 79.65 106.14 153.86 104.51 112.75 90.32 101.30 

Condition Ratios 

Loss allowance to: 

Loans and leases . ...... . .. . .. .... ... 2.62% 1.68% 1.69% 2.47% 3.39% 3.66% 1.80% 1.67% 1.88% 2.64% 2.19% 

Noncurrent loans and leases ..... . . . . . . 70.86 82.86 77.22 73.84 66.98 62.99 76.44 81 .29 103.55 84.81 82.96 

Noncurrent loans and leases plus 

other real estate owned to assets . . . 2.92 1.69 1.92 2.81 3.82 4.35 2.03 1.57 1.43 2.69 2.43 

Equity capital ratio . . ... .. . . . . . . . . . . .... 6.47 9.02 7.71 6.34 5.26 5.67 7.04 7.05 7.70 6.52 6.68 

Primary capital ratio . . ... .... . ..... .. . . . 7.98 9.93 8.62 7.70 7.38 7.72 8.02 7.94 8.98 7.67 8.39 

Net loans and leases to deposits .. . .... . . 77.51 58.26 69.52 80.69 85.91 82.81 76.63 74.25 66.87 53.64 87.38 

Growth Rates (year-to-year) 

Assets . . . ... . .... . ...... . ..... . ...... 2.7% 7.0% 9.5% 6.6% 3.1% -0.1% 4.9% 3.3% 8.0% 0.1% 6.5% 

Equity capital . . .. . .... ' ... .. . ... . . . . . . 7.0 5.2 10.4 6.5 11 .5 1.9 6.5 6.2 9.3 17.8 13.6 

Net interest income . .. . ...... . .. .. .. . . . 2.9 6.1 8.8 7.3 4.3 -0.6 7.3 2.8 0.6 10.9 4.2 

Net income .. ............... . . . ..... .. 6.5 -0.7 -3.6 -43.2 256.9 NIM -22.4 -13.4 8.3 NIM 3.6 

Noncurrent loans and leases plus 

other real estate owned . ... . . . ... . .... 31 .1 8.2 29.5 78.6 27.8 53.9 76.3 37.7 10.1 -38.9 10.2 

Net charge-offs ...... . ...... . .. . ....... 26.9 0.8 28.1 47.2 28.1 54.8 61 .5 2.7 -15.0 -31 .8 8.9 

Loan loss prevision .. .. . . . ........ .. . . . 2.2 2.7 34.4 62.9 -25.4 -4.8 84.1 30.0 -3.4 -49.8 11 .7 

PRIOR FULL YEARS 

(The way it was . .. ) 

Return on assets ... ..... ..... .. .. 1989 0.49% 0.77% 0.90% 0.64% 0.10% -0.02% 0.88% 1.00% 1.01% -0.08% 0.99% 

.. ... .. . ... . ..... 1987 0.12 0.57 0.74 0.53 -0.65 -0.13 0.93 0.44 0.67 -0.62 -0.01 

. . ... ...... .... .. 1985 0.70 0.66 0.84 0.87 0.51 0.78 1.01 0.82 0.69 0.43 0.34 

Equity capital ratio . . . ........ . .. . 1989 6.21 8.92 7.47 6.12 4.86 5.55 6.93 6.86 7.61 5.54 6.26 

... . . .. . .. ...... . 1987 6.04 8.55 7.29 6.14 4.41 5.43 6.81 6.52 7.46 6.06 5.77 

........ . .. .. . . .. 1985 6.20 8.50 7.20 5.84 4.91 5.67 6.60 6.81 7.34 6.86 5.53 

Noncurrent loans and leases plus 

other real estate owned to assets . 1989 2.28 1.75 1.67 1.84 3.12 2.82 1.21 1.18 1.40 4.41 2.35 

. . . .. . ......... .. 1987 2.46 2.10 1.80 1.81 3.47 2.44 1.04 1.27 1.87 5.82 3.28 

. . . . ...... . .... . . 1985 1.87 2.13 1.70 1.49 2.19 1.55 1.07 1.49 2.22 2.75 2.83 

Net charge-offs to loans and leases .1989 1.16 0.75 0.74 1.06 1.54 1.32 0.59 0.91 1.20 1.92 1.18 

. . .... ... ..... ... 1987 0.92 1.15 0.88 0.94 0.89 0.67 0.69 0.68 1.57 1.99 1.07 

.. .. .. . .... . . .... 1985 0.84 1.41 0.84 0.70 0.79 0.49 0.59 0.68 1.70 1.46 1.19 

NIM-Not meaningful 

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 1990 Bank Data (Dollar figures in billions, ratios in %) 

Asset Size Distribution Geographic Distribution 

EAST WEST Less $100 Million Greater 

PRELIMINARY FOURTH QUARTER than $100 to $1-10 than $10 Northeast Southeast Central Midwest Southwest West 

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

Number of banks reporting ........ . .. . . . 12,338 9,249 2,715 325 49 1,068 1,956 2,716 2,954 2,179 1,465 

Net income (in millions) ... . .. .. .. . .... .. 1,392 408 915 15 54 -1,670 518 1,061 535 134 815 

Percentage of banks losing money ... . . . . 21.0% 22.1% 15.9% 29.5% 30.6% 38.0% 26.4% 11.4% 16.5% 24.2% 23.3% 

Percentage of banks with earnings gains .. 53.6% 54.0% 53.1% 44.3% 55.1% 39.2% 50.5% 55.1% 54.7% 59.6% 54.2% 

Perfonnance Ratios (annualized) 

Yield on earning assets ....... . . .. ... . .. 11.15% 10.41% 10.64% 10.69% 12.00% 11.88% 10.61% 10.66% 10.38% 10.31% 11.15% 

Cost of funding earning assets .. .. . . . .. . . 7.04 5.92 6.08 6.45 8.33 8.26 6.35 6.55 6.10 6.11 6.12 

Net interest margin .. ........ .... .... .. 4.11 4.49 4.56 4.24 3.67 3.62 4.26 4.11 4.28 4.20 5.03 

Net noninterest expense to earning assets . 2.27 3.04 2.62 2.23 1.90 2.11 2.32 2.13 1.99 2.90 2.57 

Net operating cash flow to assets ... . . .. . 1.61 1.32 1.75 1.77 1.51 1.33 1.72 1.75 2.04 1.11 2.15 

Net operating income to assets .... . .. . . . 0.11 0.43 0.57 --0.05 --0.08 --0.61 0.33 0.76 0.93 0.14 0.60 

Return on assets . .. . .. . .. . .. . ... . . . ... 0.17 0.46 0.57 0.01 0.02 --0.51 0.41 0.78 0.96 0.20 0.61 

Return on equity ..... . .. . ...... . . . .. . . 2.56 5.03 7.28 0.09 0.31 -9.16 5.79 11.00 12.15 3.06 9.19 

Net charge-offs to loans and leases .. . . . . . 1.58 1.06 1.20 1.78 1.70 2.07 1.22 0.99 1.13 1.77 1.40 

Loan loss provision to net charge-offs ... .. 139.51 109.97 130.15 158.94 130.84 148.48 163.77 128.31 116.94 102.37 122.43 

Growth Rates (year-to-year) 

Net interest income .... . ..... .. ........ 4.2% 7.2% 9.4% 7.3% 6.9% -1.6% 8.0% 5.9% 1.0% 23.7% 5.1% 

Net income . . . . .. . .................. . . -30.8 -3.4 -14.0 -97.9 -60.9 N/M -33.4 -10.6 46.3 N/M -31.9 

Net charge-offs .. . . . ...... ... .. .. ... . .. -15.0 0.7 26.7 41.7 -38.3 -14.5 47.7 -36.6 -20.5 -47.9 2.0 

Loan loss provision .... .. .. . . . .... . . . .. 8.0 1.1 46.2 54.3 -12.1 -2.6 78.7 72.0 -8.4 -54.1 55.5 

PRIOR FOURTH QUARTERS 

(The way it was . .. ) 

Return on assets ..... .. . .. ....... 1989 0.25% 0.36% 0.70% 0.09% 0.12% --0.35% 0.66% 0.90% 0.69% -0.62% 0.96% 

. .. .. . . ... .. . . .. .1987 0.42 0.21 0.58 0.39 0.40 0.61 0.79 0.43 0.74 -1.13 0.42 

.. . ... . .. . ... . ... 1985 0.51 --0.00 0.59 0.84 0.47 0.74 0.78 0.73 0.27 --0.12 0.13 

Net charge-offs to loans and leases .1989 1.92 1.19 1.10 1.43 2.91 2.43 0.87 1.63 1.47 3.28 1.52 

. .......... ... . .. 1987 1.25 1.57 1.18 1.40 1.23 0.16 1.14 1.11 2.01 2.46 1.29 

.. . . . . . .... . . . . . . 1985 1.22 2.45 1.37 0.90 1.02 0.66 0.91 0.97 2.70 2.40 1.55 

N/M - not meaningful 

NOTES TO USERS 

COMPUTATION METHODOLOGY FOR PERFORMANCE AND CONDITION RATIOS 

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-of-period 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. 

DEFINITIONS 

"Problem" Banks-Federal regulators assign to each financial institution a uniform 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 vlalblllty. Depending upon the degree of risk and supervisory concern, they are rated either "4" or "5". 

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

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. 

Net Nonlnterast Expense-total noninterest expense, excluding the expense of providing for loan losses, less total noninterest income. A measure of banks' overhead costs. 

Net Operating Income-income after taxes and before gains (or losses) from securities transactions and from nonrecurring items. The profit earned on banks' regular banking business. 

Net Operating Cash Flow-pre-tax net operating Income before the provision for loan and lease losses; a measurement of banks' cash flow, net of interest and overhead expenses, 

from regular operations. Previously referred to as "adjusted net operating income". 

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 00 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. 

Primary Cepltal-total equity capital plus the allowance for loan and lease losses plus minority interests in consolidated subsidiaries plus qualifying mandatory convertible debt 

(cannot exceed 20 percent of total primary capital), less intangible assets except purchased mortgage servicing rights. 

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

Temporary Investments-the sum of interest-bearing balances due from depository institutions, federal funds sold and resold, trading-account assets and investment securities 

with remaining maturities of one year or less. 

Volatlle Liabilities-the sum of large denomination time deposits, foreign office deposits, federal funds purchased, and other borrowed money. 

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

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

7 
Table Ill. Full Year 1990 Savings Bank Data (Dollar figures in billions, ratios In %) 

Asset Size Distribution 

All 

BIF-lnsured Less $100 Million Greater 

Savings than $100 to than 

Banks Million $1 Billion $1 billion 

FULL YEAR Preliminary 

Number of savings banks reporting .......... . ... .. . . ... . .. . ... . . 473 135 2n 61 

Total assets . . ................ ... ......... . .. .... .. .. . . .. ... . $ 260.73 $6.99 $89.36 $164.38 

Total deposits . ..... . .... .. . . . . .. ..... . .... . .................. 213.86 6.22 76.77 130.86 

Net income ffn millions) • ..•..•.•.. ..•.•.•... . • .. ... .. . ... . .. . ... . -2,372 -31 -697 -1 ,645 

Percentage of banks losing money ....... ................. ..... . 40.38% 37.04% 38.63% 55.74% 

Percentage of banks with earnings gains .... ......... ...... ..... . 25.16 29.63 22.74 26.23 

Perfonnance Ratios 

Yield on earning assets . . . . . . . . .... ... ... . . .. ......... . ....... . 10.05% 10.16% 10.24% 9.95% 

Cost of funding earning assets .... ..... ........ .. .. ... . . .... .. . 7.41 6.97 7.15 7.56 

Net interest margin .... . . .... . . . .. . .. ......................... 2.64 3.19 3.09 2.38 

Net noninterest expense to earning assets ... . . .. .. . ..... . . . .. . ... 2.11 2.62 2.38 1.95 

Return on assets .. .. . . . .. ...... . ... . ......•. . . . .... . . . ....•.. -0.89 -0.45 -0.79 -0.97 

Return on equity ....... .. ..... .... .... ........ .... .... .... ... -12.53 -5.17 -9.25 -15.22 

Net charg~ffs to loans and leases ..... .... .. .......... ........ 1.20 0.89 1.26 1.18 

Loan loss provision to net charg~ffs ............... . .. .. ..... . . . 157.03 139.14 143.18 166.03 

Condition Ratios 

Loss allowance to: 

Loans and leases .. . . . .. . . .. . . . ..... . .......... . ............ 1.74% 0.92% 1.51% 1.90% 

Noncurrent loans and leases . . . .. .. ..... .. . ... ...... . . .. .... . 31 .36 23.48 33.13 30.82 

Noncurrent loans and leases plus other real estate to assets . .. . . . .. . 5.03 3.81 4.66 5.29 

Noncurrent RE loans to total RE loans ... .. . . . . .. ................ 5.35 3.91 4.48 5.93 

Equity capital ratio . ... .. ... . . . . . .. .. . ......... .. ..... . ...... . . 6.70 8.34 7.87 6.00 

Net loans and leases to deposits ... . . . . . .. . ...... . . . ..... .. .. . .. 83.10 79.80 83.19 83.19 

Growth Rates (year-to-yeafJ 

Net interest income .. . . . . . . . . . ... ... . . . .. .. .. ...... .. . ... ... . . -3.14% 0.62% 0.51% -3.50% 

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

Net charg~ffs* . ... . .. . .. ... .. . . . . ... ...... . .... .. .... . .. . . . . 68.50 231 .17 148.19 78.05 

Loan loss provision . . ........................... .. . . .......... 56.09 186.50 92.75 78.24 

Table IV. Fourth Quarter 1990 Savings Bank Data (Dollar figures in billions, ratios in %) 

Asset Size Distribution 

All 

BIF-lnsured Less $100 Million Greater 

Savings than $100 to than 

Banks Million $1 Billion $1 billion 

FOURTH QUARTER Preliminary 

Number of savings banks reporting . .. ... . .. . .. .. .... ... ....... .. 473 135 2n 61 

Net Income /in millions) .. . ................ . .. .. ... ... . . ... . ... -1,202 -22 -438 -742 

Percentage of banks losing money . . .. . ... .. . .. . .. '.' ....... .... 47.78% 40.74% 49.82% 54.10% 

Percentage of banks with earnings gains .. . .. . .. . .. . .. .. . . . ... ... 37.21 44.44 32.49 42.62 

Perfonnance Ratios (annualized) 

Yield on earning assets . . .. . ..... . . . ............ . . .. . . .... . .... 10.08% 10.13% 10.44% 9.88% 

Cost of funding earning assets . ... ........ . . .. .. .... . . .. . ... ... 7.46 6.97 7.38 7.52 

Net interest margin . . . ......... . . .... .. .. . . ... .... . . ..... . .... 2.63 3.16 3.06 2.36 

Net noninterest expense to earning assets ........................ 2.54 2.88 2.n 2.41 

Return on assets .... . ........ . ........... .. . . .. . ... ... .. ... . . -1.84 -1 .26 -1 .97 -1.79 

Return on equity ...... . ... . .......... . . . ..................... -26.67 -14.95 -24.28 -29.03 

Net charg~ffs to loans and leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.10 1.54 2.22 2.05 

Loan loss provision to net charg~ffs .. . .. . .... . ... .... .. . ....... 132.38 135.18 134.04 131 .23 

Growth Rates (year-to-yeafJ 

Assets ...................... .. . .. . .. .. . .•.... .. ... . ...... . .. -6.85% 4.06% 2.67% -6.78% 

Equity capital . .. . .. .. . . .. . .. . . . . .. •...... . ............... . ... -11.60 -2.36 -9.68 -14.01 

Net interest income . . .. . .. . . . . . . . .. ... .. . ........... . ......... -1.08 0.71 5.19 -5.09 

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

Noncurrent loans and leases plus other real estate owned* . . . ...• . . . 75.42 74.47 95.19 96.69 

Net chargooffs* .................... . . . . . ..... . . . ... . ........ . 27.71 201 .72 87.21 56.52 

Loan loss provision .. .. . ...... .... ....... . . . .. ... ... . .... . . ... 6.25 117.37 50.82 6.96 

Geographic Distribution 

New Other Rest 

England Northeast of U.S. 

346 109 18 

$110.92 $ 137.01 $12.80 

93.43 111.75 8.68 

-1 ,739 -712 79 

45.67% 29.36% 5.56% 

18.79 40.37 55.56 

10.22% 9.88% 10.46% 

7.43 7.38 7.53 

2.79 2.50 2.93 

2.52 1.86 1.29 

-1 .56 -0.51 0.61 

-20.46 -7.56 7.84 

1.75 0.77 0.48 

145.29 180.09 177.76 

2.16% 1.42% 0.98% 

36.72 25.32 66.55 

6.22 4.32 2.18 

5.63 5.52 1.44 

6.70 6.58 8.06 

85.71 79.49 101.41 

-9.60% 0.24% 33.14% 

N/M N/M 52.43 

70.65 58.41 139.71 

36.95 96.18 205.50 

Geographic Distribution 

New Other Rest 

England Northeast of U.S. 

346 109 18 

-920 -318 37 

55.78% 28.44% 11 .11% 

32.37 50.46 50.00 

10.32% 9.84% 10.55% 

7.60 7.34 7.46 

2.72 2.51 3.10 

3.21 2.13 1.15 

-3.31 -0.92 1.13 

-47.14 -13.83 14.38 

3.07 1.29 1.35 

135.17 136.98 30.07 

-3.78% -10.45% 10.07% 

-19.27 -7.01 18.44 

-6.17 -0.42 51 .56 

N/M N/M 82.65 

62.50 111 .19 5.54 

20.28 37.97 469.42 

6.95 4.91 1.94 

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 

"These growth rates do not include Federally-chartered Savings Banks 

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

1984-1990 

Number of Banks 

2,000 .------------------------------------

1,500 

1,000 

500 

0 

12/84 12/85 12/86 12/87 12/88 12/89 12/90 

Assets of Commercial and Savings Banks on FDIC's "Problem List1' 

1984 -1990 

$ Billions 

500 

408.8 

400 - 358.5 352.2 

335.5 

300 -

237.8 235.5 228.3 

200 ...

100 -

I I I I I I 0 I 

12/84 12/85 12/86 12/87 12/88 12/89 12/90 

11