The FDIC 

uarte r ly:____A_n_dre_w_c._Ho_ve_,J_r.,_ch_ai_rm_an_ 

First Quarter, 1993 

FDIC 

Division of Research 

&Statistics 

Don Inscoe 

(202) 898-3940 

Ross Waldrop 

(202) 898-3951 

anking B,ofile 

COMMERCIAL BANKING PERFORMANCE- FIRST QUARTER, 1993 

• Net Income of $10.9 Billion Shatters Previous Quarterly Record 

• Asset Quality Improvement, Accounting Change Boost Earnings 

• Loan Shrinkage Continues as Securities Holdings Increase 

• Industry Net Worth Registers Strongest Quarterly Growth Ever 

Propelled by further improvement in asset quality, 

one-time gains from Generally Accepted Accounting 

Principles (GAAP) rule changes, and continued wide 

net interest margins, commercial banks reported their 

highest quarterly earnings ever. First-quarter net 

income totaled $10.9 billion, easily surpassing the 

previous record of $8.5 billion, set in the third quarter 

of 1992. Industry earnings rose $3.3 billion from a year 

ago, and were $2. 7 billion more than banks earned in 

the fourth quarter of 1992. The main sources of the 

improvement were lower provisions set aside for 

future loan losses and accounting changes that 

permitted recognition of additional deferred tax assets. 

Net interest income was also higher than a year ago, 

but was down slightly from the fourth quarter of 1992. 

Chart A-Quarterly Net Income of FDIC-Insured 

Commercial Banks, 1989-1993 

$ Billions 

10.9 

10 

:6.2 

5.4 

5 

3.7 

0 1-'-......i.,-i,,1,-i,i...u....u....u.....,i. · ..u...u...u...i;i. · ..u...u...u....i;i.---i 

D ~et Operating ;Income , 

_2_5 .....___.___.___.__.._....._.....__..s_ec.._ur._1ti_es._an_...d_:o_th_e._r_G._ai_ns...,_N~et 

12341234123412341 

1989 1990 1991 1992 1993 

The average return on assets of commercial banks 

rose to 1.24 percent, the first time since banks began 

reporting quarterly earnings in 1983 that their average 

ROA has exceeded one percent. The average return 

on equity, at 16.23 percent, also represents a 

quarterly record and marks the first time the industry 

average has exceeded 15 percent. Improved 

profitability was widespread; banks in all six regions 

and all four size groups had ROA averages above one 

percent. 

Extraordinary gains, stemming mainly from accounting 

changes, totaled $1.8 billion in the first quarter, up 

from $133 million a year ago and $96 million in the 

previous quarter. These gains were concentrated in 

the largest banks; the 52 banks with assets greater 

than $10 billion accounted for $1.3 billion, or more 

than three-quarters, of the total. Extraordinary gains 

represented 30.6 percent of their total net income, 

compared with 7 percent of net income for banks with 

less than $10 billion in assets. A larger contribution to 

higher industry profits came from reduced provisioning 

for future loan losses. Banks set aside $4. 7 billion in 

loan-loss provisions in the first quarter, a decline of 

more than one-third from the $7.2 billion set aside in 

the first quarter of 1992. It was the lowest quarterly 

loss provision since the $4.4 billion set aside in the 

second quarter of 1989. 

Chart B - Quarterly Net Interest Margins of 

FDIC-Insured Commercial Banks, 1985-1993 

Net Interest Margin (%) 

5 

Banks< $100 Mllllon 4.72% 

4.5 

? .. ~ .

"', -----

....... .. 

'. 

. . 

'"" ~ --

~~ 

/ !II I\ 

.;- n i-"~ Ill / ' 

4 ,~- .. . . 

.-i-.·,,iJ',_, •llli,. .. 

-

,~i . .. . .. 

Banks> $100 Mllllon i°47% ',-ry3.5 

123412341234123412341234123412341 

1985 1 986 1987 1 988 1 989 1990 1991 1 992 '93 

Commercial banks' average net interest margin 

narrowed in the first quarter, from 4.67 percent in the 

fourth quarter of 1992 to 4.50 percent, after seven 

consecutive quarters of improvement. Nevertheless, it 

remained higher than in any previous quarter except 

the fourth quarter of 1992. Net interest income of 

$34.6 billion was $2.1 billion higher than a year earlier, 

but fell short of the record $35.8 billion earned in the 

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
fourth quarter of 1992. Noninterest income of $17.7 

billion was more than $1.5 billion above the level of 

the first quarter of 1992. Noninterest expense was 

$3.3 billion higher than a year ago, reflecting higher 

losses on other real estate owned and on sales of 

troubled loans. 

Equity capital increased by $10.1 billion in the first 

quarter, to 7.79 percent of total assets. This is the 

largest quarterly increase since 1973, when qu~rterly 

balance-sheet data are first available, and the highest 

equity-to-assets ratio reported by the industry ~i~ce 

1963. Even though dividend payments of $4.3 bllhon 

were more than 50 percent above the level of a year 

ago, retained earnings totaled $6.5 billion. This was 

$916 million above the previous quarterly record, set 

in the third quarter of last year. 

Troubled assets of commercial banks declined for the 

fourth consecutive quarter, to $84.3 billion, their lowest 

level since the second quarter of 1990. Noncurrent 

loans fell by $3.1 billion, to $59.3 billion, while banks' 

holdings of foreclosed properties, at $25.1 billion, 

decreased by $687 million. Troubled assets have 

declined in six of the last seven quarters, and are 

almost 22 percent below the peak level of $107.8 

billion reached at the end of the second quarter of 

1991. Net charge-offs totaled $4.3 billion in the first 

quarter, the lowest quarterly amount since banks 

charged-off $3.6 billion in the first quarter of 1989. 

Reserves for future losses grew by only $135 million, 

but the decrease in noncurrent loans boosted the 

industry's coverage ratio to 92.2 cents in reserves for 

every dollar of noncurrent loans, the highest lev~I 

since banks began reporting noncurrent loan data m 

1982. 

Total assets grew by $7.6 billion (0.2 percent) in the 

first quarter, to $3.51 trillion, an increase of $77.8 

billion from the level of a year earlier. Total loans held 

by commercial banks fell by $9 billion in the quarter 

(0.4 percent). Loans have now decli~~d in eight of the 

last nine quarters, falling by $86.4 b1lhon (4.1 percent) 

during that time. The largest decline in the first quarter 

was a seasonal $3.5-billion decrease in consumer 

loans, which still remained above the level of a year 

ago. Commercial and industrial loans continued a 

longer-term decline, falling by $2.4 billion -- the twelfth 

consecutive quarter that they have decreased. Most of 

the decrease in commercial and industrial loans 

occurred at banks in the Northeast and West Regions. 

Real estate loans shrank by $62 million, due to falling 

levels of construction and development lending. This 

is only the second time since the first quarter of 1978 

that real estate loans have fallen. Increased holdings 

of investment securities remain the main engine of 

asset growth. Bank holdings of U.S. Treasury 

securities grew by $9.9 billion, while mortgage-backed 

securities increased by $16.8 billion. 

A total of 11,328 commercial banks filed financial 

reports at the end of March, a net decrease of 134 

institutions from the number reporting at year-end 

1992, and 477 fewer than a year earlier. Only seven 

commercial banks failed in the first quarter, the lowest 

total since the fourth quarter of 1983. Eleven new 

bank charters were issued, four to successors of failed 

institutions. There were 118 unassisted mergers 

during the quarter. The number of commercial banks 

on the FDIC's "Problem List" continued to shrink in the 

first quarter, falling to 671 institutions at the end of 

March, a net decrease of 116 banks in the first 

quarter. Assets of "Problem" banks also fell, to $377.4 

billion from $408.2 billion at the end of last year, but 

still represent more than 10. 7 percent of total 

commercial bank assets. 

Chart C - Commercial and Industrial Loan Growth Rates By State 

March 31, 1992- March 31, 1993 

Midwest Central Northeast 

Colorado 

-5.9 

Hawaii 6.2 

~ 

Commercial and Industrial Loan Growth Rate: 

■ 5% and Greater 

□ 0%to4.9% 

D Less than 0% 2 

3.8 
REAL ESTATE LOAN PERFORMANCE AND OTHER REAL ESTATE OWNED, 

MARCH 31, 1993 

ASSET SIZE GEOGRAPHIC DISTRIBUTION 

LESS $1B $10B NORTH- SOUTH- MID- SOUTHALL THAN $100MM TO OR EAST EAST CENTRAL WEST WEST WEST 

BANKS$100MM TO $1B $10B MORE REGION REGION REGION REGION REGION REGION 

PERCENT OF LOANS 30-89 DAVS PAST DUE 

All real estate loans 1.97% 1.76% 1.76% 1.96% 2.21% 2.61 % 1.45% 1.60% 1.42% 1.67% 2.13% 

Construction and development 3.19 1.63 2.99 3.78 3.13 3.48 1.79 3.33 1.78 1.80 4.38 

Commercial real estate 2.36 1.63 1.76 2.36 3.25 3.68 1.35 1.65 2.00 1.56 2.62 

Multifamily residential real estate 2.69 1.47 1.63 2.08 4.51 5.01 1.45 1.82 1.45 0.96 2.45 

1-4 Family residential 1.67 1.94 1.72 1.49 1.66 2.04 1.59 1.44 1.12 1.79 1.60 

Home equity lines of credit 0.86 1.36 1.00 0.77 0.82 1.11 0.65 0.75 0.81 1.15 0.71 

Commercial R/E loans not secured by real estate 3.24 2.12 1.78 2.29 3.79 4.75 1.19 1.89 0.92 0.66 3.54 

PERCENT OF LOANS NONCURRENT* 

All real estate loans 3.74% 1.48% 1.89% 3.26% 6.27% 6.11 % 2.30% 1.83% 1.29% 1.98% 4.65% 

Construction and development 12.67 2.18 4.66 11.21 19.99 18.21 6.04 8.02 2.69 3.79 17.09 

Commercial real estate 5.18 1.93 2.56 4.21 10.16 9.26 3.63 2.29 2.38 2.71 5.37 

Multifamily residential real estate 4.86 1.64 1.95 3.68 9.32 8.65 2.47 2.29 1.66 2.56 6.02 

1-4 Family residential 1.42 1.07 1.14 1.31 1.87 2.29 1.03 0.78 0.55 1.09 1.67 

Home equity lines of credit 0.71 1.07 0.78 0.62 0.72 1.10 0.46 0.35 0 .38 0.74 0.58 

Commercial R/E loans not secured by real estate 7.12 3.06 1.94 4.24 8.89 13 .07 3.36 2.65 4.72 0.67 4.77 

PERCENT OF LOANS CHARGED-OFF (NET, ANNUALIZED) 

All real estate loans 0.63% 0.13% 0.19% 0.52% 1.23% 1.27% 0.28% 0.24% 0.26% 0.10% 0.67% 

Construction and development 2.62 0 .14 0. 60 1.72 4.84 5.01 0.94 1.50 0.27 -0.08 2.47 

Commercial real estate 0.88 0.18 0.24 0.76 1.92 1.86 0.39 0.32 0 .74 0.08 0.85 

Multifamily residential real estate 0.73 0.31 0.25 0.60 1.38 1.85 0.57 0.14 0.59 0.17 0.18 

1-4 Family residential 0.16 0.11 0.10 0.17 0.23 0.29 0.11 0.05 0.08 0.15 0.19 

Home equity lines of credit 0.14 0.11 0.14 0.13 0.15 0.19 0.07 0.05 0.01 0.19 0.18 

Commercial R/E loans not secured by real estate 1.76 1.68 1.38 2.51 1.56 3.27 0.33 6.07 0.21 0.74 -0.43 

TOTAL LOANS OUTSTANDING($ BILLIONS) 

All real estate loans $868.2 $99.3 $218.6 $255 .3 $295.0 $259.6 $172.9 $150.1 $57.2 $56.3 $172.2 

Construction and development 74.1 5.8 15.0 24.0 29.4 23 .5 14.4 10.8 3.0 4.0 18.4 

Commercial real estate 259.3 27 .1 73.1 86.3 72.9 73.2 54.7 46.6 14.8 19.1 50.9 

Multifamily residential real estate 27.6 2.3 7.4 9.0 8.9 7.6 5.0 5.3 1.9 1.7 6.0 

1-4 Family residential 390.7 51.0 102.6 107.1 129.9 106.9 83.3 70.1 29.0 28.3 73 .0 

Home equity lines of credit 73.7 2.9 14.1 26.5 30.2 27.2 12.1 11.9 2.4 0.9 19.3 

Commercial R/E loans not secured by real estate 18.7 0.4 1.6 4.2 12.5 6.7 2.9 2.0 0.5 0.8 5.9 

OTHER REAL ESTATE OWNED($ BILLIONS) 

All other real estate owned $25 .1 $1.8 $4.3 $6.3 $12.7 $12.1 $3 .1 $1.9 $0.9 $1.7 $5.3 

Construction and development 6.0 0.3 1.0 2.3 2.5 2.5 1.0 0.4 0.2 0.3 1.7 

Commercial real estate 12.8 0.8 2.0 2.9 7.0 6.1 1.6 1.2 0.5 0.9 2.5 

Multifamily residential real estate 1.7 0.1 0.2 0.4 1.0 1.1 0.1 0.1 0.1 0.1 0.3 

1-4 Family residential 3.1 0.5 0.9 0.6 1.0 1.2 0.5 0.2 0.1 0.3 0.8 

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 1.2 0.0 0.0 0.0 1.2 1.2 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. 

3 
Table I. Selected Indicators. FDIC-Insured Commercial Banks 

1993* 1992* 1992 1991 1990 1989 1988 

Return on assets .......... .. ... .... ....... . 1.24% 0.88% 0.96% 0.54% 0.48% 0.49% 0 .82% 

Return on equity ......... .......... ....... . 16.23 12.82 13.29 8.05 7.55 7.78 13.30 

Equity capital to assets .......... ....... . 7.79 6.96 7.52 6.75 6.45 6.21 6.28 

Noncurrent loans and leases plus 

other real estate owned to assets .. 2.40 3.00 2.51 2.99 2.90 2.30 2.14 

Net charge-offs to loans .. .... ..... ..... . 0.86 1.24 1.29 1.61 1.44 1.14 1.00 

Asset growth rate .. .... ....... ... ........ . 2.26 2.53 2.20 1.21 2.72 5 .37 4 .36 

Net operating income growth ........ .. 27.20 35.95 92.96 -0.60 2.56 - 38.53 1554. 74 

Percentage of unprofitable banks .... . 4.97 7.04 6.68 11 .58 13.46 12.50 14.65 

Number of institutions ................... . 11,328 11,805 11,462 11,921 12,341 12,707 13,139 

Number of problem banks .............. . 671 981 787 1,016 1,012 1,092 1,394 

Assets of problem banks (billions) .. . . $377.4 $535.4 $408.2 $528.0 $341.6 $187.9 $304.8 

Number of failed/assisted banks .... . . 7 29 100 108 159 206 221 

• Through March 31; ratios annualized where appropriate. Asset growth rates are for 12 months ending March 31 . 

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

(dollar figures in millions) 

Preliminary 1st Otr 4th Otr 1st Otr %Change

1993 1992 1992 92:1-93:1 

Number of banks reporting .............. .. .... ....... . 11,328 11,462 11,805 -4.0 

Total employees (full-time equivalent) ............. . 1,467,641 1,477,883 1,478,534 -0.7 

CONDITION DA TA 

Total assets..... ..... ........... .......... .................. $3,513,538 $3,505,932 $3,435,737 2.3 

Real estate loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 868, 162 868,224 854,954 1.5 

Commercial & industrial loans. ... .... .. .......... 533,914 536,343 551,309 -3.2 

Loans to individuals. ..... ............................ 381,882 385,355 378,161 1.0 

Farm loans............. ...... ...... ... .... .. .... .... .... 33,178 35,006 33,357 -0.5 

Other loans and leases. .......... .......... ........ 205,812 207,050 218,736 -5.9 

Total loans and leases ... ... ............. .... ... ... . 2,022,949 2,031,978 2,036,517 -0.7 

LESS: Reserve for losses . . .. .. .. .. .. . . . . . . .. .. . . .. 54,607 54,472 55,824 -2.2 

Net loans and leases . . . . .... ... . .. . . . . .. .. .. .. .. .. . ... 1,968,342 1,977,506 1,980,693 -0.6 

Temporary investments. .. .. ......... ...... .. .. ....... 555,777 540,933 518,774 7.1 

Securities over 1 year.. ............... ..... ........ .. . 580,284 569,367 536,382 8.2 

All other assets....... ...... .... ...... ... ...... .......... 409,135 418,125 399,889 2.3 

Total liabilities and capital. .... ..... .. ... .. ..... ..... ... 3,513,538 3,505,932 3,435,737 2.3 

Noninterest-bearing deposits.......... ... ........... 490,814 541,005 470,625 4.3 

Interest-bearing deposits.................... ....... .. 2, 164,670 2,157,950 2,205,640 -1.9 

Other borrowed funds............ ...... ..... .......... 430,382 406,568 386,921 11.2 

Subordinated debt.... .............. .................... 34,446 33,731 25,043 37.6 

All other liabilities..... ........... ............ .. .. ....... 119,569 103,154 108,344 10.4 

Equity capital ....... ... ... ... ........ ... ... ...... ........ 273,657 263,524 239,164 14.4 

Goodwill........ ........ .... ... ........ .... ...... ......... ... 7,200 6,872 4,527 59.0 

Loans and leases 30-89 days past due ............ 34,210 34,579 40,116 -14.7 

Noncurrent loans and leases .. ....... ...... .......... . 59,257 62,319 75,341 -21.3 

Restructured loans and leases........................ 11,579 11,909 9,509 21 .8 

Other real estate owned............. ... .. ............. . 25,069 25,756 27,626 -9.3 

Loan commitments and letters of credit .. ..... .... 1,474,058 1,449,283 1,388,172 6.2 

Domestic office assets ...... .... ...... .... ... .. ....... .. 3,092,539 3,109,537 3,038,693 1.8 

Foreign office assets............ ...................... ... 420,999 396,395 397,045 6.0 

Domestic office deposits .. ...... ... ..... .. ....... .... .. 2,351,069 2,412,155 2,366,740 -0.7 

Foreign office deposits.. ... .. ..... ...... ... ..... ...... .. 304,416 286,800 309,526 -1.6 

Earning assets ... ...... ... ... ........ ..... ...... ........... 3,104,403 3,087,806 3,035,849 2.3 

Volatile liabilities . .. . . . . . ...... ..... .. .. . . . . . . . . . . . . . . . .. . . 955,259 918,059 979,169 -2.4 

Preliminary Full Year Full Year 1st Qtr 1st Otr %Change 

1992 1991 %Change 1993 1992 92:1-93:1 

INCOME DATA 

Total interest income ..... ............ . $255,297 $289,233 -11 .7 $61,204 $66,732 -8.3 

Total interest expense ......... ... ... .. 121,835 167,304 -27.2 26,570 34,231 -22.4 

Net interest income .... .. .......... 133,462 121,929 9.5 34,634 32,502 6.6 

Provision for loan losses .............. 25,959 34,313 -24.3 4,729 7,215 -34.5 

Total noninterest income ..... .... .... 65,628 59,723 9.9 17,661 16,072 9.9 

Total noninterest expense ....... .. ... 130,949 124,789 4 .9 35,025 31,756 10.3 

Securities gains (losses) .. ............ 4,014 2,972 35 .1 990 1,112 -11 .0 

Applicable income taxes ............ .. 14,514 8,266 75.6 4,482 3,326 34.8 

Extraordinary gains, net ... ........... 409 686 -40.5 1,811 133 1264.5 

Net income .... ... .. ... ....... ... ....... 32,090 17,942 78.9 10,860 7,522 44.4 

Net charge-offs ...... ..... ............... 25,570 32,862 -22.2 4,350 6,350 -31.5 

Cash dividends on capital stock .... 14,147 14,298 -1 .1 4,330 2,826 53.2 

Net operating income ............... 28,731 14,889 93.0 8,353 6,567 27.2 

4 
Table Ill. First Quarter 1993 Commercial Bank Data (Dollar figures in billions, ratios in %) 

ASSET SIZE DISTRIBUTION GEOGRAPHIC DISTRIBUTION 

EAST WEST Less $100 Million Greater 

FIRST QUARTER 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 .. ...... ........ . 11,328 8,215 2,739 322 52 911 1,877 2,496 2,762 2,007 1,275 

Total assets ..... .... .......... ........ ....... .... $3,513.5 $344.9 $669.1 $1,004.5 $1,495.0 $1,329.6 $556.4 $574.2 $234.9 $283.0 $535.6 

Total deposits ... ........ .......... ... .. ......... 2,655 .5 304.6 573.7 756.2 1,020.9 906.4 433.8 448.0 190.8 243.0 433.5 

Net income (in millions) ... .... .. .. .... .. .... 10,860 1,101 2,116 3,197 4,447 3 ,804 1,631 1,853 820 1,319 1,433 

Percentage of banks losing money ...... 5 .0% 5.3% 3.9% 6.2% 5.8% 8 .0% 4 .5% 3.5% 2.9% 3 .8% 12.6% 

Percentage of banks with earnings gains 64.4 61 .8 70.7 76 .7 75 .0 74.8 70 .2 63.9 57 .6 64.3 64.5 

Performance Ratios (annualized) 

Yield on earning assets ...... .. ......... ..... 7 .95% 7.85% 7.76% 7 .77% 8 .19% 8 .53% 7.50% 7.61% 7.62% 7 .10% 7 .97°1/o 

Cost of funding earning assets .. ...... .. .. 3.45 3 .13 2.99 2 .91 4 .14 4 .39 2 .94 3.10 3.09 2.68 2.64 

Net interest margin .......... ........ .... .. .... 4 .50 4.72 4 .78 4 .86 4.06 4 .14 4.56 4 .51 4 .53 4.42 5.32 

Noninterest income to earning assets .. . 2.29 1.07 1.38 2.55 2.86 2 .83 1.68 1.75 2.40 1.72 2.49 

Noninterest expense to earning assets . 4 .55 3.82 3 .97 4 .70 4.91 4 .89 4 .07 3.93 4.26 4.25 5 .20 

Net operating income to assets .. ..... .. .. 0.96 1. 11 1. 11 1 .13 0 .73 0.70 1.09 1.16 1 .31 1.09 1.00 

Return on assets .......... ...... ...... .. .... .. . 1.24 1.28 1.26 1.27 1.21 1 .16 1 .18 1.29 1.38 1.90 1.07 

Return on equity ...... ............ ...... ....... 16.23 13.39 15.04 16.13 17.94 16.65 15.36 16.05 15 .95 24.16 12.70 

Net charge-offs to loans and leases .. ... 0.86 0.35 0.43 0 .95 1.10 1.35 0.42 0 .52 0 .57 0 .21 0.94 

Loan loss provision to net charge-offs .. 108.72 122.92 153.45 121.69 92.09 95.70 145. 70 146.45 138.94 120.91 104.63 

Condition Ratios 

Loss allowance to: 

Loans and leases .......................... 2 .70% 1.83% 1.96% 2.78% 3.15% 3.35% 2.04% 1.96% 2 .07% 2 .24% 3 .07 % 

Noncurrent loans and leases .... .. .. .. 92.15 113.25 107.48 115.66 77 .45 79.22 112.53 115.44 145.27 136.03 88.69 

Noncurrent loans and leases plus 

other real estate to assets .. .. ......... 2.40 1.37 1.69 2.08 3 .17 3 .27 1.62 1.35 1 .19 1.34 3 .25 

Equity capital ratio .. .... ... .. .. ............... 7.79 9 .66 8 .55 8 .05 6 .84 7 .03 7.81 8.18 8.85 8 .13 8.58 

Core capital (leverage} ratio .... .. .... ...... 7.50 9 .59 8.42 7 .74 6.44 6 .91 7.70 7.95 8 .68 7 .82 7.60 

Net loans and leases to deposits ......... 74.12 57.43 65 .47 78.13 81 .00 79.20 73.68 75.22 67 .50 51.48 78.43 

Growth Rates (year-to-year) 

Assets .. ... ................ .. .. .. .............. .. .. 2 .3% 3.6% 5.3% 6.1% 16.5% 3 .3% 5.3% 2.6% -0.2% 3.7% -3.0o/c 

Equity capital ....... .. ........ .. ..... .. .......... 14.4 8.4 12.4 16.8 37.7 15.6 13.3 10.5 7 .6 19.8 18.3 

Net interest income .... ........... ...... ...... 6 .6 6.9 9 .3 10.9 22.6 9 .0 9 .3 5.9 5 .6 7 .1 0 .7 

Net income .. ................ .. ...... .. ... .... .. .. 44.4 23 .3 24.9 29.3 75.7 55.6 29.9 23.9 9.5 78.1 71.2 

Noncurrent loans and leases plus 

other real estate owned ..... .. .. ...... . -18.1 -15.4 -8.3 -19.0 - 0 .3 - 17.3 - 20.9 - 17.0 -23.6 -38.6 -11.8 

Net charge-offs ....... .. ..... ........ ... ........ -31.5 -16.3 -21 .5 -28.6 -18.7 -26.0 -48.6 - 30.3 -21.3 -72.7 -32.2 

Loan loss provision .. .. .. ..... .... ..... ........ -34.5 -25.4 -13.7 -21 .0 - 31.2 -31.8 -37.9 -13.5 -15.9 -68.9 -46.5 

PRIOR FIRST QUARTERS 

(The way it was. . . ) 

Return on assets .. .... .... .... ....... 1992 0 .88% 1.08% 1.02% 1.02% 0.65% 0 .76% 0.96% 1.07% 1.29% 1.09% 0 .60°1/o 

... ............... ...... ...... 1990 0.76 0.80 0 .88 0 .68 0.74 0 .50 0.75 0 .87 1 .18 0.44 1.28 

.... .......................... 1988 0 .66 0 .75 0 .69 0 .74 0 .55 0 .94 1 .01 1.12 1.05 -2.43 0.82 

Equity capital ratio .......... .. .... .. 1992 6 .96 9 .23 7.94 7.24 5.69 6 .29 7 .26 7.59 8 .21 7 .04 7.04 

6.38 8 .99 7 .63 6.50 4 .94 5 .57 7.10 7.02 7 .86 6.36 6.49 ············· ················· 1990 

6.07 8 .71 7 .30 6 .19 4.42 5 .53 6.95 6.75 7.43 5.40 5.75 ······························ 1988 

Noncurrent loans and leases plus 

other real estate owned to assets . 1992 3 .00 1.65 2.08 2.78 3 .95 4 .09 2 .16 1.67 1.56 2 .27 3 .57 

............ ............... ... 1990 2 .37 1.81 1.90 1.95 3 .10 3 .10 1.43 1 .29 1.47 3 .22 2.48 

.... ........ ............. ..... 1988 2.48 2.16 1.92 1.81 3 .43 2.39 1 .06 1 .26 1.87 6 .29 3 .26 

Net charge-offs to loans and leases .. 1992 1.25 0.41 0 .62 1 .51 1.52 1.77 0 .84 0.76 0.75 0.77 1.28 

1990 1.29 0.47 0 .58 1.39 1.74 1.92 0.70 1.08 0 .89 1.17 0 .70 

1988 0.88 0 .65 0 .61 0.96 1 .02 0.69 0.69 0.78 1.38 2.16 0.79 

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 

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

ASSET SIZE DISTRIBUTION GEOGRAPHIC DISTRIBUTION 

EAST WEST Less $100 Million Greater 

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

BANKS Million $1 Billion Billion Billion Region Region Region Region Region Region 

Number of banks reporting .................. 11,462 8,291 2,791 329 51 922 1,892 2,521 2 ,791 2,047 1,289 

Total assets .. ..... .... ............................ $3,505.9 $345.9 $680.3 $1,034.1 $1,445.7 $1,307 .7 $550.4 $581 .5 $242.0 $282 .6 $541 .7 

Total deposits .... ............. ................... 2,699.0 306.4 587.3 787 .8 1,017.4 924.0 434.6 459 .6 197.6 242 .1 441.0 

Net income (in millions) ...................... . 32,090 3,523 6,708 10,348 11,510 10,550 5,258 5,810 3,057 3,071 4,343 

Percentage of banks losing money ....... 6.7% 6.7% 6.3% 10.9% 7.8% 15.8% 8.4% 3.6% 2 .0% 5.2% 16.1 % 

Percentage of banks with earnings gains . 79 .5 78.7 81.6 79.6 88.2 79.4 84.8 79 .3 77 .6 82.5 71.5% 

Performance Ratios 

Yield on earning assets .... ..... ...... .... ..... 8 .63% 8.57% 8.44% 8.35% 8 .97% 9.09% 8.32% 8.49% 8 .23% 7.63% 8.70°Vo 

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 .75 4 .78 4 .80 4 .10 4.09 4 .66 4 .63 4.49 4.37 5.38 

Noninterest income to earning assets .... 2.22 1.05 1.35 2.51 2.75 2.74 1.70 1.67 2.31 1.68 2.32 

Noninterest expense to earning assets ... 4.43 3.90 4 .00 4 .68 4 .60 4.51 4 .24 3.99 4 .23 4 .19 5.12 

Net operating income to assets .. .. ..... .... 0 .86 0.96 0 .95 0 .95 0 .72 0 .68 0 .94 1.01 1.22 1.02 0 .79 

Return on assets .. ...... ... ...... ............. .. . 0 .96 1.05 1.02 1.04 0 .84 0 .83 1.01 1.06 1.32 1.15 0 .84 

Return on equity ... .. ... .. ... ......... ..... ... ... 13.29 11 .22 12.63 14.03 13.84 12.84 13.41 13.77 15 .68 16.04 11.07 

Net charge-offs to loans and leases ....... 1.29 0.55 0 .75 1.40 1.63 1.80 0 .84 1.00 0 .79 0 .67 1.29 

Loan loss provision to net charge-offs .. . 101 .52 118.35 124.61 108.34 91.00 97 .08 106.25 109.40 115.69 88 .64 105 .36 

Condition Ratios 

Loss allowance to: 

Loans and leases ................. ..... ........ 2 .68% 1 .79% 1 .90% 2 .77% 3.16% 3 .37% 1.99% 1.89% 2.04% 2 .29% 2.99°Vo 

Noncurrent loans and leases ..... ... ..... . 87.41 113.74 103.81 108.06 73.30 75 .23 113.19 112.43 142.97 126.79 81.17 

Noncurrent loans and leases plus 

other real estate to assets .............. ... 2 .51 1 .35 1.70 2 .15 3 .43 3.49 1 .61 1.35 1 .18 1 .49 3.45 

Equity capital ratio.. ........... ...... ......... .. 7 .52 9 .39 8 .21 7 .69 6 .62 6 .93 7 .60 7 .86 8.43 7.31 8 .18 

Core capital (leverage) ratio ................. 7.21 9.34 8.10 7.38 6 .17 6.69 7 .48 7.63 8 .36 7 .25 7.22 

Net loans and leases to deposits ...... .... 73.27 57 .20 64.73 76.10 80.85 78.10 72 .57 73.61 66.34 52.16 78 .18 

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 ........ ..... ... ... ... ..... ... ... .... 13.7 8 .5 11.4 17.6 35.1 16.4 12.3 10.0 7.9 11 .3 17.9 

Net interest income ...... .... .. .... .. ... ... ..... 9.5 12.8 13.9 14.6 24.2 11 . 1 13.7 10.8 5.5 12.8 2.3 

Net income .... .. ...... .. ... ... ......... .... ... .... 78.9 44.7 33.0 91.2 104.8 205.8 67 .2 21.2 27.1 77.0 80.1 

Noncurrent loans and leases plus 

other real estate owned .. ..... ... .... .. .... . -14.1 -12.7 - 4 .2 -16.9 3.4 -14.1 -22.0 -15.5 -19.9 - 34.6 -0.7 

Net charge-offs ...................... .... ... ...... - 22.2 -15.0 -11.0 -12.8 -12.4 -26.0 -31.5 10.5 -25.7 -47.3 -12.0 

Loan loss provision ..... .. ... ................... -24.3 -16.6 -8.4 -20.9 -7.2 -19.3 -38.5 1.4 -20.3 - 45.2 -36.0 

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°Yo 

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 6.72 

............................. 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 to assets ... ... 1991 2.99 1.62 2.07 2.81 3 .95 4.13 2.21 1.63 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 

6 
SAVINGS BANK PERFORMANCE - FIRST QUARTER, 1993 

• BIF-lnsured Savings Banks Earn $517 Million 

• Strong Earnings Improvements are Attributable to Lower Overhead Expense, 

Reduced Loss Provisions and Nonrecurring Gains 

• Holding Company Consolidations and Unassisted Acquisitions Shrink the Industry's Assets 

• Capital Levels Increase at the Remaining Savings Banks 

• No Savings Banks Fail During the Quarter For the First Time in 12 Quarters 

The 410 savings banks insured by the FDIC Bank Insurance Fund (BIF)1 turned in their fifth consecutive profitable 

quarter following three unprofitable years. Annualized 

return on assets averaged 1.01 percent, the highest 

profitability achieved by these institutions since they began reporting quarterly earnings in 1983. Earnings improvements were widespread, with eight of every ten institutions reporting higher earnings than in the first quarter 

of last year. Nearly 96 percent of firms in the industry 

made money during the quarter, up from 87 percent the 

previous quarter. 

First quarter 1993 net income of $517 million was 34 

percent higher than the $385 million earned the previous 

quarter. Improved profitability resulted from lower noninterest expenses, which were $181 million below the 

amount reported in the fourth quarter of 1992. The decline 

in noninterest expense is attributable to a variety of factors, including reduced write-offs of real estate owned and 

a drop in intangible assets and their associated amortization expenses. 

Higher nonrecurring extraordinary gains contributed $ 5 5 

million of the increase in earnings. A number of institutions 

benefited from Generally Accepted Accounting Principles 

(GAAP) accounting rule changes that permitted recognition 

of additional deferred tax assets. First quarter extraordinary gains amounted to $102 million and the industry's annualized return on assets excluding these gains 

was 0.81 percent. 

Lower loan-loss provisions, which amounted to $262 million in the first quarter, contributed $45 million to the 

bottom-line improvement. Troubled assets - past due and 

nonaccrual loans plus other real estate owned-declined 

slightly (by $174 million) at the remaining institutions and 

net charge-offs during the quarter of $264 million offset 

loan-loss provisions of $262 million. As a result, overall 

reserve coverage of troubled loans was unchanged compared with the previous quarter. Reserve coverage remains 

stronger at savings banks headquartered in New England 

than elsewhere in the Northeast. New England institutions 

hold 63 cents in reserve against each dollar of troubled 

loans whereas institutions elsewhere in the Northeast hold 

32 cents for each dollar of troubled assets. 

Record profit levels were realized despite lower net interest earnings and lower gains on securities sales compared 

with the previous quarter. Reductions in interest paid to 

depositors and other creditors did not match larger 

declines in interest earned on loans and other investments, 

reflecting a narrower spread between short-term and 

longer-term interest rates 

The industry continues to downsize through unassisted 

mergers and acquisitions. At the end of the first quarter, 

BIF-insured savings banks held $202.7 billion in assets, 

$1 2. 1 billion less than at the end of the previous quarter. 

Four BIF-insured institutions with $8.7 billion in assets 

were absorbed by BIF-insured commercial banks or thrifts 

insured by the FDIC Savings Association Insurance Fund 

(SAIF). 2 Total assets at the remaining savings banks 

shrank by $3.4 billion. Loans at these institutions fell almost $ 2.0 billion during the quarter, including a reduction 

of $1 .0 billion in mortgage loans secured by 1-4 family 

residential properties.3 

Shrinking assets, retained earnings and new capital issues 

all contributed to the significant improvement in the industry's capital ratio. The aggregate industry equity capital 

ratio reached 8 .27 percent of total assets, up from 7 .97 

percent the previous quarter. This is the highest industry 

ratio since 1963, when equity capital, which includes 

reserves held by mutual organizations, stood at 8.30 percent of assets. 

No BIF-insured institutions failed during the first 

quarter - this is the first time since the final quarter of 

1989 that no BIF-insured savings banks failed in a quarter. 

Both the number and assets of savings banks on the 

FDIC's "Problem list" declined for the third quarter in a 

row. Assets of "Problem" savings banks declined from 

$56.3 billion at the end of 1992 to $50 .2 billion as of 

March 31, 1993. This is the lowest amount of savings 

bank assets on the "Problem List" since year-end 1989, 

when assets held by "Problem" savings banks amounted 

to $47 .6 billion. 

The wide spread between short-term and longer-term interest rates and improving asset quality likely will continue 

to underwrite industry profitability for the remainder of 

1993 . Additional exits of savings banks through acquisitions -either assisted or unassisted-are likely to 

result in further industry shrinkage during the year. 

1 BIF-insured savings banks account for less than ten percent of all deposits insured by the FDIC Bank Insurance Fund. This analysis does 

not include SAIF member savings banks regulated by the FDIC or by the Office of Thrift Supervision. 

2 Includes the holding company consolidation of two New York City institutions -Home Savings of America, The Bowery Division, FSB 

and Home Savings of America, FSB-NY into Honie Savings of America, FSB, Irwindale, CA. The combined institution is not included in 

this analysis. 

3 Industry downsizing was caused in part by a transfer of approximately $2 .1 billion in assets and liabilities from OnBank, Syracuse, New 

York, to OnBank & Trust Company, Syracuse, New York, a commercial bank owned by the same bank holding company. This transfer 

reduced total loans in the industry by approximately $500 million. 

7 
Table I. Selected Indicators, Savings Banks Insured by the FDIC Bank Insurance Fund (BIF) 

1993* 1992* 1992 1991 1990 1989 1988 

Return on assets ..... ......... ........................ 1.01 % 0.32% 0.65% -0.56% -0.98% -0.27% 0.44% 

Equity capital to assets .......... .. ................. 8.27 7.09 7.95 6.67 6.62 7.06 7.44 

Noncurrent loans and leases plus 

other real estate owned to assets** ........ 4.35 5.59 4.37 6.02 5 .13 2.64 1 .51 

Noncurrent RE loans to total RE loans** ..... 3.29 5.28 3.95 5 .64 5.32 3 .14 1.67 

Asset growth rate ............. .... ................ .. . -14.28 -8.25 -9.49 -8.35 -7.46 -1.52 8.52 

Deposit growth rate .... .. .. .. ... .. ... ................ - 13.93 -5.82 -9.14 -5.68 -4.98 1.36 7 .90 

Number of institutions ..................... ......... 410 435 414 441 469 489 492 

Number of problem savings banks .............. 72 70 76 74 34 17 12 

Assets of problem savings banks (billions) .. $50.2 $72 .0 $56.3 $81.8 $67.2 $47.6 $47.4 

Number of failed savings banks ................ . 0 6 22 19 10 1 0 

• Through March 31 ; rates annualized where appropriate. Asset and deposit growth rates are for 12 months ending March 31 . 

• • Excludes Federally-chartered Savings Banks before 1990. 

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

(dollar figures in millions) 

Preliminary 

1st Qtr 4th Qtr 1st Qtr % Change 

1993 1992 1992 92:1-93:1 

Number of savings banks reporting ..... ..... ........... 410 414 435 -5.7 

Total employees (full-time equivalent) ....... .......... 61,084 63,467 67,798 -9.9 

CONDITION DA TA 

Total assets .. ... ................................................. $202,680 $214,761 $236,454 - 14.3 

Mortgage loans ................. ....... ............ ........... 115,064 123,615 139,362 -17.4 

1- 4 family residential ..... ............................... 82,178 88,200 95,522 -14.0 

Construction and land development.. ..... ... .. .. .. 2,769 3,062 4,493 -38.4 

Commercial and multi-family .......... ...... .. ....... 30,117 32,353 39,347 -23.5 

All other loans and leases ............. ....... ..... ....... 12,791 12,931 15,489 -17.4 

LESS: Reserves for losses ..... ........ .. ........... ... 2,292 2,389 3,135 -26.9 

LESS: Other contra accounts .... .. ... .. ..... ......... 360 384 549 -34.4 

Net loans and leases ............. .......... ........... ..... 125,203 133,772 151 ,168 -17.2 

Mortgage-backed securities ........ ......... ........... .. 17,634 17,772 20,608 -14.4 

Other real estate owned .......... .................. .... .. 3,755 4,054 4,933 -23.9 

Goodwill .................. .......... ....... ..................... 352 536 935 -62.4 

All other assets ........ ............. .... ...................... 55,737 58,626 58,810 -5.2 

Total liabilities and capital ........... .......... ..... ........ 202,680 214,761 236,454 -14.3 

Interest-bearing deposits .................................. 165,596 174,633 193,110 -14.2 

Noninterest-bearing deposits .......... ... ....... .. ...... 6,594 7,677 6,956 -5.2 

Other borrowed funds ... ..................... ....... ...... 11,888 13,376 16,648 -28.6 

Subordinated debt .................. ......................... 77 192 317 -75.9 

Other liabilities .. .............................................. 1,767 1,803 2,651 -33.3 

Equity capital ... ......... ..... ....... ....... .... ... ....... ..... 16,759 17,080 16,772 -0.1 

Loans and leases 30-89 days past-due .......... ...... 3,156 3,364 4,896 -35.5 

Noncurrent loans and leases ......................... ...... 5,029 5,320 8,290 -39.3 

Other noncurrent assets ................ ..................... 20 13 26 -24.1 

Direct and indirect investments in real estate ....... 459 474 797 -42.4 

Preliminary 

Full Year Full Year 1st Qtr 1st Qtr 

INCOME DATA 1992 1991 % Change 1993 1992 % Change 

Total interest income .. ................... $16,408 $20,206 -18.8 $3,626 $4,616 -21.4 

Total interest expense ... ... .. ............ 8,927 13,890 -35.7 1,746 2,784 -37.3 

Net interest income .......... ........... 7,481 6,316 18.5 1,880 1,832 2.6 

Provisions for losses ................. ..... 1,230 2,637 -53.4 262 376 -30.3 

Total noninterest income ........... ..... 1,306 1,238 5.5 361 318 13.6 

Total noninterest expense ...... ........ 5,670 6,185 -8.3 1,392 1,496 -7.0 

Securities gains (losses) .... .. .... ....... 357 297 20.2 77 114 -32.2 

Applicable income taxes ................. 918 443 107.4 250 222 12.9 

Extraordinary gains, net ...... ..... ...... 63 97 - 34.6 102 16 553.9 

Net income .............................. 1,390 (1,317) N/M 517 186 178.1 

Net charge-offs ......... ....... ............. 1,444 1,770 -30.4 264 418 -36.8 

N/M - Not meaningful 

8 
Table Ill. First Quarter 1993 Savings Bank Data (Dollar figures in billions, ratios in %) 

ASSET SIZE DISTRIBUTION GEOGRAPHIC DISTRIBUTION All 

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

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

Number of savings banks reporting .. ... ... .............. 410 1 21 242 47 308 88 14 

Total assets ....................................................... $202.7 $6.6 $76.3 $119.8 $98.7 $91.9 $12.0 

Total deposits ............................. ........ .. ............. 172.2 5.9 66.0 100.3 85.0 79.4 7.8 

Net income (in millions) ... .................................... 517 16 193 308 254 196 67 

Percentage of savings banks losing money ........... 4.2% 5.0% 3.7% 4.3% 3 .9% 5.7% O.Oo/c0 

Percentage of savings banks with earnings gains .. 80.0 80.2 81.8 70.2 82.1 76.1 57.1 

Performance Ratios 

Yield on earning assets .................... ... ................ 7.68% 7.96% 7.55% 7.75% 7 .66% 7.55% 9.07% 

Cost of funding earning assets ............................ 3.70 3.58 3.61 3.77 3 .64 3.68 4.42 

Net interest margin ............................................. 3.99 4.38 3.95 3.99 4.02 3.87 4.65 

Noninterest income to earning assets ................... 0.77 0.44 0.57 0.91 0.73 0.70 1.62 

Noninterest expense to earning assets ................. 2.95 3.14 2.91 2.96 3.23 2.63 3 .15 

Return on assets ...................................... .......... 1.01 0.94 1.00 1.03 1.03 0.84 2 .30 

Return on equity ............. .. .................. ... ... ...... .... 12 .51 11 .08 11 .94 12.99 13.17 10.68 18.32 

Net charge-offs to loans and leases ..................... 0.83 0 .30 0.41 1 .13 0.68 1.07 0.24 

Loan loss provision to net charge-offs .................. 99.28 162.18 137.28 89.44 87.80 102.07 297.08 

Condition Ratios 

Loss allowance to: 

Loans and leases ............. ......... ....................... 1 .80% 1.29% 1.64% 1.94% 1 .91 % 1 .74% 1.34% 

Noncurrent loans and leases ...... ....................... 45.57 57.41 56.44 40.93 63 .11 32.39 98.07 

Noncurrent loans and leases plus 

other real estate owned to assets ....... ... .... ... .. 4.35 2.66 3.67 4.97 3.86 5.45 1 .62 

Noncurrent RE loans to total RE loans .................. 3.29 2.21 2 .92 3.65 2.97 4.04 1.39 

Equity capital ratio.................... .......................... 8.27 8.62 8.54 8 .08 7.94 8.04 12.71 

Core capital (leverage) ratio .... ............................. 8.01 8.65 8.41 7.72 7.73 7.73 12.56 

Net loans and leases to deposits .......................... 72.71 73.83 71.75 73.28 74.11 69.33 91.91 

Growth Rates (year-to-year) 

Assets .............................................................. -14.3% 2.5% 1 .8% -2.0% -5.1% -23.9% 3.6% 

Equity capital .......................... ........................... -0.1 10.3 10.6 13.3 7. 1 -11 .4 37.4 

Net interest income ........... ................ ................. 2.6 18.0 14.5 13.4 8.1 -4.3 16.4 

Net income ........................................................ 178.1 159.0 110.2 48.1 401.3 108.5 62.0 

Net charge-offs .... ........................... ................... -36.8 -57.3 -40.6 3.4 -51.4 -19.8 -12.7 

Loan loss provision .............................. .. ......... .... -30.3 -30.3 -24.6 14.5 -53.6 -3.3 27.5 

Geographic Distribution: New England - Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, Vermont 

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

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

9 
Table IV. Full Year 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 FULL YEAR 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 

Total assets ................................. ...................... $214.8 $6.5 $75.8 $132.4 $99.6 $104.0 $11.2 

Total deposits ... .... ...... ...... ........ ................. ........ 182.3 5 .8 66.0 110.5 86.0 89.6 6.7 

Net income (in millions) ...... ...... ... ........................ 1,390 34 425 931 423 803 164 

Percentage of savings banks losing money .... .. ..... 12.3% 13.3% 11.2% 15.4% 14.0% 7.6% 7.1 % 

Percentage of savings banks with earnings gains .. 88 .6 89 .2 88.0 90.4 90.3 83.7 85.7 

Performance Ratios (annualized) 

Yield on earning assets ...... .. ........................ ....... 8 .33% 8.64% 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 

Noninterest income to earning assets ................... 0.66 0 .43 0.50 0.77 0.67 0 .56 1.65 

Noninterest expense to earning assets ........... ...... 2 .88 3 .19 3.01 2.79 3.32 2.45 3 .02 

Return on assets ...................... .... ...................... 0.65 0.53 0 .57 0.70 0.43 0 .77 1.52 

Return on equity........ ......................................... 8.53 6.45 7 .02 9.58 5.80 10.18 14.67 

Net charge-offs to loans and leases ..................... 1.05 0 .67 0 .72 1.26 1.17 1.01 0.35 

Loan loss provision to net charge-offs ........... .. ..... 85 .18 100.91 107.35 77.62 87.24 79.80 163.45 

Condition Ratios (year-to-year) 

Loss allowance to: 

Loans and leases ......................... ..................... 1.76% 1.26% 1.55% 1.91 % 1.91 % 1.68% 1.20% 

Noncurrent loans and leases ....... ....................... 44.91 51.40 56.34 40.87 60.65 33.45 86.69 

Noncurrent loans and leases plus 

other real estate owned to assets .............. .. .... 4 .37 2.77 3.33 5 .04 3 .95 5.03 1.89 

Noncurrent RE loans to total RE loans .... ........... .. . 3.95 2.40 2.75 4.72 3 .07 5 .09 1.40 

Equity capital ratio................................ .............. 7.95 8.39 8.35 7.70 7.63 7.79 12.34 

Core capital (leverage) ratio ........... ........... ........... 7.66 8.41 8.24 7.30 7.44 7.41 12.04 

Net loans and leases to deposits ............. .......... ... 73.38 73.68 71.58 74.43 74.20 70.08 107.00 

Growth Rates (year-to-year) 

Assets ................ ........ ........ ...... ...... ................ .. -9.5% 4.3% 5 .0% 2.8% -5.1% -14.0% -1.6% 

Equity capital ... ..... ........ ...... ........ ......... .. ............ 7 .9 8.1 9 .3 10.3 5 .9 6 .9 27.1 

Net interest income ..... ....................................... 18.5 25.7 24.1 26.9 20.5 17.3 12.1 

Net income ..... .... ............ .. ... .......... .................... N/M N/M N/M N/M N/M N/M 23.9 

Net charge-offs ......... .. ...... ........ ... ... ..... .............. -30.4 -31.9 -30.1 -5.0 - 37.7 -16.3 14.4 

Loan loss provision ...... .......................... ............. -53.4 -37.6 -37.7 - 42 .1 -48.4 -60.1 20.9 

N/M - Not meaningful 

Spread Between Short-Term and Long-Term Yields 

Yield 30-Year Treasury Bond Versus 3-Month Treasury Bill 

10% .------------------ ---------------~ 

Yield on 30-Year Treasury Bond 

... ·.·. ·..·.·.··:·:·:•:::.:·:•:·:•: .·.· ...,-~--..;,,.____.....,...,...,~ -'--'-'--'--........· ...;,,, · ,;..: ·· c:_ .·.. ·.:·::::::::::::::::::: :::: ::::::::::::::::::::::::::::::::::::::::: ..............................

······:.. < $pr¢ijcf 

/ # 

Yield on 3-Month Treasury Bill 

2 1989 1990 1990 1990 1990 1991 1991 1991 1991 1992 1992 1992 1992 1993 

40 10 20 30 40 10 20 30 40 10 20 30 40 10 

Quarterly Average Yield: 

1989 1990 1991 1992 1992 1992 1992 1993 

40 40 40 10 20 30 40 10 30-Year 

Treasury Bond 7.93 8.55 7.85 7.80 7.90 7.44 7.53 7.08 

3-Month 

Treasury Bill 7.65 6.99 4.54 3.91 3.68 3.08 3.07 2.96 

Spread 0.28 1.56 3.31 3.89 4.22 4.36 4.46 4.12 

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

1986-1993 

Number of Banks 

1,575 D Savings Banks 1,500 

I Commercial Banks 

1,000 

500 

0 

12/86 12/87 12/88 12/89 12/90 12/91 3/92 6/92 9/92 12/92 3/93 

Number of Problem Institutions: 

Savings Banks 27 16 12 17 34 74 70 88 84 76 72

Commercial Banks 1,457 1,559 1,394 1,092 1,012 1,016 981 956 909 787 671 

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

1986-1993 

$ Billions 

700 

609.8 607.4 

600 D Savings Banks 

500 I Commercial Banks 

400 

300 

200 

100 

0 

12/86 12/87 12/88 12/89 12/90 12/91 3/92 6/92 9/92 12/92 3/93 

Assets of Problem Institutions: 

Savings Banks 49.7 29.3 47.4 47.6 67.2 81.8 72.0 73.0 70.4 56.3 50.2 

Commercial Banks 285.8 329.2 304.8 187.9 341 .6 528.0 535.4 494.5 487.9 408.2 377.4 

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 Federallychartered 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-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. 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 n:,oney 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-bea ring balances due from depository institutions, federal funds sold and securities purchased under agreements to 

resell, trading-account assets and investment securities with rema ining 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. 

FDIC 

Federal Deposit Insurance Corporation 

Washington, DC 20429-9990 

OFFICIAL BUSINESS 

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MAIL 

Postage& 

Fees Paid 

FDIC 

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Attn: Chief Executive Officer