FDIC Quarterly 

Quarterly Banking Profile: 

Third Quarter 2007 

Feature Articles: 

The Case for Loan 

Modification 

Establishing Voluntary Excess 

Deposit Insurance: 

Results of the 2006 Study 

2007, Volume 1, Number 3 
The FDIC Quarterly is published by the Division of Insurance and Research of the Federal Deposit 

Insurance Corporation and contains a comprehensive summary of the most current financial results 

for the banking industry. Feature articles appearing in the FDIC Quarterly range from timely analysis of economic and banking trends at the national and regional level that may affect the risk exposure of FDIC-insured institutions to research on issues affecting the banking system and the 

development of regulatory policy. 

Single copy subscriptions of the FDIC Quarterly can be obtained through the FDIC Public 

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be sent to publicinfo@fdic.gov. Change of address information also should be submitted to the Public 

Information Center. 

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Chairman Sheila C. Bair 

Director, Division of Insurance Arthur J. Murton 

and Research 

Executive Editor Maureen E. Sweeney 

Managing Editors Richard A. Brown 

Diane L. Ellis 

Paul H. Kupiec 

Christopher J. Newbury 

Editors Kim E. Lowry 

Kathy Zeidler 

Publication Managers Geri Bonebrake 

Elena Johnson 

Lynne Montgomery 

Media Inquiries (202) 898-6993 
FDIC Quarterly 

2007, Volume 1, Number 3 

Quarterly Banking Profile: 

Third Quarter 2007 

FDIC-insured commercial banks and savings institutions reported net income of $28.7 billion for 

third quarter 2007, the lowest quarterly total since fourth quarter 2002. Quarterly loan loss 

provisions soared to a 20-year high, and market-related noninterest revenues declined. The average 

return-on-assets fell to 0.92 percent, the lowest quarterly average since fourth quarter 1992. 

See page 1. 

Insurance Fund Indicators 

Insured deposits increased 0.2 percent, and the Deposit Insurance Fund reserve ratio rose one basis 

point to 1.22 percent during third quarter 2007. One institution failed during the quarter. 

See page 14. 

Feature Articles: 

The Case for Loan Modification: With a Foreword by Sheila C. Bair, 

Chairman, Federal Deposit Insurance Corporation 

The combination of weakening in mortgage credit quality, upward pricing of hybrid adjustable-rate 

mortgages, falling home prices, and fewer refinancing options highlights the need to find a workable 

solution to current problems in the U.S. subprime mortgage market. This article describes a 

systematic and streamlined approach to loan modification that will help avert foreclosure for certain 

subprime borrowers who cannot afford to continue making mortgage payments when interest rates 

reset. The article also addresses common misconceptions about this approach. See page 22. 

Establishing Voluntary Excess Deposit Insurance: 

Results of the 2006 FDIC Study 

The Federal Deposit Insurance Reform Conforming Amendments Act of 2005 required the FDIC to 

study the feasibility of establishing a voluntary deposit insurance system for deposits in excess of the 

maximum amount of FDIC insurance. The study results were delivered to Congress in early 2006. 

This article describes market changes that have reduced the demand for excess deposit insurance and 

provided depositors with other options to protect excess deposits. However, if Congress were to 

decide the FDIC should play a role in providing excess deposit insurance, the article examines two 

possible approaches available to the Corporation. See page 30. 

The views expressed are those of the authors and do not necessarily reflect official positions of the Federal Deposit Insurance 

Corporation. Some of the information used in the preparation of this publication was obtained from publicly available 

sources that are considered reliable. However, the use of this information does not constitute an endorsement of its accuracy by the Federal Deposit Insurance Corporation. Articles may be reprinted or abstracted if the publication and author(s) 

are credited. Please provide the FDIC’s Division of Insurance and Research with a copy of any publications containing 

reprinted material. 
 

 

 

Quarterly Banking Profile Third Quarter 2007 

INSURED INSTITUTION PERFORMANCE 

Credit Quality Problems Drag Down Earnings 

Industry Net Income Falls to Four-Year Low 

Asset Growth Sets New Quarterly Record 

Net Interest Margins Register Slight Improvement 

Almost Half of All Institutions Report Lower Profits 

Rising levels of troubled loans in all major loan categories, 

but most notably in residential mortgage portfolios, led to a 

steep jump in expenses for bad loans in the third quarter. 

These higher costs, combined with sharply lower trading 

revenue, caused industry earnings to fall 24.7 percent from 

a year ago to $28.7 billion — the lowest level for industry 

earnings since the fourth quarter of 2002. This is the first 

time since 2003 that quarterly earnings have been below 

$30 billion. The industry’s return on assets (ROA) for the 

quarter was 0.92 percent, the lowest ROA since the fourth 

quarter of 1992. Slightly fewer than half of all insured 

institutions (48.5 percent) had ROAs of 1 percent or higher. A year ago, 54.4 percent of institutions attained this 

benchmark. The year-over-year decline in industry net 

income was fairly widespread; almost half of all institutions 

(49 percent) reported lower quarterly earnings compared to 

the third quarter of 2006. However, most of the decline 

was attributable to results at a relatively few large institutions. Ten institutions accounted for more than half of the 

decline in industry earnings. Net income in foreign offices 

fell by $4.3 billion, from a positive $2.0 billion in the third 

Chart 1 

quarter of 2006 to a negative $2.3 billion in the current 

quarter. 

Loss Provisions Surge to 20-Year High 

Loan-loss provisions totaled $16.6 billion, more than double the $7.5 billion insured institutions set aside for credit 

losses in the third quarter of 2006 and the largest quarterly 

loss provision for the industry since the second quarter of 

1987. Loss provisions absorbed 11 percent of net operating 

revenue (net interest income plus total noninterest 

income), the highest level since the fourth quarter of 2002. 

Noninterest income was $3.2 billion (5.1 percent) lower 

than in the third quarter of 2006; this is only the second 

time in the last 12 quarters that noninterest income has 

declined on a year-over-year basis. Revenue from trading 

was $2.8 billion (60.3 percent) lower than a year earlier. 

Sales of loans yielded a net loss of $139 million, compared 

to $2.3 billion in gains a year ago. This is the first time the 

industry has reported a net loss on loan sales since institutions first began reporting these data seven years ago. 

Gains on sales of securities and other assets declined by 

Chart 2 

-2.0 

2.0 

6.0 

10.0 

14.0 

18.0 

22.0 

26.0 

30.0 

34.0 

38.0 

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

$ Billions 

Securities and Other Gains/Losses, Net 

Net Operating Income 

2003 2004 2005 2006 2007 

29.5 30.2 30.4 31.1 31.8 31.2 32.5 31.1 

34.0 33.2 34.7 32.7 

36.9 38.0 38.1 

35.4 36.0 36.7 

28.7 

Industry Earnings Fall Below $30 Billion for the 

First Time Since 2003 

5.6 5.3 

-0.7 

9.2 

-3.2 

-8.0 

-4.0 

0.0 

4.0 

8.0 

12.0 

Increase in 

Net Interest 

Income 

Decrease in 

Noninterest 

Income 

Increase in 

Loan Loss 

Provision 

Decrease in 

Securities & 

Other Gains/ 

Losses 

Increase in 

Noninterest 

Expense 

Positive

Factor

Negative

Factors

3rd Quarter 2006 to 3rd Quarter 2007 

($ Billions) 

Net Interest Income Growth Was Among Few 

Positives for Industry Earnings 

FDIC QUARTERLY 1 2007, VOLUME 1, NO.3 
 

0

$698 million (80.8 percent) from a year earlier, to $166 million, the lowest level in seven years. Extraordinary items, 

which added $101 million to earnings a year ago, produced a 

net loss of $1.1 billion in the quarter. Noninterest expenses 

were $5.3 billion (6.5 percent) higher than in the third quarter of 2006. The magnitude of these downward pressures 

dwarfed improvements in net interest income, trust income 

and service charges on deposit accounts (up $5.6 billion, $1.3 

billion, and $721 million, respectively). 

Net Interest Income Registers Strong Growth 

The 6.5-percent increase in net interest income was the best 

year-over-year growth rate in five years. Interest-earning 

assets were up 7.5 percent from a year ago, and net interest 

margins (NIMs) were modestly higher than in the second 

quarter, thanks in part to a slightly steeper yield curve. The 

average NIM in the third quarter was 3.36 percent, up from 

3.34 percent in the second quarter, but lower than the 3.38 

percent average of a year ago. More than half of all institutions reported consecutive-quarter improvements in NIMs, 

but only 35 percent had year-over-year margin improvement. 

Overall, margins remain near 17-year lows. 

Loan Losses Are Higher in Most Loan Categories 

Net charge-offs totaled $10.7 billion, the largest quarterly 

amount since the fourth quarter of 2002. Loan losses in the 

third quarter were $3.6 billion (49.9 percent) higher than a 

Chart 3 

2.5 

3.0 

3.5 

4.0 

4.5 

5.0 

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

2003 2004 2005 2006 2007 

Assets > $100 Million 

Assets < $100 Million 

4.13 

3.35 

Net Interest Margin (%) 

Quarterly Net Interest Margins Improve 

Slightly 

year earlier, rising year-over-year for the third quarter in a 

row. Losses were up in most of the major loan categories. 

The largest increase occurred in loans to commercial and 

industrial (C&I) borrowers, where charge-offs were $796 million (91.4 percent) higher than a year earlier. Charge-offs of 

consumer loans other than credit cards had the second-largest 

increase, rising by $702 million (46.1 percent). Net chargeoffs of residential mortgage loans were up by $676 million 

(164.8 percent). Loss rates were significantly higher at larger 

institutions, where deterioration was most pronounced in residential mortgage loans. The quarterly loss rate on residential 

mortgage loans increased to 0.21 percent in the third quarter, 

from 0.08 percent a year earlier, at institutions with assets 

greater than $1 billion. The net charge-off rate on residential 

mortgages at smaller institutions increased from 0.05 percent 

to 0.09 percent. The net charge-off rate on all loans and 

leases rose from 0.44 percent to 0.62 percent at larger institutions, while at smaller institutions, the quarterly charge-off 

rate rose from 0.15 percent to 0.24 percent. 

Residential Real Estate Accounts for More than Half 

of the Increase in Noncurrent Loans 

Noncurrent loans and leases registered their largest quarterly 

increase in 20 years during the third quarter, rising by $16.0 

billion (23.8 percent). More than half of the increase consisted of residential real estate loans. Noncurrent residential 

mortgage loans increased by $7.5 billion (27.2 percent), 

while noncurrent home equity lines of credit rose by $783 

million (27.4 percent). Large increases in noncurrent loans 

Chart 4 

Loss Provisions Rose to a 20-Year High 

$ Billions 

17 

Loss Provisions Net Charge-offs 

9 

8 8 

7 7 7 

9 

8 

7 

6 

7 7 

9 

8 

10 

9 

6 6 

7 

6 

10 

8 8 

7 

11 

9 9 

8 

11 

0 

3/04 9/04 3/05 9/05 3/06 9/06 3/07 9/07 

FDIC QUARTERLY 2 2007, VOLUME 1, NO. 3 
 

Quarterly Banking Profile 

also occurred in real estate construction and development 

loans (up $3.6 billion, or 45.5 percent), real estate loans 

secured by nonfarm nonresidential properties (up $918 million, or 15.4 percent), and C&I loans (up $833 milllion, or 

10.4 percent). At the end of September, the total amount of 

loans and leases that were noncurrent stood at $83.0 billion, 

the highest level since the third quarter of 1992. The percentage of loans and leases that were noncurrent, which 

reached a 22-year low of 0.70 percent at midyear 2006, has 

risen in each of the five succeeding quarters. The noncurrent 

rate was 1.08 percent at the end of September, the highest 

level since the fourth quarter of 2003. 

Strong Reserve Growth Falls Short of the Increase in 

Noncurrent Loans 

The industry’s reserves for loan and lease losses increased by 

$5.7 billion (7.0 percent) during the quarter, as insured institutions added $5.9 billion more to reserves in loss provisions 

than was removed by charge-offs. The growth in reserves was 

the largest quarterly increase in 18 years and caused the 

industry’s ratio of reserves to total loans and leases to increase 

for the third quarter in a row. However, the increase in 

reserves failed to keep pace with the sharp rise in noncurrent 

loans. As a result, the industry’s “coverage ratio” declined 

from $1.21 in reserves for every $1.00 of noncurrent loans to 

$1.05 during the quarter — the lowest level for the coverage 

ratio since the third quarter of 1993. 

Chart 5 

Regulatory Capital Ratios Decline 

Equity capital grew by $48.1 billion (3.8 percent), the largest 

quarterly increase since the third quarter of 2004, as the 

industry’s equity-to-assets ratio rose from 10.43 percent to 

10.45 percent. A sizable share of the increase in equity capital came from merger-related goodwill, which grew by $22.2 

billion (6.8 percent). Unrealized losses on securities held for 

sale, which are deducted from equity capital, declined by $8.1 

billion (39.2 percent) during the quarter, providing an additional boost to capital. The industry’s tier 1 regulatory capital, which excludes goodwill and unrealized gains or losses on 

securities, increased by only $17.6 billion (1.8 percent), and 

the average core capital (leverage) ratio declined from 8.18 

percent to 8.14 percent during the quarter. The industry’s 

ratio of tier 1 capital to risk-weighted assets fell from 10.41 

percent to 10.24 percent, and the total risk-weighted capital 

ratio declined from 12.86 percent to 12.75 percent, both sixyear lows. At the end of the quarter, more than 99 percent of 

insured institutions met or exceeded the highest regulatory 

capital requirements. 

C&I Loan Growth Sets Another New Record 

Total assets increased by a record $446.3 billion (3.6 percent), eclipsing the previous quarterly high of $331.6 billion 

set in the first quarter of 2006. Loans and leases accounted 

for more than half of the increase, rising by $231.8 billion 

(3.1 percent). After increasing by a record $51.2 billion in 

Chart 6 

Growth in Noncurrent Loans Outpaces 

Reserve Growth 

$ Billions Coverage Ratio* (%) 

100 200 

Coverage Ratio (%) 180 

85 

160 

70 140 Loan-Loss Reserves ($) 

120 

55 

100 

40 80 

Noncurrent Loans ($) 

60 

25 

40 

10 20 

3/04 9/04 3/05 9/05 3/06 9/06 3/07 9/07 

*Loan-loss reserves to noncurrent loans. 

Troubled Mortgage Loans Surged in the 

Third Quarter 

$ Billions 

9.00 

Quarterly Net Charge-Offs 

Quarterly Change in Noncurrent Loans 

6.00 

3.00 

0.00 

-3.00 

3/04 6/04 9/04 12/04 3/05 6/05 9/05 12/05 3/06 6/06 9/06 12/06 3/07 6/07 9/07 

Note: Noncurrent loans = loans 90 days or more past due or in nonaccrual status. 

FDIC QUARTERLY 3 2007, VOLUME 1, NO.3 
 

 

Author: 

Author: 

the second quarter, C&I loan growth set a new record of 

$89.5 billion (6.9 percent) in the third quarter. Three large 

institutions accounted for more than half of the increase in 

C&I loans. Residential mortgage loans increased by $50.2 

billion (2.3 percent), the largest quarterly increase since the 

second quarter of 2006. Real estate construction and development loans increased by $16.0 billion (2.7 percent), the 

smallest quarterly increase since the second quarter of 2004. 

Despite the slowdown in construction loan growth, the number of insured institutions with concentrations of construction loans continued to increase. At the end of September, 

more than one in four institutions (27.4 percent) reported 

construction loan portfolios that exceeded their total capital. 

In addition to the growth in loans, assets in trading accounts 

increased by $78.6 billion (10.7 percent), and intangible 

assets rose by $25.2 billion (5.8 percent) during the quarter. 

Goodwill accounted for most of the growth in intangible 

assets. 

Nondeposit Borrowings Fund Bulk of Asset Growth 

Insured institutions increased their reliance on wholesale 

funding sources during the quarter, as domestic deposit 

growth did not keep pace with growth in assets. Deposits 

increased by $146.0 billion (1.8 percent), as domestic office 

deposits grew by $49.2 billion (0.7 percent), and deposits in 

foreign offices rose by $96.8 billion (7.2 percent). This 

growth in deposits represented less than a third of the growth 

in total assets during the quarter. The increase in domestic 

Chart 7 

deposits came from time deposits, which rose by $82.2 billion 

(3.3 percent), and from other interest-bearing deposits, which 

increased by $20.1 billion (0.7 percent). Noninterest-bearing 

deposits in domestic offices fell by $53.1 billion (4.5 percent). 

Federal Home Loan Bank (FHLB) advances filled a substantial share of the funding gap, rising by $161.8 billion (26.6 

percent) during the quarter. More than half of all insured 

institutions (59.2 percent) had FHLB advances at the end of 

September. Liabilities in trading accounts increased by $45.0 

billion (15.3 percent). 

“Problem List” Assets Decline 

The number of insured commercial banks and savings institutions reporting quarterly financial results declined from 8,615 

to 8,560 during the quarter. Forty-two new charters were 

added, while mergers absorbed 93 charters. One insured savings institution failed during the quarter. Two mutuallyowned savings institutions, with combined assets of $304 

million, converted to stock ownership. The number of institutions on the FDIC’s “Problem List” increased for the fourth 

quarter in a row, from 61 to 65, but the assets of “problem” 

institutions declined during the quarter, from $23.8 billion to 

$18.5 billion. 

Author: Ross Waldrop, Sr. Banking Analyst 

Division of Insurance and Research, FDIC 

(202) 898-3951 

Chart 8

The Noncurrent Rate on Construction Loans Has Been 

Rising from Historic Lows Percent Noncurrent 

16.0 

14.0 

12.0 

10.0 

8.0 

6.0 

4.0 

2.0 

0.0 

1991 1993 1995 1997 1999 2001 2003 2005 2007 

FHLB Borrowings Rose Sharply 

$ Billions 

900 

800 770 

700 

621 598 600 542 

500 480 453 436 451 

400 386 

300 281 

200 200 159 128 133

101 100 78 78 

0 12/91 12/93 12/95 12/97 12/99 12/01 12/03 12/05 9/07 

FDIC QUARTERLY 4 2007, VOLUME 1, NO. 3 
 

 

Quarterly Banking Profile 

TABLE I-A. Selected Indicators, All FDIC-Insured Institutions* 2007** 2006** 2006 2005 2004 2003 2002 

Return on assets (%) ................................................................ 1.11 1.33 1.28 1.28 1.28 1.38 1.30 

Return on equity (%) ................................................................. 10.52 12.87 12.31 12.43 13.20 15.05 14.08 

Core capital (leverage) ratio (%) ............................................... 8.14 8.29 8.23 8.25 8.11 7.88 7.86 

Noncurrent assets plus 

other real estate owned to assets (%) ................................... 0.73 0.50 0.53 0.50 0.53 0.75 0.90 

Net charge-offs to loans (%) ..................................................... 0.50 0.36 0.39 0.49 0.56 0.78 0.97 

Asset growth rate (%) ............................................................... 8.11 9.84 9.03 7.64 11.36 7.58 7.20 

Net interest margin (%) ............................................................. 3.32 3.43 3.31 3.47 3.52 3.73 3.96 

Net operating income growth (%) ............................................. -9.08 12.20 8.54 11.43 4.02 16.39 17.58 

Number of institutions reporting ................................................ 8,560 8,743 8,680 8,833 8,976 9,181 9,354 

Commercial banks ................................................................. 7,303 7,449 7,401 7,526 7,631 7,770 7,888 

Savings institutions ................................................................ 1,257 1,294 1,279 1,307 1,345 1,411 1,466 

Percentage of unprofitable institutions (%) ............................... 10.23 6.99 7.91 6.22 5.97 5.99 6.67 

Number of problem institutions ................................................. 65 47 50 52 80 116 136 

Assets of problem institutions (in billions) ................................. $19 $4 $8 $7 $28 $30 $39 

Number of failed/assisted institutions ....................................... 2 0 0 0 4 3 11 

* Excludes insured branches of foreign banks (IBAs). 

** Through September 30, ratios annualized where appropriate. Asset growth rates are for 12 months ending September 30. 

TABLE II-A. Aggregate Condition and Income Data, All FDIC-Insured Institutions 

(dollar figures in millions) 

Number of institutions reporting ........................................................................................ 

3rd Quarter 2nd Quarter 3rd Quarter %Change 

2007 2007 2006 06:3-07:3 

8,560 8,615 8,743 -2.1 

Total employees (full-time equivalent) .............................................................................. 

CONDITION DATA 

2,220,446 2,220,950 2,196,445 1.1 

Total assets .................................................................................................................. . .... $12,707,112 $12,260,815 $11,753,570 8.1 

Loans secured by real estate ........................................................................................ . 4,700,419 4,619,133 4,464,287 5.3 

1-4 Family residential mortgages ............................................................................... . 2,238,284 2,188,078 2,175,303 2.9 

Nonfarm nonresidential .............................................................................................. . 939,559 943,286 885,953 6.1 

Construction and development ................................................................................... 616,403 600,374 545,000 13.1 

Home equity lines ....................................................................................................... 591,360 576,684 554,890 6.6 

Commercial & industrial loans ....................................................................................... 1,389,545 1,300,007 1,180,769 17.7 

Loans to individuals ....................................................................................................... 1,013,337 980,884 954,854 6.1 

Credit cards ................................................................................................................ 384,540 373,951 383,143 0.4 

Farm loans ..................................................................................................................... 56,172 55,608 54,010 4.0 

Other loans & leases ..................................................................................................... 546,324 513,507 515,704 5.9 

Less: Unearned income ................................................................................................. . 2,237 3,068 2,235 0.1 

Total loans & leases ...................................................................................................... 7,703,559 7,466,070 7,167,388 7.5 

Less: Reserve for losses ............................................................................................... 86,935 81,222 77,841 11.7 

Net loans and leases ..................................................................................................... 7,616,624 7,384,848 7,089,548 7.4 

Securities ....................................................................................................................... 1,989,044 1,976,945 1,991,930 -0.1 

Other real estate owned ................................................................................................ 9,805 7,995 5,567 76.1 

Goodwill and other intangibles ...................................................................................... . 461,051 435,890 387,895 18.9 

All other assets .............................................................................................................. 2,630,588 2,455,138 2,278,631 15.4 

Total liabilities and capital ................................................................................................. 12,707,112 12,260,815 11,753,570 8.1 

Deposits ......................................................................................................................... 8,181,570 8,035,535 7,577,977 8.0 

Domestic office deposits ............................................................................................. . 6,741,161 6,691,951 6,474,123 4.1 

Foreign office deposits ............................................................................................... . 1,440,409 1,343,583 1,103,854 30.5 

Other borrowed funds .................................................................................................... 2,454,135 2,248,609 2,298,791 6.8 

Subordinated debt ......................................................................................................... 177,482 172,377 146,675 21.0 

All other liabilities ........................................................................................................... 566,607 525,086 506,258 11.9 

Equity capital ................................................................................................................. 1,327,318 1,279,208 1,223,868 8.5 

Loans and leases 30-89 days past due ............................................................................ 92,223 74,090 62,752 47.0 

Noncurrent loans and leases ............................................................................................ 82,960 66,995 52,538 57.9 

Restructured loans and leases ......................................................................................... 4,244 3,231 3,635 16.8 

Direct and indirect investments in real estate ................................................................... 1,101 1,080 1,119 -1.6 

Mortgage-backed securities ............................................................................................. . 1,199,186 1,217,987 1,208,741 -0.8 

Earning assets .................................................................................................................. 11,031,953 10,721,804 10,258,099 7.5 

FHLB Advances ................................................................................................................ 770,203 608,438 632,586 21.8 

Unused loan commitments ............................................................................................... 8,301,186 8,082,795 7,703,202 7.8 

Trust assets ...................................................................................................................... 21,501,189 20,748,637 18,064,588 19.0 

Assets securitized and sold*** .......................................................................................... 1,735,779 1,714,556 1,073,059 61.8 

Notional amount of derivatives*** ..................................................................................... 173,374,162 153,825,754 127,107,293 36.4 

INCOME DATA 

First Three First Three 3rd Quarter 3rd Quarter %Change 

Qtrs 2007 Qtrs 2006 %Change 2007 2006 06:3-07:3 

Total interest income .................................................................................. 

Total interest expense ................................................................................ 

Net interest income .................................................................................. 

Provision for loan and lease losses ............................................................ 

Total noninterest income ............................................................................ 

Total noninterest expense .......................................................................... 

Securities gains (losses) ............................................................................. 

Applicable income taxes ............................................................................. 

Extraordinary gains, net .............................................................................. 

Net income .............................................................................................. 

Net charge-offs ........................................................................................... 

Cash dividends ........................................................................................... 

Retained earnings ...................................................................................... 

Net operating income ............................................................................. 

$542,980 $485,113 11.9 $188,431 $171,599 9.8 

278,779 231,185 20.6 97,193 85,956 13.1 

264,201 253,928 4.1 91,238 85,643 6.5 

37,085 19,858 86.8 16,637 7,481 122.4 

187,279 185,971 0.7 59,400 62,618 -5.1 

265,996 254,815 4.4 91,029 85,692 6.2 

2,439 1,815 34.4 166 864 -80.8 

48,187 54,788 -12.1 13,391 17,986 -25.6 

-1,918 569 N/M -1,079 101 N/M 

100,732 112,823 -10.7 28,669 38,067 -24.7 

27,922 18,649 49.7 10,702 7,138 49.9 

94,393 60,396 56.3 27,868 19,910 40.0 

6,339 52,427 -87.9 800 18,156 -95.6

101,015 111,101 -9.1 29,661 37,428 -20.8 

*** Call Report filers only. N/M - Not Meaningful 

FDIC QUARTERLY 5 2007, VOLUME 1, NO.3 
TABLE III-A. Third Quarter 2007, All FDIC-Insured Institutions 

THIRD QUARTER 

(The way it is...) 

Number of institutions reporting ............................. 

All Insured 

Institutions 

Asset Concentration Groups* 

Credit Card 

Banks 

International 

Banks 

Agricultural 

Banks 

Commercial 

Lenders 

Mortgage 

Lenders 

Consumer 

Lenders 

Other 

Specialized 

<$1 Billion 

All Other 

<$1 Billion 

All Other 

>$1 Billion 

8,560 28 4 1,634 4,739 781 120 377 820 57 

Commercial banks .............................................. 7,303 25 4 1,630 4,259 169 95 332 747 42 

Savings institutions ............................................. 1,257 3 0 4 480 612 25 45 73 15 

Total assets (in billions) ......................................... $12,707.1 $423.6 $2,644.0 $157.3 $5,055.9 $1,454.2 $95.8 $40.1 $111.4 $2,724.9 

Commercial banks .............................................. 10,792.7 411.7 2,644.0 156.9 4,584.1 254.2 46.0 32.1 94.8 2,568.8 

Savings institutions ............................................. 1,914.4 11.8 0.0 0.4 471.8 1,199.9 49.8 8.1 16.5 156.1 

Total deposits (in billions) ...................................... 8,181.6 122.4 1,597.8 127.4 3,567.7 848.0 73.2 28.5 91.0 1,725.6 

Commercial banks .............................................. 7,011.5 120.6 1,597.8 127.1 3,265.5 113.4 32.9 23.0 78.0 1,653.2 

Savings institutions ............................................. 1,170.0 1.8 0.0 0.3 302.2 734.6 40.3 5.5 13.0 72.4 

Net income (in millions) .......................................... 28,669 4,137 4,454 510 12,160 1,133 275 223 295 5,483 

Commercial banks .............................................. 27,270 4,055 4,454 509 11,230 518 198 151 267 5,887 

Savings institutions ............................................. 

Performance Ratios (annualized,%) 

1,399 82 0 1 929 614 77 72 28 -404 

Yield on earning assets .......................................... 6.95 13.37 6.53 7.27 7.10 6.64 7.77 5.69 6.62 6.30 

Cost of funding earning assets .............................. 3.58 4.62 3.76 3.27 3.41 4.02 3.27 2.55 2.90 3.42 

Net interest margin .............................................. 3.36 8.75 2.77 4.00 3.68 2.61 4.50 3.14 3.72 2.88 

Noninterest income to assets ................................. 1.91 11.24 1.93 0.71 1.42 0.91 2.31 9.43 1.05 1.84 

Noninterest expense to assets ............................... 2.92 9.04 2.71 2.65 2.82 2.08 3.45 8.73 3.04 2.72 

Loan and lease loss provision to assets ................ 0.53 3.42 0.63 0.16 0.33 0.75 1.38 0.11 0.15 0.27 

Net operating income to assets ............................. 0.95 3.67 0.65 1.31 1.07 0.32 1.11 2.21 1.03 0.88 

Pretax return on assets .......................................... 1.35 6.09 0.99 1.56 1.42 0.47 1.76 3.40 1.31 1.24 

Return on assets .................................................... 0.92 3.98 0.69 1.31 0.98 0.32 1.17 2.23 1.07 0.83 

Return on equity ..................................................... 8.81 16.76 8.91 11.64 9.06 3.30 10.86 11.48 9.31 7.82 

Net charge-offs to loans and leases ...................... 0.57 3.98 0.77 0.26 0.30 0.42 1.05 0.32 0.22 0.42 

Loan and lease loss provision to net charge-offs ... 155.45 116.99 181.85 90.34 158.22 252.07 164.92 136.68 125.56 122.56 

Efficiency ratio ........................................................ 58.37 46.61 62.25 60.12 59.01 62.00 49.98 70.30 67.70 58.96 

% of unprofitable institutions .................................. 10.90 7.14 0.00 3.67 12.77 13.96 9.17 24.40 5.98 8.77 

% of institutions with earnings gains ...................... 

Structural Changes 

49.47 64.29 75.00 61.08 46.78 38.16 43.33 46.42 54.39 49.12 

New Charters ...................................................... 42 0 0 1 7 2 0 31 1 0 

Institutions absorbed by mergers ........................ 93 0 0 8 70 2 1 0 1 11 

Failed Institutions ................................................ 

PRIOR THIRD QUARTERS 

(The way it was...) 

1 0 0 0 0 0 0 0 0 1 

Return on assets (%) ................................... 2006 1.31 4.09 0.92 1.30 1.32 1.06 1.60 2.12 1.07 1.35

 ............................. 2004 1.33 4.10 0.86 1.33 1.34 1.15 1.16 1.53 1.18 1.34

 ............................. 2002 1.34 3.76 0.65 1.38 1.31 1.36 1.18 1.60 1.20 1.51 

Net charge-offs to loans and leases (%) ..... 2006 0.40 3.86 0.64 0.15 0.19 0.18 1.21 0.12 0.17 0.23

 ............................. 2004 0.51 4.24 0.89 0.20 0.28 0.10 1.10 0.27 0.26 0.26

 ............................. 2002 0.98 5.35 2.17 0.30 0.68 0.15 1.29 0.42 0.34 0.86 

* See Table IV-A (page 8) for explanations. 

FDIC QUARTERLY 6 2007, VOLUME 1, NO. 3 
 

Quarterly Banking Profile 

TABLE III-A. Third Quarter 2007, All FDIC-Insured Institutions 

THIRD QUARTER 

(The way it is...) 

Number of institutions reporting ............................. 

All 

Insured 

Institutions 

Asset Size Distribution Geographic Regions* 

Less 

than 

$100 Million 

$100 Million 

to 

$1 Billion 

$1 Billion 

to 

$10 Billion 

Greater 

than $10 

Billion New York Atlanta Chicago 

Kansas 

City Dallas 

San 

Francisco 

8,560 3,513 4,392 539 116 1,047 1,214 1,794 1,990 1,740 775 

Commercial banks ............................................... 7,303 3,131 3,673 415 84 547 1,069 1,479 1,885 1,618 705 

Savings institutions .............................................. 1,257 382 719 124 32 500 145 315 105 122 70 

Total assets (in billions) .......................................... $12,707.1 $186.0 $1,296.8 $1,408.3 $9,816.0 $2,381.6 $3,197.1 $2,796.5 $931.6 $659.5 $2,740.9 

Commercial banks ............................................... 10,792.7 166.5 1,050.3 1,100.1 8,475.8 1,710.3 2,920.1 2,641.0 891.8 542.4 2,087.0 

Savings institutions .............................................. 1,914.4 19.5 246.5 308.2 1,340.2 671.2 277.0 155.4 39.8 117.1 653.9 

Total deposits (in billions) ....................................... 8,181.6 151.2 1,036.0 1,009.6 5,984.8 1,470.4 2,064.2 1,786.9 661.4 492.6 1,706.0 

Commercial banks ............................................... 7,011.5 136.5 850.4 793.0 5,231.7 1,024.5 1,901.2 1,675.8 633.3 422.2 1,354.6 

Savings institutions .............................................. 1,170.0 14.7 185.5 216.7 753.1 445.9 163.0 111.2 28.1 70.4 351.4 

Net income (in millions) .......................................... 28,669 369 3,328 3,904 21,068 4,828 6,083 6,348 3,758 1,866 5,784 

Commercial banks ............................................... 27,270 357 2,932 3,433 20,547 4,686 6,424 6,228 3,709 1,606 4,616 

Savings institutions .............................................. 

Performance Ratios (annualized,%) 

1,399 12 396 470 521 142 -341 120 49 260 1,168 

Yield on earning assets .......................................... 6.95 7.18 7.28 7.21 6.86 6.96 6.62 6.54 7.71 7.35 7.39 

Cost of funding earning assets ............................... 3.58 3.05 3.38 3.48 3.64 3.55 3.52 3.54 3.45 3.41 3.82 

Net interest margin .............................................. 3.36 4.13 3.90 3.73 3.22 3.41 3.10 3.00 4.26 3.94 3.56 

Noninterest income to assets ................................. 1.91 1.45 1.11 1.61 2.07 2.18 1.47 1.78 3.35 1.40 1.95 

Noninterest expense to assets ............................... 2.92 4.00 3.09 2.92 2.88 3.23 2.49 2.72 4.09 3.17 2.91 

Loan and lease loss provision to assets ................. 0.53 0.23 0.25 0.35 0.60 0.63 0.39 0.38 0.58 0.28 0.83 

Net operating income to assets .............................. 0.95 0.79 1.02 1.18 0.91 0.90 0.87 0.90 1.58 1.13 0.90 

Pretax return on assets .......................................... 1.35 1.04 1.37 1.68 1.31 1.21 1.18 1.32 2.45 1.52 1.29 

Return on assets .................................................... 0.92 0.80 1.04 1.12 0.88 0.84 0.77 0.91 1.63 1.15 0.87 

Return on equity ..................................................... 8.81 5.87 9.86 9.92 8.57 6.77 7.61 10.17 16.16 11.13 8.08 

Net charge-offs to loans and leases ...................... 0.57 0.24 0.24 0.35 0.66 0.93 0.28 0.43 0.74 0.29 0.72 

Loan and lease loss provision to net charge-offs ... 155.45 147.01 150.43 144.22 156.84 117.69 224.79 156.68 111.67 146.13 179.52 

Efficiency ratio ........................................................ 58.37 75.52 65.38 57.19 57.27 57.11 59.01 60.68 56.58 63.19 56.47 

% of unprofitable institutions .................................. 10.90 17.31 6.31 5.94 13.79 15.19 16.06 10.76 6.63 7.01 17.03 

% of institutions with earnings gains ...................... 

Structural Changes 

49.47 49.33 49.93 48.42 41.38 42.60 39.21 47.71 53.62 58.33 48.39 

New Charters ...................................................... 42 40 1 1 0 2 18 5 3 3 11 

Institutions absorbed by mergers ........................ 93 27 45 12 9 29 20 15 13 11 5 

Failed Institutions ................................................ 

PRIOR THIRD QUARTERS 

(The way it was...) 

1 0 0 1 0 0 1 0 0 0 0 

Return on assets (%) .................................... 2006 1.31 1.02 1.23 1.27 1.33 1.13 1.37 1.01 1.79 1.22 1.82

 ............................. 2004 1.33 1.08 1.22 1.47 1.33 1.13 1.46 1.21 1.49 1.46 1.67

 ............................. 2002 1.34 1.11 1.23 1.54 1.33 1.10 1.38 1.29 1.64 1.44 1.75 

Net charge-offs to loans and leases (%) ...... 2006 0.40 0.16 0.14 0.20 0.49 0.63 0.18 0.27 0.46 0.23 0.62

 ............................. 2004 0.51 0.25 0.22 0.34 0.60 0.73 0.26 0.43 0.61 0.30 0.54

 ............................. 2002 0.98 0.31 0.36 0.76 1.21 1.51 0.73 0.80 1.15 0.42 0.77 

* See Table IV-A (page 9) for explanations. 

FDIC QUARTERLY 7 2007, VOLUME 1, NO.3 
TABLE IV-A. First Three Quarters 2007, All FDIC-Insured Institutions 

FIRST THREE QUARTERS 

(The way it is...) 

Number of institutions reporting .............................. 

All Insured 

Institutions 

Asset Concentration Groups* 

Credit Card 

Banks 

International 

Banks 

Agricultural 

Banks 

Commercial 

Lenders 

Mortgage 

Lenders 

Consumer 

Lenders 

Other 

Specialized 

<$1 Billion 

All Other 

<$1 Billion 

All Other 

>$1 Billion 

8,560 28 4 1,634 4,739 781 120 377 820 57 

Commercial banks ............................................... 7,303 25 4 1,630 4,259 169 95 332 747 42 

Savings institutions .............................................. 1,257 3 0 4 480 612 25 45 73 15 

Total assets (in billions) .......................................... $12,707.1 $423.6 $2,644.0 $157.3 $5,055.9 $1,454.2 $95.8 $40.1 $111.4 $2,724.9 

Commercial banks ............................................... 10,792.7 411.7 2,644.0 156.9 4,584.1 254.2 46.0 32.1 94.8 2,568.8 

Savings institutions .............................................. 1,914.4 11.8 0.0 0.4 471.8 1,199.9 49.8 8.1 16.5 156.1 

Total deposits (in billions) ....................................... 8,181.6 122.4 1,597.8 127.4 3,567.7 848.0 73.2 28.5 91.0 1,725.6 

Commercial banks ............................................... 7,011.5 120.6 1,597.8 127.1 3,265.5 113.4 32.9 23.0 78.0 1,653.2 

Savings institutions .............................................. 1,170.0 1.8 0.0 0.3 302.2 734.6 40.3 5.5 13.0 72.4 

Net income (in millions) .......................................... 100,732 11,649 16,190 1,432 39,953 7,557 962 715 860 21,416 

Commercial banks ............................................... 90,184 11,030 16,190 1,429 36,870 1,700 699 481 788 20,996 

Savings institutions .............................................. 

Performance Ratios (annualized,%) 

10,549 618 0 3 3,083 5,856 263 234 73 419 

Yield on earning assets .......................................... 6.83 13.23 6.28 7.15 7.02 6.59 7.23 5.53 6.51 6.16 

Cost of funding earning assets ............................... 3.50 4.80 3.68 3.19 3.35 3.93 2.99 2.47 2.84 3.29 

Net interest margin .............................................. 3.32 8.43 2.60 3.96 3.67 2.66 4.24 3.06 3.67 2.88 

Noninterest income to assets ................................. 2.05 10.31 2.31 0.68 1.51 0.99 1.93 9.44 1.01 2.10 

Noninterest expense to assets ............................... 2.92 8.36 2.84 2.66 2.84 2.05 2.92 8.59 3.01 2.66 

Loan and lease loss provision to assets ................. 0.41 3.10 0.45 0.15 0.27 0.38 0.91 0.08 0.11 0.22 

Net operating income to assets .............................. 1.11 3.47 0.85 1.26 1.14 0.65 1.38 2.35 1.01 1.12 

Pretax return on assets ........................................... 1.63 5.81 1.26 1.50 1.59 1.11 2.14 3.55 1.29 1.67 

Return on assets ..................................................... 1.11 3.74 0.87 1.25 1.08 0.73 1.40 2.39 1.04 1.11 

Return on equity ..................................................... 10.52 15.63 11.25 11.32 10.11 7.44 13.75 12.34 9.16 10.30 

Net charge-offs to loans and leases ....................... 0.50 3.90 0.65 0.19 0.28 0.29 0.98 0.29 0.17 0.35 

Loan and lease loss provision to net charge-offs ... 132.82 108.79 155.91 123.18 137.62 188.45 118.75 119.97 117.12 118.18 

Efficiency ratio ........................................................ 57.33 46.06 61.90 61.10 58.41 58.87 47.98 69.94 68.34 56.16 

% of unprofitable institutions ................................... 10.23 10.71 0.00 2.63 12.20 13.06 8.33 24.67 5.37 5.26 

% of institutions with earnings gains ....................... 

Condition Ratios (%) 

49.50 57.14 75.00 57.34 50.12 30.99 44.17 43.50 51.10 49.12 

Earning assets to total assets ................................. 

Loss Allowance to: 

86.82 77.67 84.04 91.57 88.28 91.46 91.71 88.48 91.79 85.07 

Loans and leases ................................................ 1.13 3.99 1.23 1.31 1.14 0.61 1.12 1.35 1.18 0.74 

Noncurrent loans and leases ............................... 

Noncurrent assets plus 

104.79 216.17 117.12 127.52 113.24 45.93 179.85 142.44 126.60 77.38 

other real estate owned to assets ........................... 0.73 1.34 0.51 0.81 0.81 1.09 0.53 0.27 0.64 0.53 

Equity capital ratio .................................................. 10.45 23.07 7.78 11.32 10.85 9.44 11.89 19.58 11.58 10.56 

Core capital (leverage) ratio ................................... 8.14 15.18 6.23 10.46 8.45 7.87 9.53 18.01 11.21 8.10 

Tier 1 risk-based capital ratio .................................. 10.22 13.53 8.19 13.85 9.64 12.82 11.46 40.05 18.41 10.83 

Total risk-based capital ratio ................................... 12.75 16.33 11.93 14.92 11.84 14.48 13.04 41.13 19.55 13.37 

Net loans and leases to deposits ............................ 93.09 242.65 74.20 82.47 97.76 120.12 104.10 33.82 68.72 79.64 

Net loans to total assets ......................................... 59.94 70.12 44.84 66.80 68.99 70.05 79.47 24.02 56.13 50.43 

Domestic deposits to total assets ........................... 

Structural Changes 

53.05 26.31 26.39 81.01 67.29 58.23 75.24 68.84 81.69 50.08 

New Charters ....................................................... 131 1 0 4 32 4 0 89 1 0 

Institutions absorbed by mergers ........................ 247 1 0 22 191 8 2 2 3 18 

Failed Institutions ................................................. 

PRIOR FIRST THREE QUARTERS 

(The way it was...) 

2 0 0 0 0 1 0 0 0 1 

Number of institutions ................................... 2006 8,743 29 4 1,691 4,710 845 125 398 886 55

 ................................. 2004 9,024 35 6 1,783 4,385 1,000 136 458 1,138 83

 ................................ 2002 9,415 41 5 1,877 4,081 1,159 206 453 1,495 98 

Total assets (in billions) ................................ 2006 $11,753.6 $382.0 $2,128.5 $151.5 $4,673.2 $1,790.4 $107.1 $42.3 $117.4 $2,361.2

 ................................. 2004 9,877.2 367.9 1,565.9 137.7 3,195.3 1,405.2 211.7 54.0 147.6 2,791.9

 ................................ 2002 8,272.8 291.0 1,232.2 124.7 3,394.2 1,279.5 168.3 49.0 192.5 1,541.3 

Return on assets (%) .................................... 2006 1.33 4.42 1.03 1.29 1.32 1.07 1.69 1.33 1.07 1.31

 ................................. 2004 1.29 3.90 0.89 1.28 1.33 1.20 0.82 1.47 1.14 1.23

 ................................ 2002 1.34 3.55 0.85 1.31 1.30 1.34 1.40 1.39 1.19 1.40 

Net charge-offs to loans & leases (%) ......... 2006 0.36 3.38 0.59 0.14 0.18 0.14 1.00 0.53 0.17 0.20

 ................................ 2004 0.55 4.69 1.05 0.17 0.29 0.11 0.94 0.46 0.26 0.25

 ................................ 2002 

Noncurrent assets plus 

0.97 6.07 1.78 0.26 0.67 0.16 1.12 0.47 0.30 0.86 

OREO to assets (%) ................................. 2006 0.50 1.35 0.40 0.67 0.51 0.52 0.65 0.20 0.52 0.37

 ................................. 2004 0.57 1.30 0.69 0.77 0.55 0.59 0.63 0.30 0.63 0.40

 ................................ 2002 0.92 1.61 1.28 0.93 0.88 0.68 1.34 0.36 0.70 0.80 

Equity capital ratio (%) ................................. 2006 10.41 27.18 7.82 10.94 10.39 10.54 9.76 22.46 11.11 9.73

 ................................. 2004 10.13 20.78 7.27 10.87 10.40 8.74 13.62 16.95 10.93 10.25

 ................................ 2002 9.22 15.39 7.26 11.04 9.53 8.81 7.78 16.73 10.89 8.87 

*Asset Concentration Group Definitions (Groups are hierarchical and mutually exclusive): 

Credit-card Lenders - Institutions whose credit-card loans plus securitized receivables exceed 50 percent of total assets plus securitized receivables. 

International Banks - Banks with assets greater than $10 billion and more than 25 percent of total assets in foreign offices. 

Agricultural Banks - Banks whose agricultural production loans plus real estate loans secured by farmland exceed 25 percent of their total loans and leases. 

Commercial Lenders - Institutions whose commercial and industrial loans, plus real estate construction and development loans, plus loans 

secured by commercial real estate properties exceed 25 percent of total assets. 

Mortgage Lenders - Institutions whose residential mortgage loans, plus mortgage-backed securities, exceed 50 percent of total assets. 

Consumer Lenders - Institutions whose residential mortgage loans, plus credit-card loans, plus other loans to individuals, exceed 50 percent of total assets. 

Other Specialized < $1 Billion - Institutions with assets less than $1 billion, whose loans and leases are less than 40 percent of total assets. 

All Other < $1 billion - Institutions with assets less than $1 billion that do not meet any of the definitions above, they have significant lending 

activity with no identified asset concentrations. 

All Other > $1 billion - Institutions with assets greater than $1 billion that do not meet any of the definitions above, they have significant lending 

activity with no identified asset concentrations. 

FDIC QUARTERLY 8 2007, VOLUME 1, NO. 3 
 

Quarterly Banking Profile 

TABLE IV-A. First Three Quarters 2007, All FDIC-Insured Institutions 

FIRST THREE QUARTERS 

(The way it is...) 

Number of institutions reporting ............................. 

All 

Insured 

Institutions 

Asset Size Distribution Geographic Regions* 

Less 

than $100 

Million 

$100 Million 

to 

$1 Billion 

$1 Billion 

to 

$10 Billion 

Greater 

than $10 

Billion New York Atlanta Chicago 

Kansas 

City Dallas 

San 

Francisco 

8,560 3,513 4,392 539 116 1,047 1,214 1,794 1,990 1,740 775 

Commercial banks ............................................... 7,303 3,131 3,673 415 84 547 1,069 1,479 1,885 1,618 705 

Savings institutions .............................................. 1,257 382 719 124 32 500 145 315 105 122 70 

Total assets (in billions) .......................................... $12,707.1 $186.0 $1,296.8 $1,408.3 $9,816.0 $2,381.6 $3,197.1 $2,796.5 $931.6 $659.5 $2,740.9 

Commercial banks ............................................... 10,792.7 166.5 1,050.3 1,100.1 8,475.8 1,710.3 2,920.1 2,641.0 891.8 542.4 2,087.0 

Savings institutions .............................................. 1,914.4 19.5 246.5 308.2 1,340.2 671.2 277.0 155.4 39.8 117.1 653.9 

Total deposits (in billions) ....................................... 8,181.6 151.2 1,036.0 1,009.6 5,984.8 1,470.4 2,064.2 1,786.9 661.4 492.6 1,706.0 

Commercial banks ............................................... 7,011.5 136.5 850.4 793.0 5,231.7 1,024.5 1,901.2 1,675.8 633.3 422.2 1,354.6 

Savings institutions .............................................. 1,170.0 14.7 185.5 216.7 753.1 445.9 163.0 111.2 28.1 70.4 351.4 

Net income (in millions) .......................................... 100,732 1,159 10,078 11,051 78,444 16,257 24,756 20,963 10,937 5,538 22,280 

Commercial banks ............................................... 90,184 1,118 8,777 9,429 70,859 14,017 24,150 20,346 10,760 4,729 16,182 

Savings institutions .............................................. 

Performance Ratios (annualized,%) 

10,549 42 1,300 1,621 7,585 2,240 606 617 178 810 6,098 

Yield on earning assets .......................................... 6.83 7.00 7.17 7.10 6.73 6.80 6.54 6.36 7.62 7.23 7.31 

Cost of funding earning assets ............................... 3.50 2.93 3.29 3.39 3.57 3.46 3.45 3.48 3.29 3.33 3.76 

Net interest margin .............................................. 3.32 4.07 3.87 3.71 3.17 3.34 3.09 2.88 4.33 3.90 3.55 

Noninterest income to assets ................................. 2.05 1.35 1.12 1.58 2.26 2.17 1.72 2.08 3.42 1.40 2.03 

Noninterest expense to assets ............................... 2.92 3.82 3.09 2.93 2.88 3.05 2.55 2.81 4.19 3.16 2.86 

Loan and lease loss provision to assets ................. 0.41 0.18 0.20 0.31 0.45 0.56 0.24 0.28 0.61 0.22 0.58 

Net operating income to assets .............................. 1.11 0.84 1.05 1.16 1.11 0.98 1.09 1.01 1.62 1.15 1.16 

Pretax return on assets .......................................... 1.63 1.10 1.42 1.63 1.67 1.44 1.61 1.49 2.40 1.53 1.74 

Return on assets .................................................... 1.11 0.85 1.06 1.08 1.12 0.97 1.07 1.02 1.63 1.16 1.16 

Return on equity ..................................................... 10.52 6.19 10.16 9.58 10.82 7.80 10.43 11.36 15.79 11.32 10.65 

Net charge-offs to loans and leases ....................... 0.50 0.18 0.18 0.35 0.59 0.87 0.25 0.37 0.66 0.23 0.64 

Loan and lease loss provision to net charge-offs ... 132.82 164.51 155.94 130.27 131.72 112.92 154.07 139.58 129.22 150.80 140.47 

Efficiency ratio ........................................................ 57.33 74.75 65.42 57.90 55.88 56.60 56.86 60.13 56.99 63.53 54.50 

% of unprofitable institutions .................................. 10.23 16.99 5.71 3.90 6.03 15.00 15.32 9.36 5.53 7.18 16.77 

% of institutions with earnings gains ...................... 

Condition Ratios (%) 

49.50 49.25 50.27 46.75 40.52 38.11 43.33 45.48 53.12 58.79 53.68 

Earning assets to total assets ................................ 

Loss Allowance to: 

86.82 91.95 92.02 90.80 85.46 86.35 86.23 86.88 86.03 89.99 87.34 

Loans and leases ................................................ 1.13 1.29 1.16 1.20 1.11 1.41 0.93 1.20 1.19 1.10 1.06 

Noncurrent loans and leases ............................... 

Noncurrent assets plus 

104.79 115.62 111.81 113.31 102.07 128.01 119.76 97.79 81.87 112.11 92.39 

other real estate owned to assets .......................... 0.73 0.87 0.89 0.83 0.69 0.66 0.54 0.78 1.19 0.77 0.80 

Equity capital ratio .................................................. 10.45 13.69 10.57 11.39 10.23 12.41 10.16 9.09 10.14 10.40 10.58 

Core capital (leverage) ratio ................................... 8.14 13.53 10.07 9.58 7.56 9.01 7.26 7.37 8.26 8.88 9.01 

Tier 1 risk-based capital ratio ................................. 10.22 19.65 13.36 12.16 9.38 12.20 8.97 8.87 9.64 11.87 11.48 

Total risk-based capital ratio .................................. 12.75 20.70 14.47 13.43 12.29 14.15 11.42 11.80 12.28 13.25 14.35 

Net loans and leases to deposits ........................... 93.09 77.06 87.23 94.80 94.23 90.38 93.86 86.34 98.07 86.29 101.63 

Net loans to total assets ......................................... 59.94 62.64 69.69 67.96 57.45 55.80 60.60 55.17 69.62 64.46 63.26 

Domestic deposits to total assets ........................... 

Structural Changes 

53.05 81.28 79.78 71.08 46.40 53.20 56.69 51.43 64.58 74.06 41.36 

New Charters ...................................................... 131 124 5 2 0 14 40 12 7 24 34 

Institutions absorbed by mergers ........................ 247 84 128 26 9 62 40 44 36 40 25 

Failed Institutions ................................................ 

PRIOR FIRST THREE QUARTERS 

(The way it was...) 

2 1 0 1 0 1 1 0 0 0 0 

Number of institutions ................................... 2006 8,743 3,731 4,369 523 120 1,097 1,232 1,848 2,027 1,767 772

 ................................ 2004 9,024 4,204 4,223 480 117 1,136 1,223 1,968 2,104 1,840 753

 ................................ 2002 9,415 4,809 4,059 441 106 1,222 1,249 2,067 2,180 1,910 787 

Total assets (in billions) ................................ 2006 $11,753.6 $194.2 $1,283.5 $1,422.5 $8,853.4 $2,962.9 $2,928.6 $2,736.1 $814.5 $644.3 $1,667.3

 ................................ 2004 9,877.2 217.7 1,177.3 1,326.4 7,155.9 3,403.0 2,104.7 1,745.7 763.1 588.8 1,271.9

 ................................ 2002 8,272.8 243.9 1,113.3 1,256.3 5,659.4 2,826.3 1,667.5 1,561.3 429.8 569.2 1,218.7 

Return on assets (%) .................................... 2006 1.33 1.01 1.20 1.30 1.36 1.24 1.34 1.07 1.68 1.27 1.77

 ................................ 2004 1.29 1.02 1.19 1.48 1.28 1.14 1.40 1.13 1.51 1.35 1.61

 ................................ 2002 1.34 1.05 1.18 1.45 1.36 1.17 1.36 1.32 1.59 1.42 1.60 

Net charge-offs to loans & leases (%) .......... 2006 0.36 0.14 0.14 0.19 0.43 0.56 0.16 0.24 0.39 0.20 0.56

 ................................ 2004 0.55 0.22 0.23 0.35 0.66 0.81 0.31 0.36 0.75 0.26 0.60

 ................................ 2002 

Noncurrent assets plus 

0.97 0.28 0.33 0.74 1.19 1.48 0.69 0.77 1.19 0.40 0.79 

OREO to assets (%) .................................. 2006 0.50 0.72 0.57 0.46 0.49 0.43 0.31 0.54 0.89 0.62 0.63

 ................................ 2004 0.57 0.82 0.61 0.53 0.56 0.56 0.39 0.68 0.61 0.65 0.66

 ................................ 2002 0.92 0.87 0.75 0.73 1.00 1.05 0.79 1.04 0.87 0.84 0.72 

Equity capital ratio (%) .................................. 2006 10.41 13.04 10.46 11.00 10.25 11.13 9.76 9.03 11.18 10.36 12.20

 ................................ 2004 10.13 11.94 10.20 10.83 9.94 10.16 8.45 10.47 10.52 10.17 12.14

 ................................ 2002 9.22 11.42 10.05 10.08 8.78 8.92 9.42 8.62 10.32 9.76 9.79 

* Regions: 

New York - Connecticut, Delaware, District of Columbia, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Puerto Rico, 

Rhode Island, Vermont, U.S. Virgin Islands 

Atlanta - Alabama, Florida, Georgia, North Carolina, South Carolina, Virginia, West Virginia 

Chicago - Illinois, Indiana, Kentucky, Michigan, Ohio, Wisconsin 

Kansas City - Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota 

Dallas - Arkansas, Colorado, Louisiana, Mississippi, New Mexico, Oklahoma, Tennessee, Texas 

San Francisco - Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon, Pacific Islands, Utah, Washington, Wyoming 

FDIC QUARTERLY 9 2007, VOLUME 1, NO.3 
TABLE V-A. Loan Performance, All FDIC-Insured Institutions 

September 30, 2007 All Insured 

Institutions 

Asset Concentration Groups* 

Credit Card 

Banks 

International 

Banks 

Agricultural 

Banks 

Commercial 

Lenders 

Mortgage 

Lenders 

Consumer 

Lenders 

Other 

Specialized 

<$1 Billion 

All Other 

<$1 Billion 

All Other 

>$1 Billion 

Percent of Loans 30-89 Days Past Due 

All loans secured by real estate ......................................... 1.27 3.14 1.82 1.13 1.05 1.63 0.66 1.10 1.52 1.19 

Construction and development ....................................... 1.37 0.00 0.61 2.19 1.30 3.34 1.73 1.35 1.41 1.18 

Nonfarm nonresidential ................................................... 0.62 0.00 0.41 1.00 0.65 0.81 0.50 0.62 1.22 0.35 

Multifamily residential real estate .................................... 0.43 0.00 0.07 0.88 0.53 0.26 0.06 2.21 0.96 0.36 

Home equity loans .......................................................... 0.91 2.46 0.89 0.68 0.74 1.21 0.65 0.52 0.86 0.97 

Other 1-4 family residential ............................................. 1.71 5.59 2.48 1.75 1.47 1.76 0.64 1.28 1.76 1.56 

Commercial and industrial loans ........................................ 0.65 2.65 0.53 1.61 0.65 0.93 0.94 1.65 1.52 0.44 

Loans to individuals ............................................................ 1.99 2.31 2.48 2.09 1.65 1.30 1.62 1.82 2.14 1.66 

Credit card loans ............................................................. 2.42 2.31 3.36 0.98 2.06 2.09 1.26 3.54 1.08 2.14 

Other loans to individuals ................................................ 1.72 2.29 2.08 2.16 1.59 0.75 1.73 1.67 2.18 1.56 

All other loans and leases (including farm) ........................ 0.52 0.12 0.66 0.53 0.58 0.41 0.10 0.85 0.51 0.31 

Total loans and leases ....................................................... 

Percent of Loans Noncurrent** 

1.20 2.22 1.41 1.11 0.99 1.60 1.16 1.28 1.53 1.01 

All real estate loans ............................................................ 1.27 2.48 1.44 1.15 1.19 1.36 0.39 0.94 0.98 1.32 

Construction and development ....................................... 1.85 0.00 1.10 3.03 1.84 2.70 0.75 2.76 2.01 1.57 

Nonfarm nonresidential ................................................... 0.73 0.00 0.56 1.33 0.73 0.85 0.64 0.94 1.26 0.59 

Multifamily residential real estate .................................... 0.68 0.00 0.38 1.10 0.85 0.44 0.02 1.17 1.33 0.42 

Home equity loans .......................................................... 0.62 1.56 0.53 0.40 0.48 0.97 0.17 0.12 0.71 0.64 

Other 1-4 family residential ............................................. 1.57 5.71 1.91 0.90 1.48 1.45 0.51 0.72 0.80 1.81 

Commercial and industrial loans ........................................ 0.64 1.96 0.33 1.33 0.69 0.94 0.74 2.01 1.15 0.59 

Loans to individuals ............................................................ 1.18 1.96 1.62 0.71 0.67 0.85 0.82 0.55 0.67 0.52 

Credit card loans ............................................................. 1.93 1.99 2.18 0.71 1.49 1.73 1.14 1.21 0.80 1.87 

Other loans to individuals ................................................ 0.73 1.78 1.37 0.71 0.56 0.23 0.72 0.49 0.66 0.23 

All other loans and leases (including farm) ........................ 0.44 0.03 0.61 0.64 0.39 1.01 0.04 0.38 0.61 0.27 

Total loans and leases ....................................................... 

Percent of Loans Charged-off (net, YTD) 

1.08 1.85 1.05 1.02 1.01 1.33 0.62 0.95 0.93 0.96 

All real estate loans ............................................................ 0.16 1.55 0.29 0.06 0.14 0.17 0.09 0.06 0.06 0.11 

Construction and development ....................................... 0.20 0.00 0.03 0.23 0.20 0.40 0.11 0.12 0.24 0.12 

Nonfarm nonresidential ................................................... 0.07 0.00 0.03 0.08 0.08 0.03 0.01 0.05 0.06 0.02 

Multifamily residential real estate .................................... 0.10 0.00 -0.02 0.02 0.15 0.01 0.06 0.06 0.05 0.03 

Home equity loans .......................................................... 0.34 1.78 0.38 0.04 0.27 0.55 0.15 0.01 0.04 0.31 

Other 1-4 family residential ............................................. 0.14 1.04 0.32 0.08 0.14 0.13 0.06 0.06 0.06 0.07 

Commercial and industrial loans ........................................ 0.43 4.51 0.10 0.68 0.40 0.38 2.76 0.39 0.40 0.37 

Loans to individuals ............................................................ 2.42 4.16 2.78 0.60 1.15 3.53 1.54 0.76 0.59 1.52 

Credit card loans ............................................................. 4.09 4.19 3.48 2.31 3.51 7.42 3.00 4.30 1.88 3.91 

Other loans to individuals ................................................ 1.38 3.94 2.47 0.49 0.81 0.46 1.07 0.42 0.54 1.01 

All other loans and leases (including farm) ........................ 0.18 0.00 0.06 0.00 0.30 0.41 0.05 0.98 0.00 0.20 

Total loans and leases ....................................................... 

Loans Outstanding (in billions) 

0.50 3.90 0.65 0.19 0.28 0.29 0.98 0.29 0.17 0.35 

All real estate loans ............................................................ $4,700.4 $1.8 $473.1 $59.2 $2,338.6 $965.1 $31.7 $6.0 $44.5 $780.6 

Construction and development ....................................... 616.4 0.0 9.5 5.8 517.5 25.0 0.9 0.5 3.0 54.3 

Nonfarm nonresidential ................................................... 939.6 0.0 24.7 16.1 738.8 36.6 2.0 1.7 10.4 109.3 

Multifamily residential real estate .................................... 192.8 0.0 11.7 1.0 115.5 47.7 0.3 0.1 0.8 15.6 

Home equity loans .......................................................... 591.4 1.4 92.8 1.1 209.9 102.0 11.4 0.2 1.7 171.0 

Other 1-4 family residential ............................................. 2,238.3 0.4 285.4 15.6 717.6 753.0 17.0 3.3 25.6 420.4 

Commercial and industrial loans ........................................ 1,389.5 33.0 306.7 14.9 723.3 18.9 3.6 1.2 6.4 281.5 

Loans to individuals ............................................................ 1,013.3 255.6 214.4 6.7 270.6 36.0 40.1 1.8 7.8 180.3 

Credit card loans ............................................................. 384.5 226.4 66.7 0.4 34.5 14.8 9.4 0.1 0.3 31.9 

Other loans to individuals ................................................ 628.8 29.2 147.7 6.3 236.0 21.3 30.7 1.6 7.6 148.4 

All other loans and leases (including farm) ........................ 602.5 19.0 206.7 25.6 196.9 5.0 1.7 0.8 4.6 142.2 

Total loans and leases ....................................................... 

Memo: Other Real Estate Owned (in millions) 

7,705.8 309.3 1,200.9 106.5 3,529.4 1,024.9 77.1 9.8 63.3 1,384.6 

All other real estate owned .............................................. 9,804.8 -15.1 891.1 187.5 5,153.3 2,174.7 23.7 13.3 126.3 1,250.0 

Construction and development ....................................... 1,489.0 0.0 0.0 53.3 1,277.6 107.1 0.8 0.9 17.6 31.7 

Nonfarm nonresidential ................................................... 1,362.2 0.0 6.0 60.3 1,096.5 69.6 5.2 8.0 47.3 69.2 

Multifamily residential real estate .................................... 318.7 0.0 0.0 3.6 275.0 14.7 0.2 0.0 8.9 16.4 

1-4 family residential ....................................................... 5,342.2 1.0 397.1 45.1 2,218.9 1,965.0 17.5 4.4 48.6 644.6 

Farmland ......................................................................... 67.8 0.0 0.0 25.0 38.3 0.2 0.1 0.0 3.7 0.6 

* See Table IV-A (page 8) for explanations. 

** 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. 

FDIC QUARTERLY 10 2007, VOLUME 1, NO. 3 
 

Quarterly Banking Profile 

TABLE V-A. Loan Performance, All FDIC-Insured Institutions 

September 30, 2007 

All 

Insured 

Institutions 

Asset Size Distribution Geographic Regions* 

Less 

than 

$100 Million 

$100 Million 

to 

$1 Billion 

$1 Billion 

to 

$10 Billion 

Greater 

than $10 

Billion New York Atlanta Chicago 

Kansas 

City Dallas 

San 

Francisco 

Percent of Loans 30-89 Days Past Due 

All loans secured by real estate ............................. 1.27 1.44 1.09 0.87 1.40 0.96 1.16 1.40 1.07 1.25 1.62 

Construction and development ........................... 1.37 1.41 1.44 1.18 1.44 1.39 1.14 1.87 1.60 0.99 1.38 

Nonfarm nonresidential ....................................... 0.62 1.14 0.82 0.56 0.52 0.69 0.48 0.87 0.68 0.72 0.34 

Multifamily residential real estate ........................ 0.43 0.84 0.73 0.53 0.32 0.27 0.34 1.00 0.77 0.88 0.24 

Home equity loans .............................................. 0.91 0.86 0.83 0.70 0.94 0.70 0.99 0.80 1.03 0.62 1.04 

Other 1-4 family residential ................................. 1.71 1.95 1.27 1.07 1.85 1.10 1.54 1.85 1.25 2.16 2.31 

Commercial and industrial loans ............................ 0.65 1.50 1.15 0.86 0.55 0.94 0.35 0.71 0.98 0.82 0.55 

Loans to individuals ............................................... 1.99 2.47 1.76 1.99 2.00 2.09 1.70 1.71 2.15 1.53 2.28 

Credit card loans ................................................. 2.42 1.89 2.32 2.23 2.44 2.26 2.76 2.06 2.21 1.20 2.95 

Other loans to individuals ................................... 1.72 2.47 1.72 1.86 1.70 1.82 1.57 1.59 2.11 1.60 1.83 

All other loans and leases (including farm) ............ 0.52 0.63 0.48 0.58 0.52 0.98 0.25 0.82 0.50 0.74 0.13 

Total loans and leases ........................................... 

Percent of Loans Noncurrent** 

1.20 1.44 1.11 0.95 1.25 1.19 1.00 1.22 1.16 1.18 1.42 

All real estate loans ............................................... 1.27 1.14 1.09 1.17 1.33 1.02 0.93 1.68 1.99 1.12 1.29 

Construction and development ........................... 1.85 1.72 2.11 1.88 1.71 2.35 1.58 2.50 1.96 1.22 1.71 

Nonfarm nonresidential ....................................... 0.73 1.21 0.85 0.72 0.66 1.01 0.47 1.09 0.79 0.66 0.36 

Multifamily residential real estate ........................ 0.68 0.91 0.99 1.21 0.44 0.36 0.59 2.08 0.72 1.35 0.29 

Home equity loans .............................................. 0.62 0.60 0.49 0.50 0.63 0.46 0.70 0.57 0.59 0.25 0.71 

Other 1-4 family residential ................................. 1.57 1.04 0.83 1.29 1.71 0.97 1.01 2.21 3.73 1.65 1.70 

Commercial and industrial loans ............................ 0.64 1.42 1.09 0.77 0.56 1.18 0.42 0.60 0.82 0.72 0.47 

Loans to individuals ............................................... 1.18 0.90 0.57 0.88 1.25 1.56 0.72 0.81 0.94 0.54 1.55 

Credit card loans ................................................. 1.93 0.91 1.19 1.73 1.95 2.10 1.98 1.58 1.64 1.01 1.98 

Other loans to individuals ................................... 0.73 0.90 0.52 0.43 0.77 0.69 0.56 0.55 0.40 0.44 1.25 

All other loans and leases (including farm) ............ 0.44 0.72 0.55 0.39 0.43 0.18 0.25 0.54 0.30 0.68 0.78 

Total loans and leases ........................................... 

Percent of Loans Charged-off (net, YTD) 

1.08 1.11 1.04 1.06 1.09 1.10 0.78 1.23 1.45 0.98 1.14 

All real estate loans ............................................... 0.16 0.08 0.09 0.14 0.18 0.07 0.13 0.25 0.19 0.10 0.19 

Construction and development ........................... 0.20 0.19 0.19 0.22 0.19 0.19 0.20 0.28 0.18 0.14 0.13 

Nonfarm nonresidential ....................................... 0.07 0.07 0.06 0.09 0.06 0.06 0.05 0.12 0.04 0.06 0.06 

Multifamily residential real estate ........................ 0.10 0.12 0.11 0.31 0.02 0.01 0.30 0.24 0.02 0.19 0.02 

Home equity loans .............................................. 0.34 0.13 0.10 0.22 0.37 0.18 0.31 0.34 0.50 0.20 0.43 

Other 1-4 family residential ................................. 0.14 0.08 0.08 0.08 0.16 0.06 0.08 0.28 0.15 0.07 0.20 

Commercial and industrial loans ............................ 0.43 0.47 0.40 0.51 0.42 0.93 0.25 0.27 0.84 0.30 0.36 

Loans to individuals ............................................... 2.42 0.52 0.91 2.03 2.57 3.28 1.13 1.42 2.67 1.06 3.25 

Credit card loans ................................................. 4.09 2.80 5.17 3.67 4.11 4.23 3.92 3.34 3.88 2.73 4.42 

Other loans to individuals ................................... 1.38 0.48 0.59 1.23 1.48 1.64 0.72 0.75 1.61 0.67 2.52 

All other loans and leases (including farm) ............ 0.18 0.15 0.20 0.31 0.17 0.22 0.28 0.13 0.11 0.37 0.10 

Total loans and leases ........................................... 

Loans Outstanding (in billions) 

0.50 0.18 0.18 0.35 0.59 0.87 0.25 0.37 0.66 0.23 0.64 

All real estate loans ............................................... $4,700.4 $78.9 $708.7 $704.7 $3,208.1 $791.7 $1,295.1 $881.4 $375.1 $298.7 $1,058.3 

Construction and development ........................... 616.4 11.0 145.8 162.5 297.0 63.2 202.0 125.7 50.4 79.6 95.5 

Nonfarm nonresidential ....................................... 939.6 22.1 239.8 228.1 449.6 175.0 245.4 200.1 85.2 89.1 144.8 

Multifamily residential real estate ........................ 192.8 1.8 27.0 40.9 123.0 46.1 28.1 29.9 8.7 6.4 73.6 

Home equity loans .............................................. 591.4 2.5 33.1 41.2 514.4 57.5 184.8 151.6 74.1 19.7 103.6 

Other 1-4 family residential ................................. 2,238.3 32.0 236.3 218.8 1,751.2 445.8 615.5 358.0 138.9 94.0 586.1 

Commercial and industrial loans ............................ 1,389.5 17.0 120.3 150.7 1,101.5 196.2 331.9 350.8 117.5 74.1 319.0 

Loans to individuals ............................................... 1,013.3 9.3 49.7 78.1 876.3 272.3 179.6 171.6 96.5 39.6 253.7 

Credit card loans ................................................. 384.5 0.1 3.6 27.1 353.7 168.9 20.7 43.7 42.2 7.2 101.8 

Other loans to individuals ................................... 628.8 9.1 46.1 50.9 522.6 103.4 158.9 127.8 54.3 32.4 152.0 

All other loans and leases (including farm) ............ 602.5 12.9 36.2 35.8 517.6 88.0 149.4 157.9 67.3 17.5 122.3 

Total loans and leases ........................................... 

Memo: Other Real Estate Owned (in millions) 

7,705.8 118.1 914.8 969.4 5,703.5 1,348.2 1,956.0 1,561.7 656.5 430.0 1,753.4 

All other real estate owned .................................... 9,804.8 306.4 2,057.5 1,400.4 6,040.5 791.3 2,198.4 2,433.1 1,510.9 891.8 1,979.3 

Construction and development ........................... 1,489.0 48.5 688.5 480.2 271.8 143.0 490.7 256.9 225.1 265.7 107.5 

Nonfarm nonresidential ....................................... 1,362.2 99.3 622.5 285.1 355.3 156.2 319.2 363.9 217.3 241.2 64.4 

Multifamily residential real estate ........................ 318.7 10.3 72.1 91.7 144.6 27.1 148.6 83.3 15.0 25.4 19.3 

1-4 family residential ........................................... 5,342.2 135.5 636.7 532.1 4,037.8 439.5 1,191.9 1,187.6 553.8 306.5 1,663.0 

Farmland ............................................................. 67.8 12.7 34.1 8.6 12.5 12.7 5.1 5.0 11.5 31.8 1.7 

* See Table IV-A (page 9) for explanations. 

** 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. 

FDIC QUARTERLY 11 2007, VOLUME 1, NO.3 
 

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TABLE VI-A. Derivatives, All FDIC-Insured Commercial Banks and State-Chartered Savings Banks 

(dollar figures in millions; 

notional amounts unless otherwise indicated) 

3rd Quarter 2nd Quarter 1st Quarter 4th Quarter 3rd Quarter %Change 

2007 2007 2007 2006 2006 06:3-07:3 

Asset Size Distribution 

$100 Million $1 Billion 

Less than to to Greater than 

$100 Million $1 Billion $10 Billion $10 Billion 

ALL DERIVATIVE HOLDERS 

Number of institutions reporting derivatives ................................. 1,025 1,058 1,056 1,014 1,014 1.1 66 618 262 79 

Total assets of institutions reporting derivatives ........................... $9,460,401 $9,147,069 $8,872,062 $8,834,491 $8,411,745 12.5 $4,813 $269,166 $804,948 $8,381,474 

Total deposits of institutions reporting derivatives ........................... 6,031,943 5,900,334 5,750,636 5,751,266 5,431,479 11.1 3,788 212,908 580,996 5,234,251 

Total derivatives ..................................................................... 

Derivative Contracts by Underlying Risk Exposure 

173,374,162 153,825,754 144,243,311 132,182,732 127,107,293 36.4 128 18,050 193,153 173,162,830 

Interest rate .......................................................................... 138,789,184 123,340,590 116,751,419 107,434,665 103,199,181 34.5 117 17,477 86,265 138,685,325 

Foreign exchange* .................................................................. 16,696,567 15,117,713 14,167,853 12,564,160 12,226,802 36.6 0 125 5,808 16,690,633 

Equity ................................................................................. 2,873,509 2,638,709 2,317,769 2,270,942 2,218,658 29.5 12 228 100,716 2,772,553 

Commodity & other (excluding credit derivatives) ........................... 1,025,685 951,725 840,505 893,310 1,558,264 -34.2 0 2 141 1,025,543 

Credit ................................................................................... 13,989,217 11,777,017 10,165,765 9,019,655 7,904,389 77.0 0 218 223 13,988,776 

Total ................................................................................... 

Derivative Contracts by Transaction Type 

173,374,162 153,825,754 144,243,311 132,182,732 127,107,293 36.4 128 18,050 193,153 173,162,830 

Swaps ................................................................................... 111,410,085 95,320,189 88,006,970 81,339,865 77,556,008 43.7 58 9,948 62,861 111,337,218 

Futures & forwards ................................................................. 17,202,716 16,198,682 15,307,492 14,881,758 14,482,709 18.8 23 1,772 17,641 17,183,280 

Purchased options ................................................................. 14,652,412 14,377,620 14,816,440 12,944,893 13,301,484 10.2 5 3,730 106,954 14,541,723 

Written options ....................................................................... 15,033,435 14,842,430 14,667,326 13,332,489 12,945,812 16.1 41 2,272 4,825 15,026,296 

Total ................................................................................... 

Fair Value of Derivative Contracts 

158,298,648 140,738,921 132,798,228 122,499,005 118,286,013 33.8 128 17,723 192,280 158,088,517 

Interest rate contracts .............................................................. 30,717 20,025 24,447 23,299 22,720 35.2 0 21 106 30,590 

Foreign exchange contracts ...................................................... 3,119 5,661 74,088 5,324 4,144 -24.7 0 0 -19 3,138 

Equity contracts ....................................................................... -20,872 -24,713 -18,845 -17,845 -13,526 54.3 1 11 37 -20,921 

Commodity & other (excluding credit derivatives) ........................... 1,664 1,946 22,530 2,658 2,562 -35.1 0 0 0 1,664 

Credit derivatives as guarantor ................................................... -104,120 -22,960 9,032 31,583 14,670 N/M 0 0 -8 -104,112 

Credit derivatives as beneficiary ................................................ 

Derivative Contracts by Maturity** 

110,905 23,824 -9,668 -32,745 -14,819 N/M 0 0 6 110,899 

Interest rate contracts ........................................... < 1 year 48,916,897 39,403,802 32,457,725 29,551,704 26,615,376 83.8 19 2,308 25,896 48,888,674

 ............................ 1-5 years 36,310,944 33,846,133 33,802,189 31,385,640 30,872,442 17.6 17 10,078 25,894 36,274,955

 ............................ > 5 years 27,875,202 24,588,177 24,684,533 23,273,618 22,518,236 23.8 41 2,694 28,253 27,844,214 

Foreign exchange contracts ................................... < 1 year 10,094,603 8,948,450 8,372,488 7,690,210 6,687,566 50.9 0 9 4,307 10,090,288

 ............................ 1-5 years 1,831,220 1,667,700 1,571,241 1,415,846 1,573,062 16.4 0 4 17 1,831,200

 ............................ > 5 years 718,390 676,071 624,415 592,897 767,427 -6.4 0 3 10 718,377 

Equity contracts ................................................... < 1 year 464,820 442,652 397,237 341,346 333,262 39.5 1 20 153 464,647

 ............................ 1-5 years 330,227 283,520 236,563 220,856 296,151 11.5 5 91 410 329,722

 ............................ > 5 years 95,900 62,916 74,332 44,858 53,988 77.6 0 0 37 95,863 

Commodity & other contracts .................................. < 1 year 278,442 280,133 271,647 235,107 496,634 -43.9 0 0 101 278,341

 ............................ 1-5 years 308,298 261,410 200,458 272,314 274,378 12.4 0 1 29 308,267

 ............................ > 5 years 

Risk-Based Capital: Credit Equivalent Amount 

27,617 27,273 23,931 21,581 14,486 90.6 0 0 0 27,617 

Total current exposure to tier 1 capital (%) .................................... 38.0 30.7 28.3 29.2 28.6 0.4 0.2 1.4 44.2 

Total potential future exposure to tier 1 capital (%) ........................ 115.1 113.4 106.8 97.7 99.0 0.2 0.4 0.9 134.1 

Total exposure (credit equivalent amount) to tier 1 capital (%) ......... 153.1 144.1 135.1 126.9 127.6 0.6 0.6 2.3 178.3 

Credit losses on derivatives*** ................................................ 

HELD FOR TRADING 

126.0 6.0 -3.0 -25.0 -19.0 N/M 0.0 2.0 0.0 124.0 

Number of institutions reporting derivatives ................................. 158 167 155 147 147 7.5 7 44 54 53 

Total assets of institutions reporting derivatives ........................... 7,977,228 7,783,774 7,387,988 7,223,405 6,927,469 15.2 487 19,956 239,558 7,717,226 

Total deposits of institutions reporting derivatives ........................... 

Derivative Contracts by Underlying Risk Exposure 

5,082,751 4,923,927 4,770,607 4,712,089 4,435,616 14.6 379 15,964 165,978 4,900,430 

Interest rate .......................................................................... 136,068,933 120,820,776 114,003,892 104,692,154 100,300,237 35.7 8 239 29,179 136,039,507 

Foreign exchange .................................................................... 15,489,462 13,683,371 12,769,131 11,788,161 11,207,226 38.2 0 12 4,860 15,484,590 

Equity ................................................................................... 2,767,663 2,622,872 2,313,326 2,266,778 2,214,881 25.0 0 3 416 2,767,244 

Commodity & other ................................................................. 1,024,998 951,236 840,237 893,087 1,558,095 -34.2 0 0 90 1,024,907 

Total ................................................................................... 

Trading Revenues: Cash & Derivative Instruments 

155,351,056 138,078,255 129,926,585 119,640,180 115,280,439 34.8 8 254 34,546 155,316,248 

Interest rate .......................................................................... 1,166 2,969 2,405 1,151 546 113.6 0 0 3 1,163 

Foreign exchange .................................................................... 2,005 1,264 1,831 1,613 1,355 48.0 0 0 9 1,997 

Equity ................................................................................... -92 1,020 1,732 1,214 1,827 -105.0 0 0 0 -92 

Commodity & other (including credit derivatives) ........................... -757 877 1,053 -111 789 -195.9 0 0 -1 -756 

Total trading revenues .............................................................. 

Share of Revenue 

2,322 6,130 7,021 3,866 4,517 -48.6 0 0 11 2,311 

Trading revenues to gross revenues (%) .................................... 1.6 3.9 4.9 3.0 3.4 0.0 0.0 0.2 1.6 

Trading revenues to net operating revenues (%) ........................... 

HELD FOR PURPOSES OTHER THAN TRADING 

13.0 25.8 33.0 19.6 20.7 0.0 -0.1 1.9 13.4 

Number of institutions reporting derivatives ................................. 949 972 970 935 934 1.6 60 575 238 76 

Total assets of institutions reporting derivatives ........................... 9,300,602 8,967,425 8,637,855 8,604,877 8,227,057 13.0 4,377 249,131 735,782 8,311,312 

Total deposits of institutions reporting derivatives ........................... 

Derivative Contracts by Underlying Risk Exposure 

5,923,394 5,776,744 5,582,956 5,589,964 5,305,613 11.6 3,450 196,827 533,703 5,189,414 

Interest rate .......................................................................... 2,720,251 2,519,814 2,747,527 2,742,511 2,898,943 -6.2 108 17,238 57,086 2,645,819 

Foreign exchange .................................................................... 120,808 124,526 119,405 111,928 102,685 17.6 0 4 298 120,506 

Equity ................................................................................... 105,846 15,837 4,443 4,164 3,777 N/M 12 226 100,300 5,309 

Commodity & other ................................................................. 687 489 268 223 169 306.5 0 2 51 635 

Total notional amount .............................................................. 2,947,592 2,660,666 2,871,643 2,858,826 3,005,575 -1.9 120 17,469 157,734 2,772,269 

All line items are reported on a quarterly basis. 

*Include spot foreign exchange contracts. All other references to foreign exchange contracts in which notional values or fair values are reported exclude spot foreign exchange contracts. 

** Derivative contracts subject to the risk-based capital requirements for derivatives. 

*** The reporting of credit losses on derivatives is applicable to all banks filing the FFIEC 031 report form and to those banks filing the FFIEC 041 report form that have $300 million or more in total assets. 

FDIC QUARTERLY 12 2007, VOLUME 1, NO. 3 
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Quarterly Banking Profile 

TABLE VII-A. Servicing, Securitization, and Asset Sales Activities (All FDIC-Insured Commercial Banks and State-Chartered Savings Banks) 

(dollar figures in millions) 

4th 3rd 

3rd Quarter 2nd Quarter 1st Quarter Quarter Quarter %Change 

2007 2007 2007 2006 2006 06:3-07:3 

Asset Size Distribution 

$100 Million $1 Billion 

Less than to to Greater than 

$100 Million $1 Billion $10 Billion $10 Billion 

Assets Securitized and Sold with Servicing Retained or with Recourse 

or Other Seller-Provided Credit Enhancements 

Number of institutions reporting securitization activities ................................................... 

Outstanding Principal Balance by Asset Type 

123 126 126 123 119 3.4 13 48 23 39 

1-4 family residential loans .................................................................................... $1,105,601 $1,115,865 $1,079,930 $739,041 $453,900 143.6 $61 $292 $10,190 $1,095,059 

Home equity loans ................................................................................................. 9,894 10,640 9,339 8,905 9,257 6.9 0 0 248 9,646 

Credit card receivables ........................................................................................... 379,662 372,481 367,796 362,467 422,983 -10.2 0 3,328 11,204 365,130 

Auto loans ......................................................................................................... 10,433 12,547 14,132 16,263 16,781 -37.8 0 0 332 10,101 

Other consumer loans ........................................................................................... 29,386 27,396 27,737 28,673 25,753 14.1 0 7 0 29,379 

Commercial and industrial loans .............................................................................. 15,862 13,193 12,039 10,543 8,404 88.7 0 30 4,984 10,849 

All other loans, leases, and other assets* .................................................................. 184,941 162,434 150,404 144,582 135,982 36.0 1 77 799 184,065 

Total securitized and sold ........................................................................................ 

Maximum Credit Exposure by Asset Type 

1,735,779 1,714,556 1,661,376 1,310,475 1,073,059 61.8 62 3,733 27,756 1,704,229 

1-4 family residential loans .................................................................................... 6,858 6,511 6,047 6,627 4,619 48.5 20 5 44 6,788 

Home equity loans ................................................................................................. 2,336 2,420 2,368 2,332 2,358 -0.9 0 0 9 2,327 

Credit card receivables ........................................................................................... 19,120 18,711 17,685 19,182 25,084 -23.8 0 186 526 18,408 

Auto loans ......................................................................................................... 426 555 628 724 813 -47.6 0 0 15 411 

Other consumer loans ........................................................................................... 2,114 1,768 1,861 1,882 1,653 27.9 0 0 0 2,114 

Commercial and industrial loans .............................................................................. 399 314 311 348 407 -2.0 0 0 83 316 

All other loans, leases, and other assets .................................................................. 4,578 1,053 1,052 964 740 518.6 1 26 46 4,505 

Total credit exposure .............................................................................................. 35,831 31,331 29,952 32,059 35,674 0.4 21 218 724 34,869 

Total unused liquidity commitments provided to institution's own securitizations .................. 

Securitized Loans, Leases, and Other Assets 30-89 Days Past Due (%) 

5,095 5,667 6,116 6,503 6,970 -26.9 0 0 0 5,095 

1-4 family residential loans .................................................................................... 2.7 2.5 2.1 3.0 2.4 0.1 0.0 8.8 2.7 

Home equity loans ................................................................................................. 0.7 0.6 0.7 0.7 0.7 0.0 0.0 1.9 0.6 

Credit card receivables ........................................................................................... 2.1 1.9 1.9 2.0 2.0 0.0 2.8 1.6 2.2 

Auto loans ........................................................................................................... 2.0 1.7 1.5 1.7 1.3 0.0 0.0 1.0 2.0 

Other consumer loans ........................................................................................... 2.8 2.8 2.4 3.0 3.0 0.0 0.0 0.0 2.8 

Commercial and industrial loans .............................................................................. 1.0 0.5 0.7 0.7 1.2 0.0 0.0 1.8 0.6 

All other loans, leases, and other assets .................................................................. 0.1 0.1 0.1 0.2 0.2 0.0 0.0 0.2 0.1 

Total loans, leases, and other assets ........................................................................... 

Securitized Loans, Leases, and Other Assets 90 Days or More Past Due (%) 

2.3 2.1 1.9 2.4 2.0 0.1 2.5 4.3 2.3 

1-4 family residential loans .................................................................................... 1.2 1.2 1.1 1.2 0.9 0.0 0.0 17.3 1.0 

Home equity loans ................................................................................................. 0.4 0.3 0.4 0.5 0.3 0.0 0.0 1.2 0.3 

Credit card receivables ........................................................................................... 1.7 1.6 1.8 1.7 1.6 0.0 1.4 1.3 1.8 

Auto loans .......................................................................................................... 0.2 0.2 0.2 0.3 0.2 0.0 0.0 0.1 0.2 

Other consumer loans ........................................................................................... 2.1 2.1 2.0 2.1 2.1 0.0 0.0 0.0 2.1 

Commercial and industrial loans .............................................................................. 0.7 0.6 0.6 0.7 0.8 0.0 0.0 1.4 0.4 

All other loans, leases, and other assets .................................................................. 0.1 0.2 0.1 0.2 0.2 0.0 2.0 0.1 0.1 

Total loans, leases, and other assets ........................................................................... 

Securitized Loans, Leases, and Other Assets Charged-Off (net, YTD, annualized, %) 

1.2 1.2 1.1 1.2 1.1 0.0 1.3 7.2 1.1 

1-4 family residential loans .................................................................................... 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1.6 0.0 

Home equity loans ................................................................................................. 0.1 0.1 0.1 0.3 0.2 0.0 0.0 1.1 0.1 

Credit card receivables ........................................................................................... 3.3 2.2 1.1 3.8 2.9 0.0 2.4 2.2 3.4 

Auto loans ........................................................................................................... 0.8 0.5 0.3 0.7 0.5 0.0 0.0 0.4 0.8 

Other consumer loans ........................................................................................... 1.1 0.7 0.4 1.5 1.2 0.0 0.0 0.0 1.1 

Commercial and industrial loans .............................................................................. 1.3 0.7 0.4 1.3 1.2 0.0 0.0 3.1 0.4 

All other loans, leases, and other assets .................................................................. 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 

Total loans, leases, and other assets ........................................................................... 

Seller's Interests in Institution's Own Securitizations - Carried as Loans 

0.8 0.5 0.3 1.1 1.2 0.0 2.2 2.0 0.8 

Home equity loans ................................................................................................. 494 651 671 869 728 -32.1 0 0 0 494 

Credit card receivables ........................................................................................... 77,451 73,405 61,569 75,225 68,885 12.4 0 239 4,349 72,863 

Commercial and industrial loans .............................................................................. 

Seller's Interests in Institution's Own Securitizations - Carried as Securities 

6,018 2,843 2,863 2,596 2,891 108.2 0 0 974 5,044 

Home equity loans ................................................................................................. 10 10 10 10 11 -9.1 0 0 0 10 

Credit card receivables ........................................................................................... 374 327 281 322 184 103.3 0 71 303 0 

Commercial and industrial loans .............................................................................. 

Assets Sold with Recourse and Not Securitized 

6 9 1 5 0 0.0 0 0 0 6 

Number of institutions reporting asset sales .................................................................. 

Outstanding Principal Balance by Asset Type 

748 735 729 716 708 5.6 157 446 100 45 

1-4 family residential loans .................................................................................... 57,454 55,486 58,005 55,777 56,002 2.6 1,003 6,808 2,883 46,760 

Home equity, credit card receivables, auto, and other consumer loans ........................... 775 601 1,905 708 115 573.9 2 28 12 734 

Commercial and industrial loans .............................................................................. 5,302 7,708 8,198 6,668 6,781 -21.8 0 188 337 4,776 

All other loans, leases, and other assets .................................................................. 21,509 8,035 8,103 6,981 7,403 190.5 1 46 176 21,286 

Total sold and not securitized .................................................................................... 

Maximum Credit Exposure by Asset Type 

85,040 71,831 76,210 70,133 70,302 21.0 1,007 7,071 3,407 73,556 

1-4 family residential loans .................................................................................... 15,829 14,869 16,112 13,213 13,704 15.5 148 1,511 1,995 12,175 

Home equity, credit card receivables, auto, and other consumer loans ........................... 742 573 1,869 663 47 1478.7 2 5 7 728 

Commercial and industrial loans .............................................................................. 3,671 4,453 4,543 4,499 4,479 -18.0 0 169 337 3,165 

All other loans, leases, and other assets .................................................................. 6,447 2,383 2,428 2,530 2,502 157.7 1 22 89 6,335 

Total credit exposure ................................................................................................ 

Support for Securitization Facilities Sponsored by Other Institutions 

26,689 22,278 24,952 20,904 20,732 28.7 151 1,708 2,426 22,403 

Number of institutions reporting securitization facilities sponsored by others ........................ 49 50 47 47 48 2.1 24 15 3 7 

Total credit exposure .............................................................................................. 1,477 1,375 1,348 1,135 958 54.2 7 121 100 1,249 

Total unused liquidity commitments .............................................................................. 

Other 

8,242 14,093 5,827 5,857 4,718 74.7 0 0 0 8,242 

Assets serviced for others** ....................................................................................... 

Asset-backed commercial paper conduits 

3,647,431 3,569,529 3,494,728 3,392,129 3,072,169 18.7 7,553 61,643 120,033 3,458,202 

Credit exposure to conduits sponsored by institutions and others .................................... 22,592 22,211 21,404 20,714 19,244 17.4 2 0 112 22,478 

Unused liquidity commitments to conduits sponsored by institutions and others ............... 365,850 364,656 327,395 306,435 294,279 24.3 0 0 0 365,850 

Net servicing income (for the quarter) ........................................................................ 3,634 5,330 3,601 2,159 3,381 7.5 57 123 153 3,301 

Net securitization income (for the quarter) ................................................................... 5,642 5,437 5,051 2,407 6,832 -17.4 0 68 285 5,289 

Total credit exposure to Tier 1 capital (%)*** ............................................................... 6.5 5.7 5.9 5.8 6.1 0.7 1.6 2.5 8.3 

*Line item titled "All other loans and all leases" for quarters prior to March 31, 2006 

**The amount of financial assets serviced for others, other than closed-end 1-4 family residential mortgages, is reported when these assets are greater than $10 million 

***Total credit exposure includes the sum of the three line items titled "Total credit exposure" reported above 

FDIC QUARTERLY 13 2007, VOLUME 1, NO.3 
Author: 

Author: 

INSURANCE FUND INDICATORS 

Insured Deposit Growth Increases Only Slightly 

DIF Reserve Ratio Rises One Basis Point to 1.22 Percent 

One Institution Fails During the Third Quarter 

From June 30 to September 30, total assets of the 

nation’s 8,560 FDIC-insured commercial banks and 

savings institutions increased by $446.3 billion (3.6 

percent). Total deposits, which increased by $146.0 

billion, funded about one third of this asset growth. 

Total domestic deposits increased by 0.7 percent in the 

third quarter. Domestic time deposits increased by 3.3 

percent, while other domestic interest-bearing deposits 

increased by only 0.7 percent and domestic noninterest-bearing deposits decreased by 4.5 percent. Over the 

12 months ending September 30, total domestic 

deposits increased by 4.1 percent, with domestic interest-bearing deposits rising by 5.7 percent but domestic 

noninterest-bearing deposits declining by 3.1 percent. 

Insured institutions in aggregate have reduced their 

reliance on domestic deposits steadily since the early 

1990s. Domestic deposits funded 72 percent of industry 

assets in 1992, but only fund 53 percent today. Foreign 

office deposits have funded an increasing share of assets 

over the same time period, from 7 percent in 1992 to 

11 percent today. Foreign deposits as a percent of assets 

have risen from 8.4 percent in September 2005 to 9.4 

percent at September 2006 and 11.3 percent at 

September 2007. From September 30, 2006 to 

September 30, 2007, foreign office deposits increased by 

30.5 percent. Federal Home Loan Bank (FHLB) 

advances increased by 21.8 percent over the same 

twelve-month period. In the third quarter, FHLB 

advances funded 6.1 percent of assets, up from 5.0 percent in June and 5.4 percent a year ago. 

Estimated insured deposits (including U.S. branches of 

foreign banks) increased slightly during the third quarter of 2007 (0.2 percent increase), compared to a slight 

decline (0.2 percent decrease) during the second quarter of 2007. Over the last 12 months, insured deposits 

increased by 3.5 percent. For institutions existing as of 

September 30, 2007 and June 30, 2007, insured 

deposits increased during the third quarter at 4,652 

institutions (55 percent), decreased at 3,816 institutions (45 percent), and remained unchanged at 49 

institutions. 

The Deposit Insurance Fund (DIF) increased by 1.0 

percent ($527 million) during the third quarter to 

$51,754 million (unaudited). Accrued assessment 

income added $170 million to the DIF during the third 

quarter. The fund received a $68 million increase from 

unrealized gains on available for sale securities, and 

took in $421 million (net of expenses) from interest on 

securities and other revenue. The DIF was reduced by 

$132 million in additional provisions for insurance losses. The increase in the DIF, together with nearly flat 

insured deposit growth, raised the DIF reserve ratio to 

1.22 percent on September 30, 2007, one basis point 

higher than the June ratio and equal to the reserve 

ratio of a year earlier. 

One FDIC-insured institution failed during the third 

quarter of 2007, a federal savings bank with assets of 

$2.2 billion. The loss to the DIF is estimated to be 

approximately $108 million. For the first nine months 

of 2007, two institutions with combined assets of $2.3 

billion have failed at an estimated cost of $117 million. 

There were no failures of insured institutions during the 

first nine months of the previous year. 

Author: Kevin Brown, Sr. Financial Analyst 

Division of Insurance and Research, FDIC 

(202) 898-6817 

FDIC QUARTERLY 14 2007, VOLUME 1, NO. 3 
 

 

 

 

 

Quarterly Banking Profile 

TABLE I-B. Insurance Fund Balances and Selected Indicators 

(dollar figures in millions) Deposit Insurance Fund 

3rd Quarter 

2007 

2nd Quarter 

2007 

1st Quarter 

2007 

4th Quarter 

2006 

3rd Quarter 

2006 

2nd Quarter 

2006 

1st Quarter 

2006 

4th Quarter 

2005 

3rd Quarter 

2005 

Beginning Fund Balance*.................................... 

Changes in Fund Balance: 

$51,227 $50,745 $50,165 $49,992 $49,564 $49,193 $48,597 $48,373 $48,023 

Assessments earned............................................ 170 140 94 10 10 7 5 13 20 

Interest earned on investment securities................... 640 748 567 476 622 665 478 675 536 

Operating expenses.............................................. 243 248 239 248 237 242 224 252 227 

Provision for insurance losses................................. 132 -3 -73 49 -50 -6 -45 -19 -65 

All other income, net of expenses**.......................... 

Unrealized gain/(loss) on available-for-sale 

24 1 4 5 1 12 349 4 3 

securities.......................................................... 68 -162 81 -21 -18 -77 -57 -235 -47 

Total fund balance change..................................... 527 482 580 173 428 371 596 224 350 

Ending Fund Balance*......................................... 51,754 51,227 50,745 50,165 49,992 49,564 49,193 48,597 48,373

 Percent change from four quarters earlier............... 3.36 3.52 3.15 3.23 3.35 3.21 3.31 2.29 2.94 

Reserve Ratio (%)............................................... 1.21 1.22 1.20 1.21 1.22 1.23 1.23 1.25 1.26 

Estimated Insured Deposits ................................ 4,241,307 4,231,656 4,242,146 4,151,966 4,098,430 4,040,405 4,001,955 3,890,941 3,830,950

 Percent change from four quarters earlier............... 3.49 4.73 6.00 6.71 6.98 7.52 8.50 7.42 7.63 

Assessment Base 6,881,843 6,815,426 6,801,892 6,595,357 6,439,330 6,386,916 6,272,555 6,177,429 6,038,857

 Percent change from four quarters earlier............... 6.87 6.71 8.44 6.77 6.63 8.64 8.15 8.88 9.47 

Number of institutions reporting........................... 8,626 8,571 8,662 8,693 8,755 8,790 8,803 8,845 8,870 

DIF Reserve Ratio* 

Percent of Insured Deposits 

1.32 1.32 1.31 

1.29 1.28 

1.26 1.25 

1.23 1.23 1.22 1.21 1.20 1.21 1.22 

6/04 12/04 6/05 12/05 6/06 12/06 6/07 

TABLE II-B. Problem Institutions and Failed/Assisted Institutions 

(dollar figures in millions) 2007*** 2006*** 2006 2005 2004 2003 2002 

Problem Institutions

 Number of institutions................................................................................... ... 

Total assets................................................................................................ ... 

Failed/Assisted Institutions

 Number of institutions................................................................................... ... 

Total assets................................................................................................ 

65 

$18,515 

2 

$2,252 

47 

$3,983 

0 

$0 

50 

$8,265 

0 

$0 

52 

$6,607 

0 

$0 

80 

$28,250 

4 

$166 

116 

$29,917 

3

$1,097 

136

$38,927 

11 

$2,558 

* Prior to 2006, amounts represent sum of separate BIF and SAIF amounts. 

** First Quarter 2006 includes previously escrowed revenue from SAIF-member exit fees. 

*** Through September 30. 

Deposit Insurance Fund Balance 

and Insured Deposits* 

($ Millions) 

DIF DIF-Insured 

Balance Deposits 

6/04 46,521 3,531,806 

9/04 46,990 3,559,489 

12/04 47,507 3,622,068 

3/05 47,617 3,688,562 

6/05 48,023 3,757,728 

9/05 48,373 3,830,950 

12/05 48,597 3,890,941 

3/06 49,193 4,001,955 

6/06 49,564 4,040,405 

9/06 49,992 4,098,430 

12/06 50,165 4,151,966 

3/07 50,745 4,242,146 

6/07 51,227 4,231,656 

9/07 51,754 4,241,307 

FDIC QUARTERLY 15 2007, VOLUME 1, NO.3 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TABLE III-B. Estimated FDIC-Insured Deposits by Type of Institution 

(dollar figures in millions) 

September 30, 2007 

Commercial Banks and Savings Institutions 

Number of 

Institutions 

Total 

Assets 

Domestic 

Deposits* 

Est. Insured 

Deposits 

FDIC-Insured Commercial Banks ............................................ 10,792,691 7,303 5,571,617 3,331,209 

FDIC-Supervised ............................................................... 1,842,731 4,767 1,354,199 922,436 

OCC-Supervised ............................................................... 7,492,702 1,659 3,400,698 1,920,915 

Federal Reserve-Supervised ............................................... 1,457,258 877 816,720 487,858 

FDIC-Insured Savings Institutions ............................................ 1,914,422 1,257 1,169,544 903,717

 OTS-Supervised Savings Institutions ..................................... 1,613,489 831 956,061 739,217

 FDIC-Supervised State Savings Banks ................................... 

Total Commercial Banks and 

 300,933 426 213,483 164,500 

Savings Institutions ............................................................ 

Other FDIC-Insured Institutions 

8,560 12,707,112 6,741,161 4,234,925 

U.S. Branches of Foreign Banks .............................................. 19,868 11 8,181 6,381 

Total FDIC-Insured Institutions ............................................... 8,571 12,726,980 6,749,342 4,241,307 

* Excludes $1.44 trillion in foreign office deposits, which are uninsured. 

TABLE IV-B. Distribution of Institutions and Assessment Base Among Risk Categories 

Quarter Ending June 30, 2007 

(dollar figures in billions) Annual Percent of Total 

Rate in Number of Percent of Total Assessment Assessment 

Risk Category Basis Points Institutions Institutions Base Base 

I - Minimum ............................................. 

I - Middle ................................................ 

5 

5.01- 6.00 

2,931 

3,211 

34.0% 

37.2% 

3,949 

2,120 

57.9% 

31.1% 

I - Middle ................................................ 

I - Maximum ............................................. 

6.01- 6.99 

7 

1,343 

665 

15.6% 

7.7% 

436 

198 

6.4% 

2.9% 

II ......................................................... 10 413 4.8% 93 1.4% 

III ......................................................... 28 53 0.6% 5 0.1% 

IV ......................................................... 43 10 0.1% 14 0.2% 

Note: Institutions are categorized based on supervisory ratings, debt ratings and financial data as of June 30, 2007. 

Rates do not reflect the application of assessment credits. See notes to users for further information on risk categories and rates. 

FDIC QUARTERLY 16 2007, VOLUME 1, NO. 3 
Quarterly Banking Profile 

Notes To Users 

This publication contains financial data and other information for 

depository institutions insured by the Federal Deposit Insurance 

Corporation (FDIC). These notes are an integral part of this publication and provide information regarding the comparability of source 

data and reporting differences over time. 

Tables I-A through VIII-A. 

The information presented in Tables I-A through V-A of the FDIC 

Quarterly Banking Profile is aggregated for all FDIC-insured 

Institutions, both commercial banks and savings institutions. Tables 

VI-A (Derivatives) and VII-A (Servicing, Securitization, and Asset 

Sales Activities) aggregate information only for insured commercial 

banks and state-chartered savings banks that file quarterly Call 

Reports. Table VIII-A Trust Services aggregates Trust asset and 

income information collected annually from all FDIC-insured institutions. Some tables are arrayed by groups of FDIC-insured institutions 

based on predominant types of asset concentration, while other tables 

aggregate institutions by asset size and geographic region. Quarterly 

and full-year data are provided for selected indicators, including 

aggregate condition and income data, performance ratios, condition 

ratios and structural changes, as well as past due, noncurrent and 

charge-off information for loans outstanding and other assets. 

Tables I-B through IV-B. 

A separate set of tables (Tables I-B through IV-B) provides comparative quarterly data related to the Deposit Insurance Fund (DIF), problem institutions, failed/assisted institutions, estimated FDIC-insured 

deposits, as well as assessment rate information. Depository institutions that are not insured by the FDIC through the DIF are not 

included in the FDIC Quarterly Banking Profile. U.S. branches of 

institutions headquartered in foreign countries and non-deposit trust 

companies are not included unless otherwise indicated. Efforts are 

made to obtain financial reports for all active institutions. However, 

in some cases, final financial reports are not available for institutions 

that have closed or converted their charters. 

DATA SOURCES 

The financial information appearing in this publication is obtained 

primarily from the Federal Financial Institutions Examination 

Council (FFIEC) Call Reports and the OTS Thrift Financial Reports 

submitted by all FDIC-insured depository institutions. This information is stored on and retrieved from the FDIC’s Research Information 

System (RIS) data base. 

COMPUTATION METHODOLOGY 

Certain adjustments are made to the OTS Thrift Financial Reports to 

provide closer conformance with the reporting and accounting 

requirements of the FFIEC Call Reports. Parent institutions are 

required to file consolidated reports, while their subsidiary financial 

institutions are still required to file separate reports. Data from subsidiary institution reports are included in the Quarterly Banking Profile 

tables, which can lead to double-counting. No adjustments are made 

for any double-counting of subsidiary data. 

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 interim periods, divided 

by the total number of periods). For “pooling-of-interest” mergers, the 

assets of the acquired institution(s) are included in average assets 

since the year-to-date income includes the results of all merged institutions. No adjustments are made for “purchase accounting” mergers. 

Growth rates represent the percentage change over a 12-month period in totals for institutions in the base period to totals for institutions 

in the current period. 

All data are collected and presented based on the location of each 

reporting institution's main office. Reported data may include assets 

and liabilities located outside of the reporting institution’s home state. 

In addition, institutions may relocate across state lines or change their 

charters, resulting in an inter-regional or inter-industry migration, 

e.g., institutions can move their home offices between regions, and 

savings institutions can convert to commercial banks or commercial 

banks may convert to savings institutions. 

ACCOUNTING CHANGES 

FASB Statement No. 157 Fair Value Measurements issued in September 2006 

and FASB Statement No. 159 The Fair Value Option for Financial Assets and 

Financial Liabilities issued in February 2007 – both are effective in 2008 

with early adoption permitted in 2007. FAS 157 defines a fair value 

measurement framework, while FAS 159 allows banks to elect a fair 

value option when assets are recognized on the balance sheet and to 

report certain financial assets and liabilities at fair value with subsequent changes in fair value included in earnings. Existing eligible 

items can be fair-valued as early as January 2007 under FAS 159, if 

a bank adopts FAS 157. 

FASB Statement 158 Employers’ Accounting for Defined Benefit Pension and 

Other Postretirement Plans – issued in September 2006 requires a bank 

to recognize in 2007 the funded status of its postretirement plans on 

its balance sheet. An overfunded plan is recognized as an asset and 

an underfunded plan is recognized as a liability. An adjustment is 

made to equity as accumulated other comprehensive income 

(AOCI) upon application of FAS 158 and AOCI is adjusted in subsequent periods as net periodic benefit costs are recognized in earnings. 

FASB Statement No. 156 Accounting for Servicing of Financial Assets – issued 

in March 2006 and effective in 2007, requires all separately recognized servicing assets and liabilities to be initially measured at fair 

value and allows a bank the option to subsequently adjust that 

value by periodic revaluation and recognition of earnings or by periodic amortization to earnings. 

Purchased Impaired Loans and Debt Securities – Statement of Position 03-

3, Accounting for Certain Loans or Debt Securities Acquired in a Transfer. 

The SOP applies to loans and debt securities acquired in fiscal years 

beginning after December 15, 2004. In general, this Statement of 

Position applies to “purchased impaired loans and debt securities,” i.e., 

loans and debt securities that a bank has purchased, including those 

acquired in a purchase business combination, when it is probable, at 

the purchase date, that the bank will be unable to collect all contractually required payments receivable. Banks must follow Statement of 

Position 03-3 for Call Report purposes. The SOP does not apply to 

the loans that a bank has originated, prohibits “carrying over” or creation of valuation allowances in the initial accounting and any subsequent valuation allowances reflect only those losses incurred by the 

investor after acquisition. 

GNMA Buy-back Option – If an issuer of GNMA securities has the 

option to buy back the loans that collateralize the GNMA securities, 

when certain delinquency criteria are met, FASB Statement No. 140 

requires that loans with this buy-back option must be brought back 

on the issuer's books as assets. The rebooking of GNMA loans is 

required regardless of whether the issuer intends to exercise the buyback option. The banking agencies clarified in May 2005 that all 

GNMA loans that are rebooked because of delinquency should be 

reported as past due according to their contractual terms. 

FDIC QUARTERLY 17 2007, VOLUME 1, NO.3 
FASB Interpretation No. 45 – In November 2002, the FASB issued 

Interpretation No. 45, Guarantor’s Accounting and Disclosure 

Requirements for Guarantees, Including Indirect Guarantees of 

Indebtedness of Others. This interpretation clarifies that a guarantor is 

required to recognize, at the inception of a guarantee (financial standby letters of credit, performance standby letters of credit), a liability 

for the fair value of the obligation undertaken in issuing the guarantee. Banks apply the initial recognition and measurement provisions 

of Interpretation No. 45 on a prospective basis to guarantees issued or 

modified after December 31, 2002, irrespective of the bank’s fiscal 

year end. A bank’s previous accounting for guarantees issued prior to 

January 1, 2003, is not revised. 

FASB Interpretation No. 46 – The FASB issued Interpretation No. 46, 

Consolidation of Variable Interest Entities, in January 2003 and revised it 

in December 2003. Generally, banks with variable interests in variable interest entities created after December 31, 2003, must consolidate them. The timing of consolidation varies with certain situations 

with application as late as 2005. The assets and liabilities of a consolidated variable interest entity are reported on a line-by-line basis 

according to the asset and liability categories shown on the bank’s balance sheet, as well as related income items. Most small banks are 

unlikely to have any “variable interests” in variable interest entities. 

FASB Statement No. 123 (Revised 2004) and Share-Based Payments 

– requires all entities to recognize compensation expense in an 

amount equal to the fair value of share-based payments, e.g., stock 

options and restricted stock, granted to employees. As of January 2006 

all banks must adopt FAS 123(R). The compensation cost is typically 

recognized over the vesting period with a corresponding credit to 

equity. The recording of the compensation cost also gives rise to a 

deferred tax asset. 

Goodwill and intangible assets – FAS 141 terminates the use of pooling-of-interest accounting for business combinations after 2001 and 

requires purchase accounting. Under FAS 142 amortization of goodwill is eliminated. Only intangible assets other than goodwill are 

amortized each quarter. In addition companies are required to test for 

impairment of both goodwill and other intangibles once each fiscal 

year. The year 2002, the first fiscal year affected by this accounting 

change, has been designated a transitional year and the amount of initial impairments are to be recorded as extraordinary losses on a “net of 

tax” basis (and not as noninterest expense). Subsequent annual 

review of intangibles and goodwill impairment may require additional 

noninterest expense recognition. FASB Statement No. 147 clarifies 

that acquisitions of financial institutions (except transactions between 

two or more mutual enterprises), including branch acquisitions that 

meet the definition of a business combination, should be accounted 

for by the purchase method under FASB Statement No. 141. This 

accounting standard includes transition provisions that apply to 

unidentifiable intangible assets previously accounted for in accordance 

with FASB Statement No. 72. If the transaction (such as a branch 

acquisition) in which an unidentifiable intangible asset arose does not 

meet the definition of a business combination, this intangible asset is 

not be reported as “Goodwill” on the Call Report balance sheet. 

Rather, this unidentifiable intangible asset is reported as “Other intangible assets,” and must continue to be amortized and the amortization 

expense should be reported in the Call Report income statement. 

FASB Statement No. 133 Accounting for Derivative Instruments and Hedging 

Activities – All banks must recognize derivatives as either assets or liabilities on the balance sheet, measured at fair value. A derivative may 

be specifically designated as a “fair value hedge,” a “cash flow hedge,” 

or a hedge of a foreign currency exposure. The accounting for 

changes in the value of a derivative (gains and losses) depends on the 

intended use of the derivative, its resulting designation, and the effectiveness of the hedge. Derivatives held for purposes other than trading are reported as “other assets” (positive fair values) or “other liabilities” (negative fair values). For a fair value hedge, the gain or loss is 

recognized in earnings and “effectively” offsets loss or gain on the 

hedged item attributable to the risk being hedged. Any ineffectiveness of the hedge could result in a net gain or loss on the income 

statement. Accumulated net gains (losses) on cash flow hedges are 

recorded on the balance sheet as “accumulated other comprehensive 

income” and the periodic change in the accumulated net gains (losses) for cash flow hedges is reflected directly in equity as the value of 

the derivative changes. FASB Statement No. 149, Amendment of 

Statement 133 on Derivative Instruments and Hedging Activities 

provides guidance on the circumstances in which a loan commitment 

must be accounted for as derivative. Under Statement No. 149, loan 

commitments that relate to the origination of mortgage loans that will 

be held for sale, commonly referred to as interest rate lock commitments, must be accounted for as derivatives on the balance sheet by 

the issuer of the commitment. 

DEFINITIONS (in alphabetical order) 

All other assets – total cash, balances due from depository institutions, 

premises, fixed assets, direct investments in real estate, investment in 

unconsolidated subsidiaries, customers’ liability on acceptances outstanding, assets held in trading accounts, federal funds sold, securities 

purchased with agreements to resell, fair market value of derivatives, 

and other assets. 

All other liabilities – bank's liability on acceptances, limited-life preferred stock, allowance for estimated off-balance-sheet credit losses, 

fair market value of derivatives, and other liabilities. 

Assessment base –assessable deposits consist of DIF deposits (deposits 

insured by the FDIC Deposit Insurance Fund) in banks’ domestic 

offices with certain adjustments. 

Assets securitized and sold – total outstanding principal balance of 

assets securitized and sold with servicing retained or other sellerprovided credit enhancements. 

Construction and development loans – includes loans for all property 

types under construction, as well as loans for land acquisition and 

development. 

Core capital – common equity capital plus noncumulative perpetual 

preferred stock plus minority interest in consolidated subsidiaries, less 

goodwill and other ineligible intangible assets. The amount of eligible 

intangibles (including servicing rights) included in core capital is limited in accordance with supervisory capital regulations. 

Cost of funding earning assets – total interest expense paid on deposits 

and other borrowed money as a percentage of average earning assets. 

Credit enhancements – techniques whereby a company attempts to 

reduce the credit risk of its obligations. Credit enhancement may be 

provided by a third party (external credit enhancement) or by the 

originator (internal credit enhancement), and more than one type of 

enhancement may be associated with a given issuance. 

Deposit Insurance Fund (DIF) – The Bank (BIF) and Savings 

Association (SAIF) Insurance Funds were merged in 2006 by the 

Federal Deposit Insurance Reform Act to form the DIF. 

Derivatives notional amount – The notional or contractual amounts of 

derivatives represent the level of involvement in the types of derivatives transactions and are not a quantification of market risk or credit 

risk. Notional amounts represent the amounts used to calculate contractual cash flows to be exchanged. 

FDIC QUARTERLY 18 2007, VOLUME 1, NO. 3 
Quarterly Banking Profile 

Derivatives credit equivalent amount – the fair value of the derivative 

plus an additional amount for potential future credit exposure based 

on the notional amount, the remaining maturity and type of the 

contract. 

Derivatives transaction types: 

Futures and forward contracts – contracts in which the buyer agrees 

to purchase and the seller agrees to sell, at a specified future date, 

a specific quantity of an underlying variable or index at a specified price or yield. These contracts exist for a variety of variables 

or indices, (traditional agricultural or physical commodities, as 

well as currencies and interest rates). Futures contracts are standardized and are traded on organized exchanges which set limits 

on counterparty credit exposure. Forward contracts do not have 

standardized terms and are traded over the counter. 

Option contracts – contracts in which the buyer acquires the right 

to buy from or sell to another party some specified amount of an 

underlying variable or index at a stated price (strike price) during 

a period or on a specified future date, in return for compensation 

(such as a fee or premium). The seller is obligated to purchase or 

sell the variable or index at the discretion of the buyer of the contract. 

Swaps – obligations between two parties to exchange a series of 

cash flows at periodic intervals (settlement dates), for a specified 

period. The cash flows of a swap are either fixed, or determined 

for each settlement date by multiplying the quantity (notional 

principal) of the underlying variable or index by specified reference rates or prices. Except for currency swaps, the notional principal is used to calculate each payment but is not exchanged. 

Derivatives underlying risk exposure – the potential exposure characterized by the level of banks’ concentration in particular underlying 

instruments, in general. Exposure can result from market risk, credit 

risk and operational risk, as well as, interest rate risk. 

Domestic deposits to total assets – total domestic office deposits as a percent of total assets on a consolidated basis. 

Earning assets – all loans and other investments that earn interest or 

dividend income. 

Efficiency ratio – Noninterest expense less amortization of intangible 

assets as a percent of net interest income plus noninterest income. 

This ratio measures the proportion of net operating revenues that are 

absorbed by overhead expenses, so that a lower value indicates greater 

efficiency. 

Estimated insured deposits – in general, insured deposits are total 

domestic deposits minus estimated uninsured deposits. Prior to June 

30, 2000, the uninsured estimate is calculated as the sum of the excess 

amounts in accounts over $100,000. Beginning June 30, 2000, the 

amount of estimated uninsured deposits is adjusted to consider a 

financial institution's own estimate of uninsured deposits when such 

an estimate is reported. Beginning in 2006, the uninsured deposits 

estimate also considers IRA accounts over $250,000. 

Failed/assisted institutions – an institution fails when regulators take 

control of the institution, placing the assets and liabilities into a 

bridge bank, conservatorship, receivership, or another healthy institution. This action may require the FDIC to provide funds to cover 

losses. An institution is defined as “assisted” when the institution 

remains open and receives some insurance funds in order to continue 

operating. 

FHLB advances – all borrowings by FDIC insured institutions from the 

Federal Home Loan Bank System (FHLB), as reported by Call Report 

filers and by TFR filers. 

Goodwill and other intangibles – intangible assets include servicing 

rights, purchased credit card relationships and other identifiable 

intangible assets. Goodwill is the excess of the purchase price over the 

fair market value of the net assets acquired. 

Loans secured by real estate – includes home equity loans, junior liens 

secured by 1-4 family residential properties and all other loans secured 

by real estate. 

Loans to individuals – includes outstanding credit card balances and 

other secured and unsecured consumer loans. 

Long-term assets (5+ years) – loans and debt securities with remaining 

maturities or repricing intervals of over five years. 

Maximum credit exposure – the maximum contractual credit exposure 

remaining under recourse arrangements and other seller-provided 

credit enhancements provided by the reporting bank to securitizations. 

Mortgage-backed securities – certificates of participation in pools of residential mortgages and collateralized mortgage obligations issued or 

guaranteed by government-sponsored or private enterprises. Also, see 

“Securities”, below. 

Net charge-offs – total loans and leases charged off (removed from balance sheet because of uncollectibility), less amounts recovered on 

loans and leases previously charged off. 

Net interest margin – the difference between interest and dividends 

earned on interest-bearing assets and interest paid to depositors and 

other creditors, expressed as a percentage of average earning assets. 

No adjustments are made for interest income that is tax exempt. 

Net loans to total assets – loans and lease financing receivables, net of 

unearned income, allowance and reserves, as a percent of total assets 

on a consolidated basis. 

Net operating income – income excluding discretionary transactions 

such as gains (or losses) on the sale of investment securities and 

extraordinary items. Income taxes subtracted from operating income 

have been adjusted to exclude the portion applicable to securities 

gains (or losses). 

Noncurrent assets – the sum of loans, leases, debt securities and other 

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

Noncurrent loans & leases – the sum of loans and leases 90 days or 

more past due, and loans and leases in nonaccrual status. 

Number of institutions reporting – the number of institutions that actually filed a financial report. 

Other borrowed funds – federal funds purchased, securities sold with 

agreements to repurchase, demand notes issued to the U.S. Treasury, 

FHLB advances, other borrowed money, mortgage indebtedness, obligations under capitalized leases and trading liabilities, less revaluation 

losses on assets held in trading accounts. 

Other real estate owned – primarily foreclosed property. Direct and 

indirect investments in real estate ventures are excluded. The amount 

is reflected net of valuation allowances. For institutions that file a 

Thrift Financial Report (TFR), the valuation allowance subtracted 

also includes allowances for other repossessed assets. Also, for TFR 

filers the components of other real estate owned are reported gross of 

valuation allowances. 

Percent of institutions with earnings gains – the percent of institutions 

that increased their net income (or decreased their losses) compared 

to the same period a year earlier. 

“Problem” institutions – federal regulators assign a composite rating to 

each financial institution, based upon an evaluation of financial and 

operational criteria. The rating is based on a scale of 1 to 5 in ascendFDIC QUARTERLY 19 2007, VOLUME 1, NO.3 
ing order of supervisory concern. “Problem” institutions 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”. For all insured commercial banks and for insured savings banks 

for which the FDIC is the primary federal regulator, FDIC composite 

ratings are used. For all institutions whose primary federal regulator is 

the OTS, the OTS composite rating is used. 

Recourse – an arrangement in which a bank retains, in form or in substance, any credit risk directly or indirectly associated with an asset it 

has sold (in accordance with generally accepted accounting principles) that exceeds a pro rata share of the bank’s claim on the asset. If a 

bank has no claim on an asset it has sold, then the retention of any 

credit risk is recourse. 

Reserves for losses – the allowance for loan and lease losses on a consolidated basis. 

Restructured loans and leases – loan and lease financing receivables 

with terms restructured from the original contract. Excludes restructured loans and leases that are not in compliance with the modified 

terms. 

Retained earnings – net income less cash dividends on common and 

preferred stock for the reporting period. 

Return on assets – net income (including gains or losses on securities 

and extraordinary items) as a percentage of average total assets. The 

basic yardstick of bank profitability. 

Return on equity – net income (including gains or losses on securities 

and extraordinary items) as a percentage of average total equity capital. 

Risk-based capital groups – definition: 

Total Tier 1 

Risk-Based Risk-Based Tier 1 Tangible 

(Percent) Capital * Capital * Leverage Equity 

Well-capitalized >10 and >6 and >5 — 

Adequately 

capitalized >8 and >4 and >4 — 

Undercapitalized >6 and >3 and >3 — 

Significantly 

undercapitalized <6 or <3 or <3 and >2 

Critically 

undercapitalized — — — <2 

*As a percentage of risk-weighted assets. 

Risk Categories and Assessment Rate Schedule – The current risk categories and assessment rate schedule became effective January 1, 2007. 

Capital ratios and supervisory ratings distinguish one risk category 

from another. The following table shows the relationship of risk categories (I, II, III, IV) to capital and supervisory groups as well as the 

Supervisory Group 

Capital Group A B C 

I 

1. Well Capitalized 5-7 bps III II 

28 bps 10 bps 2. Adequately Capitalized 

3. Undercapitalized III IV

28 bps 43 bps

assessment rates (in basis points) for each risk category. Supervisory 

Group A generally includes institutions with CAMELS composite ratings of 1 or 2; Supervisory Group B generally includes institutions 

with a CAMELS composite rating of 3; and Supervisory Group C 

generally includes institutions with CAMELS composite ratings of 4 

or 5. For purposes of risk-based assessment capital groups, undercapitalized includes institutions that are significantly or critically undercapitalized. 

Assessment rates are 3 basis points above the base rate schedule. The 

FDIC may adjust rates up or down by 3 basis points from the base rate 

schedule without notice and comment, provided that any single 

adjustment from one quarter to the next cannot move rates more 

than 3 basis points. 

For most institutions in Risk Category I, the assessment rate assigned 

will be based on a combination of financial ratios and CAMELS component ratings. 

For large institutions in Risk Category I (generally those with at least 

$10 billion in assets) that have long-term debt issuer ratings, assessment rates will be determined by weighting CAMELS component ratings 50 percent and long-term debt issuer ratings 50 percent. For all 

large Risk Category I institutions, additional risk factors will be considered to determine whether assessment rates should be adjusted. 

This additional information includes market data, financial performance measures, considerations of the ability of an institution to withstand financial stress, and loss severity indicators. Any adjustment will 

be limited to no more than 1⁄2 basis point. 

Beginning in 2007, each institution is assigned a risk-based rate for a 

quarterly assessment period near the end of the quarter following the 

assessment period. Payment will generally be due on the 30th day of 

the last month of the quarter following the assessment period. 

Supervisory rating changes will be effective for assessment purposes as 

of the examination transmittal date. For institutions with long-term 

debt issuer ratings, changes in ratings will be effective for assessment 

purposes as of the date the change was announced. 

Risk-weighted assets – assets adjusted for risk-based capital definitions 

which include on-balance-sheet as well as off-balance-sheet items 

multiplied by risk-weights that range from zero to 100 percent. A 

conversion factor is used to assign a balance sheet equivalent amount 

for selected off-balance-sheet accounts. 

Securities – excludes securities held in trading accounts. Banks’ securities portfolios consist of securities designated as “held-to-maturity”, 

which are reported at amortized cost (book value), and securities designated as “available-for-sale”, reported at fair (market) value. 

Securities gains (losses) – realized gains (losses) on held-to-maturity and 

available-for-sale securities, before adjustments for income taxes. 

Thrift Financial Report (TFR) filers also include gains (losses) on the 

sales of assets held for sale. 

Seller’s interest in institution’s own securitizations – the reporting bank’s 

ownership interest in loans and other assets that have been securitized, except an interest that is a form of recourse or other seller-provided credit enhancement. Seller’s interests differ from the securities 

issued to investors by the securitization structure. The principal 

amount of a seller’s interest is generally equal to the total principal 

amount of the pool of assets included in the securitization structure 

less the principal amount of those assets attributable to investors, i.e., 

in the form of securities issued to investors. 

Subchapter S Corporation – A Subchapter S corporation is treated as a 

pass-through entity, similar to a partnership, for federal income tax 

purposes. It is generally not subject to any federal income taxes at the 

FDIC QUARTERLY 20 2007, VOLUME 1, NO. 3 
Quarterly Banking Profile 

corporate level. This can have the effect of reducing institutions’ 

reported taxes and increasing their after-tax earnings. 

Trust assets – market value, or other reasonably available value of 

fiduciary and related assets, to include marketable securities, and 

other financial and physical assets. Common physical assets held in 

fiduciary accounts include real estate, equipment, collectibles, and 

household goods. Such fiduciary assets are not included in the 

assets of the financial institution. 

Unearned income & contra accounts – unearned income for Call Report 

filers only. 

Unused loan commitments – includes credit card lines, home equity 

lines, commitments to make loans for construction, loans secured by 

commercial real estate, and unused commitments to originate or purchase loans. (Excluded are commitments after June 2003 for originated mortgage loans held for sale, which are accounted for as derivatives 

on the balance sheet.) 

Volatile liabilities – the sum of large-denomination time deposits, foreign-office deposits, federal funds purchased, securities sold under 

agreements to repurchase, and other borrowings. 

Yield on earning assets – total interest, dividend and fee income earned 

on loans and investments as a percentage of average earning assets. 

FDIC QUARTERLY 21 2007, VOLUME 1, NO.3 
Feature Article: 

The Case for Loan Modification 

With a Foreword by Sheila C. Bair, Chairman 

Federal Deposit Insurance Corporation 

Foreword 

Residential mortgage credit quality continues to 

weaken, with both delinquencies and charge-offs on 

the rise at FDIC-insured institutions.1 This trend, in 

tandem with upward pricing of hybrid adjustable-rate 

mortgage (ARM) loans, falling home prices, and fewer 

refinancing options, underscores the urgency of finding 

a workable solution to current problems in the 

subprime mortgage market. Legislators, regulators, 

bankers, mortgage servicers, and consumer groups have 

been debating the merits of strategies that may help 

preserve home ownership, minimize foreclosures, and 

restore some stability to local housing markets. 

On December 6, 2007, an industry-led plan was 

announced that will help avert foreclosure for certain 

subprime homeowners who face unaffordable payments 

when their interest rates reset. This plan provides for 

a streamlined process to extend the starter rates on 

subprime ARMs for at least five years in cases where 

borrowers remain current on their loans but cannot 

refinance or afford the higher payments after reset. 

An important component of the industry-led plan is 

detailed reporting of loan modification activity. Working with the Treasury Department and other bank regulators, the FDIC will monitor loan modification levels 

and seek adjustments to the protocols if warranted. 

I have long advocated a systematic and streamlined 

approach to loan modification that puts borrowers into 

long-term, sustainable mortgages. I support the industry 

plan as a means to allow borrowers to remain in their 

homes, provide investors with higher returns than can 

be obtained under foreclosure, and strengthen local 

neighborhoods where foreclosures are already driving 

down property values. It is my hope that this plan will 

be implemented in a way that delivers real progress on 

these important policy goals. 

Sheila C. Bair, Chairman 

Federal Deposit Insurance Corporation 

1 FDIC Quarterly Banking Profile, Third Quarter 2007, 

http://www2.fdic.gov/qbp/2007sep/qbp.pdf. 

FDIC QUARTERLY 22 2007, VOLUME 1, NO. 3 
The Case for Loan Modification 

The text of this article is based on testimony delivered by Sheila C. Bair, Chairman, Federal Deposit Insurance 

Corporation, on December 6, 2007, before the U.S. House of Representatives Financial Services Committee. 

Problems in the subprime mortgage market are affecting 

the U.S. housing market and the economy as a whole 

and pose a serious policy challenge for the industry and 

regulators. About 1.7 million hybrid loans worth $367 

billion are scheduled to undergo their first reset during 

2008 and 2009.2 This wave of mortgage resets, in 

combination with the decline in home prices and 

limited refinancing options, could prompt hundreds of 

thousands of additional mortgage foreclosures over the 

next two years. These foreclosures will hurt individual 

borrowers and their communities, as they potentially 

could place further downward pressure on home values. 

This article summarizes the current situation in the 

subprime mortgage market. It describes loan modification as a straightforward strategy the mortgage industry 

can undertake on its own to minimize unnecessary foreclosures and return some measure of stability to housing 

markets. Misconceptions about the effects of such an 

approach are also addressed. 

U.S. Housing Markets and Mortgage Credit 

Performance Have Deteriorated 

The U.S. housing boom of the first half of this decade 

ended abruptly in 2006. Housing starts, which peaked 

at more than 2 million units in 2005, have plummeted 

to just over half that level, with no recovery in sight. 

Home prices, which were increasing at double-digit 

rates nationally in 2004 and 2005, are now falling in 

many areas across the country (see Chart 1). As home 

prices decline, the number of problem mortgages, 

particularly in subprime and Alt-A portfolios, is rising.3 

As of third quarter 2007, the percentage of subprime 

adjustable-rate mortgages (ARMs) that were seriously 

2 Estimates are based on the LoanPerformance Securities database. 

They reflect data collected through August 2007 on first-lien mortgages secured by owner-occupied properties where the mortgage has 

been securitized in private mortgage-backed securities issues. These 

figures have been adjusted to include an estimate of subprime securitized loans that are not included in the LoanPerformance database. 

3 Alt-A loans are those made under expanded underwriting guidelines 

to borrowers with marginal to very good credit. Alt-A loans are riskier 

than prime loans because of the underwriting standards of the loans, 

not necessarily the credit quality of the borrowers. 

delinquent or in foreclosure reached 15.6 percent, more 

than double the level of a year ago (see Chart 2).4 The 

deterioration in credit performance began in the industrial Midwest, where economic conditions have been 

the weakest, but has now spread to the former boom 

markets of Florida, California, and other coastal states. 

During the past year, investors and ratings agencies have 

repeatedly downgraded assumptions about subprime 

credit performance. A Merrill Lynch study published 

in July estimated that if U.S. home prices fell only 5 

percent, subprime credit losses to investors would total 

just under $150 billion, and Alt-A credit losses would 

total $25 billion.5 On the heels of this report came news 

that the S&P/Case-Shiller Composite Home Price Index 

for 10 large U.S. cities had fallen in August to a level 

that was already 5 percent lower than a year ago, with 

the likelihood of a similar decline over the coming year. 

The complexity of many mortgage-backed securitization structures has heightened the overall risk aversion 

of investors, resulting in what has become a broader 

illiquidity in global credit markets. These disruptions 

have led to a precipitous decline in subprime lending, 

a significant reduction in the availability of Alt-A 

loans, and higher interest rates on jumbo loans (see 

Chart 3). The tightening in mortgage credit has placed 

further downward pressure on home sales and home 

prices, a situation that now could derail the U.S. 

economic expansion. 

Subprime Hybrid Mortgages and Securitization 

The crisis in subprime mortgage lending began with the 

rapid growth of two- and three-year adjustable-rate 

subprime hybrid loans after 2003. Between year-end 

2003 and mid-2007, some 5 million of these loans were 

originated. Of these, slightly more than 2.5 million 

loans representing $526 billion of mortgage debt 

remain outstanding. 

4 Mortgage Bankers Association, National Delinquency Survey Q307. 

Data cited are not seasonally adjusted. 

5 Merrill Lynch, “Mortgage Credit Losses: How Much, Where, and 

When?” July 20, 2007. 

FDIC QUARTERLY 23 2007, VOLUME 1, NO. 3 
 

 

Chart 1 

U.S. Housing Market Activity Turned Further Downward in the Third Quarter of 2007. 

New Single-Family Homes Sold Existing Home Sales (Millions of Units) Composite Home Price Index (10 Cities, Jan. 2000=100) 

1.4 7.5 230 

1.3 220 

7.0 

1.2 210 

6.5 

200 

1.1 

6.0 190 

1.0 

180 

5.5 

0.9 170 

0.8 5.0 160 

0.7 4.5 150 

2004 2005 2006 2007 2004 2005 2006 2007 2004 2005 2006 2007 

Sources: Bureau of the Census, National Association of Realtors, and S&P Case-Shiller Composite Home Price Index. 

Note: Home sales data are at a seasonally adjusted annual rate. Gray sections indicate 2007 data. 

Chart 2 

Source: Mortgage Bankers Association, Haver Analytics. . 

A Rapid Rise in Mortgage Credit Distress Is Being Led by Subprime ARMs 

Conventional Loans Past Due 90+ Days 

1998 2000 2002 2004 2006 

Subprime 

All 

ARMs Only 

Prime ARMs Only 

All 

0.0 

0.5 

1.0 

1.5 

2.0 

2.5 

3.0 

3.5 

4.0 

4.5 

5.0 

Percent 

Conventional Loans in Foreclosure 

1998 2000 2002 2004 2006 

Subprime 

ARMs Only 

Prime 

All 0.0 

2.0 

4.0 

6.0 

8.0 

10.0 

Percent 

ARMs Only 

All 

FDIC QUARTERLY 24 2007, VOLUME 1, NO. 3 
The Case for Loan Modification 

Chart 3 or sell their home when the loans reset without a loss 

The Availability of Subprime Credit 

Declined Sharply in the Third Quarter 

Quarterly Issuance of Subprime MBS, 

Dollars in Billions 

$160 

$140 

$120 

$100 

$80 

$60 

$40 

$20 

$0 

Q3 05 Q4 05 Q1 06’ Q2 06 Q3 06 Q4 06 Q1 07 Q2 07 Q3 07 

Source: Inside Mortgage Finance. 

The typical structure of these loans provides for a fixed 

starter rate (typically between 7 and 9 percent) for the 

first 24 or 36 months, followed by a series of steep 

increases in the interest rate (typically 300 basis points 

during the first year after reset) and a commensurate 

rise in the monthly payment (see Table 1). Almost 

three-quarters of subprime mortgages securitized in 

2004 and 2005 were structured in this manner, as were 

more than half the subprime loans made in 2006. Most 

of these loans, commonly referred to as 2/28 and 3/27 

ARMs, also imposed a prepayment penalty if the loan 

was repaid while the starter rate was in effect. 

Despite the steep “payment shock” built into these 

loans, they performed reasonably well until last year. 

As recently as second quarter 2006, just 6.5 percent of 

subprime ARMs were seriously delinquent. Rapid rates 

of home price appreciation in many areas of the country 

allowed even highly leveraged borrowers to refinance 

Table 1 

Hybrid Loan Borrowers May Experience 

a Series of Rate Reset Shocks 

Weighted-Average Interest Rates for Two- and Three-Year 

Nonprime First Lien Hybrids 

Origination 

Year 

Average 

Initial Rate 

Maximum 

Rate at 

First Reset 

Maximum 

Lifetime 

Interest Rate 

2003 7.37 9.79 13.67 

2004 6.85 9.41 13.16 

2005 7.23 9.79 13.53 

2006 8.23 10.77 14.53 

Source: LoanPerformance ABS database. Data for nonprime two- and three-year hybrids 

included in private label securitizations. Data current through August 2007. 

All averages are weighted by loan origination amount. 

to themselves or mortgage investors, masking the 

underlying weakness of the structure and underwriting 

of these loan products. However, in today’s more challenging environment, the ability of borrowers to refinance is limited, and payment reset will more often 

lead to default and foreclosure. 

The securitization of subprime hybrid ARMs has been 

very common in recent years and increases the 

complexity of achieving loan modifications. Once these 

loans are placed in a securitization trust, the assessment 

of borrower ability to repay is determined by the loan 

servicer. As stated in the pooling and servicing agreement (PSA), the servicer’s primary objective is to maximize the value of the assets in the securitization trust; 

therefore, the servicer’s interests are primarily aligned 

with the investor’s.6 When confronted with a distressed 

borrower who will impact the trust’s cash flow, the 

servicer must (1) protect the interests of investors and 

(2) conduct a net present value (NPV) analysis to 

determine the appropriate loss mitigation strategy in a 

default scenario. Although initially there was concern 

that the securitization documents and the PSAs might 

constrain servicers’ ability to modify loans in the pool, 

most documents provide the servicers with sufficient 

flexibility to do so. In practice, however, third-party 

servicers have been slow to exercise this flexibility on 

a large scale. 

In addition to maximizing asset value, servicers must 

ensure that they pursue loss mitigation actions that will 

present the least amount of loss to the pool. Generally, 

servicers that conduct an NPV analysis and conclude 

that the NPV of the modified loan payments is greater 

than the anticipated net recovery in the case of foreclosure may assert that the modification is in the best 

interest of the securitization of the pool as a whole. 

In many circumstances, particularly in the case of a 

declining housing market, the cost of modification will 

be less than the cost of foreclosure. 

A Proposal for Loan Modification 

The seriousness of the problems in the subprime mortgage market points to the need for new and innovative 

strategies to limit the immediate fallout in a way that 

6 The PSA describes the servicer’s roles and responsibilities. It also 

discusses the servicing of the mortgage loans and addresses foreclosure and loss mitigation alternatives, including modifications. 

FDIC QUARTERLY 25 2007, VOLUME 1, NO. 3 
will not harm the credit markets over the long run. The 

proposal that has garnered the most support in recent 

months is loan modification targeted at the group of 

loans that remains current at the starter rate, but may 

face default and foreclosure after rates reset. 

This approach applies the notion of triage to subprime 

borrowers. Conceptually, subprime borrowers can be 

divided into three basic groups: 

• Loans already past due under the starter rate that 

either cannot be remedied or will need to be reunderwritten and restructured on a case-by-case 

basis; 

• Well-structured and well-underwritten loans that 

can reasonably be expected to perform after reset 

without modification; and 

• Marginal loans that have remained current prior to 

reset, but likely will not remain so after reset without modification. 

Based on available data on securitized subprime loans, 

it is difficult to estimate precisely the size of each group. 

We do know that of the 1.7 million subprime loans 

worth $367 billion scheduled to reset during 2008 and 

2009, some 221,000 loans are already at least 90 days 

past due or in some stage of foreclosure before reset.7 

This represents a reasonable estimate of the first group, 

which is made up of more difficult cases where problems go deeper than just the interest rate reset. 

We can also roughly estimate the size of the second 

group—loans that can reasonably be expected to 

perform after reset without modification—in terms of 

loan characteristics at origination. However, because 

these loans were underwritten according to standards 

that were well below traditional industry norms, the 

number that can be expected to perform after reset 

appears to be small. Of loans scheduled to reset in 2008 

and 2009 that remain current, only 2.9 percent (or 

about 50,000 loans) show a combined loan-to-value 

ratio below 80 percent and a debt service-to-income 

ratio below 30 percent at origination. This implies that 

the third group—loans that remain current prior to reset 

7 Estimates are based on the LoanPerformance Securities database. 

They reflect data collected through August 2007 on first-lien mortgages secured by owner-occupied properties where the mortgage 

has been securitized in private MBS issues. These figures have been 

adjusted to include an estimate of subprime securitized loans that are 

not included in the LoanPerformance database. 

but face a higher likelihood of problems after reset— 

may range as high as 1.4 million loans.8 A strategy of 

either streamlined refinancing or streamlined restructuring, or both, appears to offer the greatest potential 

to improve outcomes for all parties when applied to 

this third and largest group of subprime loans. 

When feasible, the best option appears to be providing 

opportunities for borrowers to refinance their high-cost 

loans into affordable fixed-rate loans. Refinancing 

provides a near-term, full recovery of principal to 

investors and the potential for a long-term, stable 

source of financing to borrowers. However, the decision 

to refinance must take into account the availability and 

cost of credit to marginal borrowers, as well as the 

transactions cost to borrowers, including any prepayment penalties. The disruption of mortgage and credit 

markets that has taken place since mid-2007 has 

curtailed access to credit for many subprime and Alt-A 

borrowers, and sharply limited terms on credit for 

others. In response to these developments, private and 

government-related loan programs have been established to help expand refinancing options for subprime 

borrowers. For example, an estimated 240,000 subprime 

borrowers will eventually be able to refinance under the 

new FHASecure program.9 

In the remaining cases where refinancing is not an 

option, servicers will be left with a very limited set of 

choices as they try to maximize the net proceeds of 

loans under their management. The standard procedure 

has been to wait until the loan enters default and then 

initiate foreclosure proceedings. While this strategy 

makes sense in an environment when defaults are 

relatively rare and home prices are stable, it becomes 

increasingly self-defeating in situations where defaults 

are common and home prices are falling. It is in these 

situations that a shift toward streamlined restructuring 

can help servicers maximize the amount of monthly 

payments that come in from borrowers and minimize 

the credit losses that arise from foreclosure. 

The rapid pace of resets—nearly 100,000 per month 

at present—and the deterioration in housing market 

conditions argue for a systematic, rather than a one8 It should be noted that as we move into 2008, the total number of 

loans scheduled to reset will tend to decline as loans default or are 

paid down, and the proportion of loans that are seriously delinquent 

prior to reset will tend to rise over time. The net effect is likely to 

be a gradual decline over time in the number of loans considered 

candidates for restructuring. 

9 Federal Housing Administration press release, August 31, 2007. 

http://www.fha.gov/press/2007-08-31release.cfm. 

FDIC QUARTERLY 26 2007, VOLUME 1, NO. 3 
The Case for Loan Modification 

at-a-time, approach to the problem. Moving forward on 

a wholesale basis in cases where reset is the problem 

will free up resources for servicers to concentrate on 

more difficult cases where the solutions may be more 

complicated and time consuming. The key issue is 

how to address mortgage loans for owner-occupied 

properties where the borrowers are current on their 

payments but will not be able to maintain the payments following reset. Where the homeowner has 

remained current at the starter rate, but cannot make 

the higher reset payments, a better strategy is to 

modify the loan to keep it at the starter rate for a 

period of five years or more. 

Correcting Misconceptions about Mortgage 

Restructuring 

Subprime hybrid loans represent a relatively recent 

development in mortgage lending, and one with which 

many people have little or no firsthand experience. In 

addition, loan restructuring represents a significant 

departure from the standard servicing practices that are 

pursued under normal market conditions. For these and 

other reasons, a number of popular misconceptions 

have arisen with respect to this strategy which, it can 

be argued, do not necessarily hold up well in light of 

present facts. 

Misconception: Restructuring is a bailout of 

subprime borrowers and/or investors. 

The emergence of large financial sector losses sometimes results in the failure of depository institutions. 

In these cases, losses that would have been borne by 

insured depositors are covered by the FDIC Deposit 

Insurance Fund (DIF) under applicable laws and 

administrative rules. However, financial distress also 

often results in proposals for and against other types 

of ad-hoc government “bailouts” in the interest of 

financial stability. The critics of financial bailouts are 

generally correct; in the end bailouts usually end up 

benefiting one group at the expense of another and 

undermining market discipline on risk taking. 

In this case, however, those criticisms do not apply for 

the following reason: this is in no way a government 

bailout. The proposal being discussed is one where 

servicers attempt to restructure loans on their own in 

the interest of investors. If successful, they will have 

implemented a shift in servicing strategy to the benefit 

of all interested parties. But in no case is there a 

subsidy, implicit or explicit, of investors or borrowers 

that would result in cost-shifting or undermine market 

discipline. On the contrary, renegotiation of loan 

terms is a common private financial practice in times 

of distress; in this case the problem is convincing 

servicers that they have the legal flexibility to shift 

strategies and that doing so will improve the outcome 

for investors. 

Misconception: Restructuring violates the 

contractual rights of investors. 

Streamlined restructuring is a strategy that can be 

pursued voluntarily by servicers in the interest of 

investors under existing PSA agreements. The significant deterioration we have seen in mortgage credit 

performance and housing market conditions points to 

this strategy as a means to maximize the total net present value of securitized subprime mortgages. Given that 

this is the legal mandate of servicers, it is not surprising 

that they have begun to embrace this approach more 

often as conditions have worsened. But as long as this 

path is chosen voluntarily by servicers under their 

existing PSAs, and as long as they can demonstrate 

that their strategy is to maximize the proceeds of the 

pool, it is difficult to argue that doing so represents a 

violation of anyone’s contractual rights. 

Misconception: Restructuring will create a windfall 

for subprime borrowers. 

Some have expressed concern that restructuring 

subprime loans to a fixed percent of interest at the 

starter rate will result in a windfall for subprime 

borrowers. This misconception is based on the belief 

that the starter rates for these loans are similar to the 

low 1 to 2 percent “teaser” rates that were aggressively 

advertised for prime borrowers. In fact, of subprime 

hybrid mortgages originated in the first quarter of 

2006, the average starter rate was 8.28 percent, which 

exceeded the weighted-average rate on subprime fixedrate loans made in that same quarter (7.93 percent) 

and was well above rates paid on prime fixed-rate 

loans. Therefore, these subprime borrowers will 

continue to pay subprime rates even after restructuring. 

Misconception: Restructuring will deny investors 

their expected return. 

Another popular misconception is that restructuring 

will deny investors a considerable stream of interest 

payments that would rightfully accrue to them after the 

loans reset to the full contract rate. The reality is that 

very few hybrid borrowers actually remain in the pools 

after reset and pay the full contract rate. Among such 

loans made and securitized in 2003, only one in 30 is 

FDIC QUARTERLY 27 2007, VOLUME 1, NO. 3 
still paying the full contract rate after just four years 

(see Chart 4). 

The amount of additional interest income that accrues 

to investors after payment reset, the so-called excess 

spread, depends on the ability and willingness of 

borrowers to make monthly payments over the long 

term. However, the fact is that these loans generally 

were never designed or underwritten to perform at the 

full contract rate after reset. Among subprime hybrid 

loans made in 2006, nearly half had loan-to-value ratios 

above 90 percent, and more than half had monthly 

debt service-to-income ratios above 40 percent. About 

a quarter of these loans met both criteria. 

If these marginal borrowers cannot perform at the full 

contract rate on the loans, then what can lenders expect 

to recover in a short sale or a foreclosure? Studies show 

that foreclosure costs can run to more than half the 

loan amount.10 These loss rates are only going to rise in 

today’s troubled housing markets, particularly if more 

subprime borrowers are pushed into foreclosure. Studies 

also show that foreclosures tend to drive down the 

value of nearby homes.11 As these loans reset from the 

starter rate to the full contract rate, credit losses will 

mount as more borrowers default and enter foreclosure. 

The basic math is this: given current conditions in 

housing and mortgage markets, as rates on these loans 

increase from the starter rate to the full contract rate, 

credit losses will rise faster than interest income. Thus, 

resets will be self-defeating for investors and will exert 

wider negative effects on local communities and the 

overall economy. 

Misconception: Restructuring is unnecessary based 

on past levels of credit losses. 

Some argue that based on past levels of credit losses, 

standardized and widespread restructuring of subprime 

hybrid ARMs is not needed at this time. However, previous experience with losses of subprime hybrid ARMs is 

a poor indicator of how these loans will perform going 

forward. For example, through August 2007, the cumulative default rate (CDR) for subprime hybrid loans origi10 Karen Pence, “Foreclosing on Opportunity: State Laws and Mortgage 

Credit” (Federal Reserve Finance and Economics Discussion Paper 

2003-16, May 13, 2003), p. 1. 

11 Dan Immergluck and Geoff Smith, “The External Costs of Foreclosure: 

The Impact of Single-Family Mortgage Foreclosures on Property 

Values,” Housing Policy Debate (17:1) Fannie Mae Foundation (2006), 

www.fanniemaefoundation.org/programs/hpd/pdf/hpd_1701_immergluck 

.pdf. 

Chart 4 

$0 

$50 

$100 

$150 

$200 

$250 

$300 

$350 

$400 

$450

 2003 2004 2005 2006 0% 

10% 

20% 

30% 

40% 

50% 

60% 

70% Origination amount ($Billions) 

Current balance to origination 

amount (%) 

Source: LoanPerformance ABS database. 

Note: Current ratio calculated as active dollar volume of loans current or less than 60 days 

past due to total origination dollar volume per year. Data include securitized nonprime 

first lien two- and three-year hybrid loans. Active status as of August 2007. 

The Dollar Volume of Hybrid Loans Remaining 

Current Diminishes Quickly With Seasoning 

nated in 2004 has been 10 percent; that is, of 1.6 million 

such loans originated that year, 162,000 have defaulted 

(see Table 2). However, these loans were made in a 

period of rapidly rising home prices in many parts of 

the country and underwent reset during a time of ready 

access to new subprime credit, making it relatively easy 

to repay 2004 vintage loans through refinancing or 

even the sale of the property. 

By contrast, loans resetting today are doing so in an environment of declining home prices in many areas of the 

country and a virtual absence of private subprime lending. Of hybrid loans originated in 2006, the CDR already 

has reached 10.5 percent—before any of these loans have 

reset. Under today’s market conditions, interest rate reset 

likely will drive the CDR to levels much higher than 

experienced on previous vintages. This means that the 

benefits of restructuring cannot be measured against 

credit losses of prior years. Rather, the benefits must be 

viewed in the context of how many borrowers can 

afford to pay at the full contract rate when refinancing 

options are extremely limited and the value of the 

property has declined or not increased as anticipated. 

Conclusion 

Poor underwriting and abuses in the subprime mortgage 

market are exerting a significant negative impact on 

the housing markets and the U.S. economy. In the 

coming months, large numbers of subprime ARMs will 

reset to higher interest rates, and hundreds of thousands 

of borrowers will face default and possible foreclosure. 

The traditional approach taken by mortgage servicers 

is to wait for default and then pursue foreclosure. 

FDIC QUARTERLY 28 2007, VOLUME 1, NO. 3 
The Case for Loan Modification 

Table 2 

Performance of Two- and Three-Year Nonprime Hybrid Loans 

Has Deteriorated in Recent Vintages 

Originations and Cumulative Default Rates for 2- and 3-Year Nonprime First Lien Hybrid Loans as of August 2007* 

Origination Year 2003 2004 2005 2006 

Total number of 2- and 3-year first lien hybrids originated 827,347 1,620,924 1,928,064 1,330,900 

Cumulative number of defaulted loans 82,924 162,099 226,124 140,297 

Number of loans currently in foreclosure, bankruptcy, or REO 19,629 71,438 155,837 124,739 

As Percent of Loans Originated in Year 

Cumulative default rate 10.0% 10.0% 11.7% 10.5% 

Percent currently in foreclosure, bankruptcy, or REO 2.4% 4.4% 8.1% 9.4% 

*Default includes all loans which entered foreclosure, bankruptcy, or REO. 

Source: LoanPerformance ABS database. Data for nonprime two- and three-year hybrids included in private label securitizations. Includes loans in subprime and Alt-A pools. Data current 

through August 2007. 

While this may be the optimal approach for most loan 

types under normal market conditions, the large 

payment resets imposed on subprime hybrid borrowers 

will, in today’s distressed housing market, require 

servicers to consider new strategies to limit credit 

losses and maximize the value of the mortgages they 

manage. 

An emerging consensus suggests that a streamlined 

loan modification approach is not only feasible, but 

that it can reduce the cost and complexity of restructuring. On October 10, 2007, Secretary of the Treasury 

Henry M. Paulson, Jr., announced the formation of 

HOPE NOW, a private sector alliance of counselors, 

servicers, investors, and other mortgage market participants, that will maximize outreach efforts to homeowners in distress to help them stay in their homes 

and will create a coordinated plan to aid as many 

homeowners as possible.12 In addition, on November 

20, 2007, the Governor of California announced he 

has reached an agreement with several large loan 

servicers, including Countrywide, GMAC, Litton, 

and HomEq, to streamline “fast-track” procedures to 

help keep more subprime borrowers in their homes.13 

Developments such as these represent real progress on 

the part of the mortgage servicing industry in dealing 

with the ongoing mortgage credit crisis. They reflect 

a recognition of the benefits of restructuring and the 

potential costs of a business-as-usual approach to the 

problem. The ability of mortgage servicers to get ahead 

of the curve by embracing restructuring on a wider 

basis could, in the end, be one of the most important 

factors in limiting the depth and duration of the present mortgage credit crisis. 

12 For more information about the HOPE NOW alliance, see 

www.hopenow.com. The U.S. Department of the Treasury press 

release is available at http://www.ustreas.gov/press/releases/ 

hp599.htm. 

13 “Gov. Schwarzenegger Works with Lenders to Help Homeowners 

Avoid Foreclosure,” November 20, 2007 (press release available at 

http://gov.ca.gov/index.php?/press-release/8147). 

FDIC QUARTERLY 29 2007, VOLUME 1, NO. 3 
Feature Article: 

Establishing Voluntary Excess Deposit Insurance: 

Results of the 2006 FDIC Study 

Foreword A Changed Banking Environment 

The Federal Deposit Insurance Corporation (FDIC) was 

required by the Federal Deposit Insurance Reform Conforming Amendments Act of 2005 (FDIRCAA) to study 

the feasibility and consequences of privatizing deposit insurance, establishing a voluntary deposit insurance system for 

deposits in excess of the maximum amount of FDIC insurance, and increasing the limit on deposit insurance coverage 

for municipalities and other units of general government. In 

February 2007, the FDIC sent its report to Congress. The 

results of the FDIC’s findings on privatizing deposit insurance appeared in a previous issue of the FDIC Quarterly 

(available at http://www.fdic.gov/bank/analytical/ 

quarterly/index.html).1 This article summarizes the 

FDIC’s findings on establishing a voluntary deposit insurance system for excess deposits. The results of the FDIC’s 

study on providing for increased coverage on municipal 

deposits will be presented in a future issue of the FDIC 

Quarterly. 

Introduction 

In 2006, in response to the Federal Deposit Insurance 

Reform Conforming Amendments Act of 2005 

(FDIRCAA), the FDIC studied the feasibility of establishing a voluntary deposit insurance system for 

deposits that exceed the maximum amount of FDIC 

insurance. This study concluded that market changes 

during the past two decades have lessened the demand 

for excess deposit insurance and provided depositors 

with other options to protect excess deposits. This article examines the factors that have shaped this new 

banking environment. It then looks at two approaches 

to offering excess deposit insurance and identifies key 

issues to be resolved should Congress authorize an 

FDIC role in the provision of excess deposit insurance. 

1 Christine Bradley and Valentine V. Craig, “Privatizing Deposit Insurance: Results of the 2006 FDIC Study,” FDIC Quarterly (Second Quarter 2007): p. 23–32. 

The banking environment has changed considerably 

since the early 1990s in response to a return to banking industry profitability, technological advances, and 

product developments in the private sector. As a 

result, the demand for various forms of excess insurance has diminished. 

The Banking Industry’s Return to Stability and 

Profitability 

The return to industry stability and profitability after 

the turbulence of the late 1980s and early 1990s has 

reduced the demand for private excess deposit insurance. A number of private excess deposit insurance 

plans were implemented in the early 1990s, but 

many—such as the Depositsure program, offered by 

Centrex Underwriters Inc.—have been terminated. 

Joseph Carlson, president of Memphis-based Centrex, 

stated that the company expected a “blizzard of applications” for excess deposit insurance when the program 

was created in 1993. However, when profitability 

returned to the banking sector, Centrex found that the 

demand for the product fell below original expectations, and the Depositsure program ceased operation in 

2001.2 Another entrant into this market, Reliance 

National, a subsidiary of Reliance Group Holdings, 

reported being “flooded with inquiries” in the late 

1980s. However, by the time the company developed a 

product, it discovered that “their timing was a bit off.”3 

Examples of firms currently providing excess deposit 

insurance are BancInsure, St. Paul Travelers, and 

Kansas Bankers Surety Company. BancInsure provides 

risk management and risk mitigation services for community banks and other financial institutions and 

offers excess deposit insurance bonds to banks that are 

2 Celia Viggo Wexler, “For Private Deposit Insurers, The Windfall 

Never Came,” The American Banker (July 10, 1996): p. 3. 3 Ibid. 

FDIC QUARTERLY 30 2007, VOLUME 1, NO. 3 
Establishing Voluntary Excess Deposit Insurance 

customers for the company’s other insurance products 

(http://www.bancinsure.com). St. Paul Travelers offers 

excess coverage through a depository bond 

(http://www.travelers.com), as does Kansas Bankers 

Surety Company, a subsidiary of Wesco Financial Corporation. Kansas Bankers Surety offers these bonds not 

only to banks in Kansas but to banks in many other 

states (http://wescofinancial.com). 

In addition, excess deposit insurance continues to be 

provided to state-chartered cooperatives and savings 

banks in Massachusetts by the Share Insurance Fund of 

the Co-Operative Central Bank (SIF) for cooperative 

banks and the Depositors Insurance Fund (DIF) for 

savings banks. The SIF and DIF are private, industryowned excess deposit insurance funds, and both are 

backed solely by their own assets. Neither the Commonwealth of Massachusetts nor the U.S. government 

has any liability for these funds’ obligations. Both 

funds insure deposits above the FDIC limit, in full, 

dollar for dollar, without restriction 

(http://coopcentralbank.com or http://difxs.com). 

Technological Advances 

Recent technological advances have changed the 

banking environment by giving customers options for 

depositing their money and protecting their deposits, 

reducing the need for excess deposit insurance. No 

longer must depositors physically visit a depository 

institution to do their banking. Depositors can shop for 

financial services and conduct banking business 

through the Internet. Rates and terms for deposit 

accounts offered locally and nationwide are available 

through commercial listing services, such as 

Bankrate.com (http://www.bankratemonitor.com).4 

The FDIC also has developed a Web-based application 

(http://www2.fdic.gov/edie) that provides information 

to depositors about how to keep more than $100,000 

fully insured within one financial institution, using different categories of account ownership. 

Recent Private Sector Product Developments 

Products developed by the private sector have reduced 

the demand for excess coverage. Two of these initiatives have become particularly popular: deposit-place4 The FDIC provides tips for safe banking over the Internet at 

http://www.fdic.gov/bank/individual/online/safe.html, and maintains an 

online database where consumers can confirm that an institution is 

FDIC-insured (http://www2.fdic.gov/idasp/main_bankfind.asp). 

ment services and deposit-sweep programs. In depositplacement services, large deposits are split by private 

companies into smaller amounts and distributed to participating banks; as a result, the total deposit is insured 

by the FDIC. In deposit-sweep programs, a depository 

institution “sweeps” demand deposit accounts into 

nondeposit instruments, which may result in the 

avoidance of loss in the event of a bank failure. 

Deposit-Placement Services. Deposit-placement services allow participating banks and thrifts to insure 

deposits that exceed the statutory insurance limit 

while retaining the bank-customer relationship with 

their depositors. To show how a deposit-placement 

service does this, let us assume that a customer deposits 

$500,000 into a participating bank or thrift. The bank 

originating the deposit retains $100,000 in an insured 

account and distributes the remaining $400,000 among 

four other participating institutions, resulting in the 

depositor having full FDIC coverage.5 A deposit-placement service is a form of brokerage in which the risk 

associated with the increased coverage is passed to the 

FDIC. However, risk is minimized as deposits placed 

through this service are considered to be brokered 

deposits, and therefore only well-capitalized institutions can participate.6 

In 2003, the FDIC responded to an inquiry from a 

deposit-placement service as to whether pass-through 

deposit insurance rules apply to funds placed with the 

service. The FDIC responded that deposit insurance 

would “pass through” from the agent (the depositplacement service) to the owner of the funds provided 

that disclosure, record keeping, and other requirements 

were adhered to in the process.7 Deposit-placement 

services became an alternative for customers seeking 

deposit insurance coverage of funds in excess of the 

statutory limit. 

5 This example illustrates a one-way sell transaction. Deposit-placement services also offer reciprocal transactions in which the money 

that is transferred out of the originating bank ($400,000 in our example) is replaced with deposits from other participating institutions 

equaling (in our example) $400,000. As a result of a reciprocating 

transfer, the originating bank maintains its deposit base. 

6 12 U.S.C. § 1831f(a) (2001). An adequately capitalized (but not wellcapitalized) institution may apply to the FDIC for a waiver to accept 

brokered deposits ((12 U.S.C. § 1831f(c) (2001)). 

7 Joseph A. DiNuzzo, “Do ‘Pass Through’ Deposit Insurance Rules 

Apply to Funds Placed in the ‘Certificate of Deposit Account Registry 

Service?’” FDIC Law, Regulations, Related Acts (2003), 

http://www.fdic.gov/regulations/laws/rules/4000-10220.html 

(accessed December 1, 2006). 

FDIC QUARTERLY 31 2007, VOLUME 1, NO. 3 
Deposit-Sweep Programs. Many insured depository 

institutions offer customers the option of “sweeping” 

funds from a deposit account into an alternative 

investment vehicle. In a commercial sweep, the depositor has the option of sweeping funds held in a demand 

deposit into a variety of nondeposit instruments, 

including money market instruments, money market 

mutual funds, Eurodollar accounts, or international 

banking facilities. Commercial sweeps began to be used 

routinely in the 1980s. The primary motivation for 

developing this product was to allow commercial 

demand deposit customers to earn interest on their 

balances, but depositors may also believe their money 

is fully protected in the event of a bank failure. However, for several reasons, most sweeps may not actually 

increase a customer’s chance of recovery if the institution fails. 

Options for Federal Excess Deposit Insurance 

Coverage 

If Congress were to decide that the FDIC should play a 

role in providing excess deposit insurance, the FDIC 

could adopt one of two strategies. First, it could offer 

excess insurance directly to banks on a voluntary basis, 

subject to an additional cost, and either retain the 

additional risk not covered by the participating banks’ 

premiums or purchase reinsurance from a private sector 

reinsurer for the additional coverage. A second 

approach would be to continue to rely on the private 

sector for excess deposit insurance. However, to 

encourage private sector insurers to enter this market, 

the FDIC probably would have to act in some capacity 

as a reinsurer to private sector insurers. 

FDIC Provision of Excess Deposit Insurance: 

Key Issues 

The FDIC has considered how it might provide 

voluntary excess deposit insurance. Issues yet to be 

resolved include the availability of excess insurance, 

limits to the excess coverage to protect taxpayers and 

the insurance fund, and a price for the excess coverage. 

Congressional authorization would be required for the 

FDIC to play any role in providing excess voluntary 

deposit insurance. 

Availability. The FDIC might limit the availability of 

excess deposit coverage to well-capitalized and wellmanaged institutions. For instance, it might institute 

term policies that would be cancelled if the institution 

failed to meet requisite capital standards or if the 

institution’s CAMELS (capital adequacy, asset quality, 

management, earnings, liquidity and sensitivity to 

market risk) rating declined. A means of informing 

depositors about this change in status would need to be 

established to ensure that depositors received prompt 

and adequate notice. 

Caps or Co-insurance. The FDIC might place a limit, 

or cap, on the amount of excess coverage it would 

insure. In addition, the depositor might share in any 

losses on the excess deposit. For example, only 80 

percent of the excess deposit might be insured up to 

the designated cap. Of course, current law affects the 

recovery of excess (uninsured) deposits. First, after 

1993 and the enactment of national depositor 

preference, uninsured depositors share pro rata with the 

FDIC in the liquidation of the failed bank.8 As a 

result, if only part of an excess deposit is insured in a 

system using caps or co-insurance, depositors may not 

receive more coverage than they would under the 

current system, although excess coverage would give 

depositors the certainty of at least a minimum 

recovery.9 Second, the FDIC Board may authorize the 

payment of advance dividends to uninsured depositors 

soon after a bank’s closing. Advance dividends are 

based on an estimated recovery of the bank’s assets and 

provide excess depositors an earlier return on the 

uninsured portion of their deposits.10 

Pricing. A decision would need to be made as to 

whether participating institutions would pay a uniform 

premium. One possibility might be to assess a 

surcharge for accounts over the insurance limit on an 

increasing scale; that is, a higher premium per dollar of 

excess coverage. Another approach could be to assess a 

lower premium on the excess based on an institution’s 

asset mix. 

8 12 U.S.C. § 1821(d)(11) (2001). 

9 This outcome would depend on the percentage of the excess 

deposit insured and the rate of return on assets to uninsured depositors at a given failed institution. 

10 Federal Deposit Insurance Corporation (FDIC), Managing the Crisis: 

The FDIC and RTC Experience, 1980–1994 (Washington, DC: FDIC, 

1998): p. 249. 

FDIC QUARTERLY 32 2007, VOLUME 1, NO. 3 
Establishing Voluntary Excess Deposit Insurance 

FDIC Provision of Excess Deposit Insurance: 

The Role of Reinsurance 

The FDIC might guarantee its exposure in excess of 

the statutory limit with a private sector reinsurer. The 

FDIC would continue to provide deposit insurance 

coverage up to the statutory limit, but its risk on the 

excess could be transferred to a competitive market of 

private reinsurers. 

The FDIC explored the feasibility of establishing a private reinsurance system for deposit insurance in 

2001.11 (The study focused on reinsurance of the 

FDIC’s primary deposit insurance, not excess deposit 

insurance, but the findings are relevant here.) The 

Marsh & McLennan study found that reinsurers had 

only limited interest in engaging in reinsurance agreements with the FDIC on terms acceptable to the Corporation. Some reinsurers wished to limit their risk by 

either reinsuring only the strongest banks or charging 

prohibitively high premiums to banks which they 

determined to be involved in high-risk activities. 

Specifically, the Marsh & McLennan study reached 

the following conclusions: 

The capacity of the reinsurance market could 

theoretically exceed $5 billion.12 However, that 

capacity would be available only if all the major 

insurance companies or reinsurance companies 

participated and only for transactions that had a 

very low probability of loss. 

Reinsurance companies would operate to their 

maximum capacity only if the FDIC paid a very 

substantial first loss. Even if the FDIC took the first 

losses, reinsurers would provide maximum capacity 

only when the transaction was rated the equivalent 

of Aa/AA or Aaa/AAA. Multiline insurers 

expressed interest in higher-risk transactions 

(lower-risk transactions would not generate 

premiums sufficient to support underwriting costs), 

but the capacity of this segment of the market was 

limited—between $200 million and $500 million. 

11 The FDIC engaged Marsh & McLennan to evaluate the feasibility of 

private sector reinsurance arrangements, specifically whether such 

arrangements could provide competitive-market pricing information 

that would assist the FDIC in setting deposit insurance premiums and 

in measuring risks to the deposit insurance funds. The final report 

was completed in December 2001. See Marsh & McLennan Companies, Reinsurance Feasibility Study (Washington D.C.: FDIC 2001). 12 Figures are not inflation adjusted. 

Reinsurers were not interested in sharing losses 

with the FDIC on a proportional basis, even if they 

received a proportional share of any premiums. 

Reinsurance companies advised the FDIC that if 

losses were shared on a proportional basis, their 

capacity would not exceed $100 million. 

Existing transactions would affect a reinsurance 

company’s decision to participate in other 

transactions. If a reinsurer had an existing credit 

exposure with a particular bank—in the form of 

bank debt, credit default swaps, or insurance, for 

instance—the reinsurer would likely limit any 

further transactions with that client. For this 

reason, most reinsurers would prefer a transaction 

that excluded, or substantially limited, coverage of 

the 100 to 150 largest banks. 

Reinsurers generally preferred not to be exposed to 

losses from the failure of any single large bank. 

Reinsurers would be more likely to participate if 

transactions were bundled and structured with a 

three- to five-year term because reinsurers felt 

better able to evaluate risk on a portfolio basis than 

on an individual bank-by-bank pricing basis. 

Similarly, reinsurers were uncomfortable assessing 

risk beyond a five-year horizon. 

Reinsurers’ pricing of the FDIC’s risk would be a 

function of many factors, including the risk of the 

transaction, reinsurers’ cost of capital, reinsurers’ 

expense and profit provisions, and supply and 

demand. Reinsurers’ prices would represent a free 

market charge without government support and, as 

such, could be expected to exceed prices that the 

FDIC would charge for the same portion of 

coverage.13 

Privately Underwritten Excess Deposit 

Insurance 

As mentioned earlier in this article, a small number of 

private secondary insurers currently provide coverage 

for excess deposits with either the bank or the depositor purchasing the coverage. However, most banks and 

depositors have not taken advantage of these services. 

As suggested by the results of the Marsh & McLennan 

study, for privately underwritten excess deposit insurance to be more attractive to potential providers and 

customers, the FDIC likely would have to assume some 

13 Marsh & McLennan Companies (2001). 

FDIC QUARTERLY 33 2007, VOLUME 1, NO. 3 
Authors: 

of the risk. The small number of private businesses currently offering excess deposit insurance reinforces the 

hypothesis that some public loss-sharing arrangement 

is necessary to invigorate this market. 

FDIC Loss-Sharing Protocol. If the FDIC were to act 

as a reinsurer of privately underwritten excess deposit 

insurance, it would need to determine how much risk 

it would assume. The most critical issue would be the 

interplay between the amount of risk the FDIC would 

retain in such a program and the pricing of excess 

coverage. The FDIC’s share of risk could be minimal— 

perhaps, in the extreme, as little as 1 percent of anticipated expected losses—but that retained component 

would have to protect the private insurers from 

extreme events. 

Summary 

A return to stability and prosperity for the banking 

industry has weakened demand for excess deposit 

insurance. In addition, technological advances and private sector initiatives have changed the banking environment and provided depositors with many options 

for protecting their deposits in excess of the statutory 

limit. Banks and depositors currently can purchase private excess deposit insurance from a limited number of 

providers, and new banking products and services— 

deposit-placement services and deposit-sweep programs—are alternatives to FDIC-provided excess 

deposit insurance. 

If Congress were to decide that FDIC-provided excess 

insurance was appropriate, the FDIC would need to 

resolve availability, co-insurance, and pricing issues. It 

also would have to decide whether to retain the risk of 

the additional insurance or reinsure this exposure with 

private sector insurers. Alternatively, excess deposit 

insurance could be provided directly by private sector 

firms. However, depending on its scope, the price of 

privately provided excess deposit insurance likely 

would be prohibitive without an FDIC loss-sharing 

protocol. Private sector interest in providing excess 

deposit insurance, as reinsurers of FDIC exposure or as 

direct providers of excess deposit insurance, appears 

limited. 

Authors: Christine M. Bradley 

Senior Policy Analyst, cbradley@fdic.gov 

Valentine V. Craig, CFA, 

Sr. Program Analyst, mcraig@fdic.gov 

The authors would like to thank Warren Heller 

of the FDIC Division of Insurance and Research 

and Alicia Amiel of the FDIC Library for their 

assistance in writing this article. 

FDIC QUARTERLY 34 2007, VOLUME 1, NO. 3 
Establishing Voluntary Excess Deposit Insurance 

REFERENCES 

Bradley, Christine and Valentine V. Craig. 2007. Privatizing Deposit Insurance: Results of the 2006 

FDIC Study. FDIC Quarterly, Volume 1, Number 2. 

DiNuzzo, Joseph A. 2003. Do “Pass Through” Deposit Insurance Rules Apply to Funds Placed in 

the “Certificate of Deposit Account Registry Service?” FDIC Law, Regulations, Related 

Acts. http://www.fdic.gov/regulations/laws/rules/4000-10220.html (accessed December 1, 

2006). 

Federal Deposit Insurance Corporation (FDIC). 1998. Managing the Crisis: The FDIC and RTC 

Experience, 1980–1994, p. 249. 

Marsh & McLennan Companies. 2001. Reinsurance Feasibility Study. Federal Deposit Insurance 

Corporation. 

Wexler, Celia Viggo. 1996. For Private Deposit Insurers, The Windfall Never Came. The American 

Banker. July 10: p. 3. 

FDIC QUARTERLY 35 2007, VOLUME 1, NO. 3