Second Quarter, 1992 

FDIC 

Division of Research 

&Statistics 

Don Inscoe 

(202) 898-3940 

Ross Waldrop 

(202) 898-3951 

The FDIC 

uarte r 1Y---------A_n_d_re_w_c_._H_o_v_e_,J_r_.,_A_c_t_in_g_C_ha_i_r_m_an 

anking Profile 

COMMERCIAL BANKING PERFORMANCE - SECOND QUARTER, 1992 

• Bank Earnings Set Second Consecutive Quarterly Record 

• Capital Growth Accelerates In Second Quarter 

• Troubled Assets Show Slight Decline 

• Loan Portfolios Continue To Shrink As Banks Increase 

Their Investment Securities Holdings 

Insured commercial banks earned $7.9 billion in the 

second quarter of 1992, surpassing the previous 

quarterly record of $7.6 billion, set in the first. quarter 

of 1992. Second-quarter earnings were $3.3 billion 

above the $4.6 billion earned a year ago. For the first 

six months of 1992, commercial banks' net income 

totaled $15. 7 billion, compared to $10.2 billion in the 

same period of 1991. Favorable interest-rate 

conditions produced wider net interest margins for the 

fifth consecutive quarter, while loan-loss provisions 

continued to shrink. These were the two primary 

factors in the strong earnings results. Profits also were 

helped by gains from sales of investment securities, 

although these gains were lower than in the first 

quarter. The average return on assets in the second 

quarter was 0.94 percent, the highest level since 

banks began reporting quarterly income in 1983. 

Chart A - Quarterly Net Income of FDIC-Insured 

Commercial Banks, 1988 -1992 

$ Billions 

7.6 7.9 

,6.2 

5.4 

4 

■ Seeurltias and 01!,ar Gains, Not 

(4) O First Republic Effect 

12341234 1 234 1 23412 

1988 1989 1990 1991 1992 

Total interest income for the second quarter was $64.5 

billion, a decrease of $8.1 billion from the second 

quarter of 1991. Total interest expense of $31 .6 billion 

was $10.8 billion lower than a year earlier, so that net 

interest income was $2.7 billion higher. The increase 

in net interest income was attributable to the large 

spread between long- and short-term interest rates. 

Banks limited the decline in interest income by 

increasing their holdings of residential mortgages and 

longer-term (over 1 year) fixed-rate securities while 

reducing short-term investments such as federal funds 

sold. Banks' interest expense was reduced directly by 

the sharp decline in short-term rates over the prior 

twelve months, by increased reliance on equity 

funding, and by a greater willingness of depositors to 

hold balances in noninterest-bearing accounts. 

Chart B - Quarterly Net Interest Margins of 

FDIC-Insured Commercial Banks, 1984-1992 

Net Interest Marg in (%) 

5 

~ I Banks < $100 Mii li on ~ 

( 

~- ■ ill ... 4,5 

," . . ~--~ . . .._. .. l 

--,, . - ·"""' ~- _,. ~' -· .. , ' ., - 4 i..1..11 .. .. .. . . . Ill ~ . .. 

l r,, '~ "'.--

' . 

- -"-·,",, ... --- I Banks>$ 100 M il lion 14~38% 

3.5 

12341234123412341234123412341234 1 2 

1984 1985 1986 1987 1988 1989 1990 1991 1992 

The amount of troubled assets - noncurrent loans and 

other real estate owned - at commercial banks fell 

below $100 billion for the first time since the end of 

1990. Troubled assets declined by $3.3 billion during 

the quarter, to $99. 7 billion at midyear. The 

improvement was modest, but broad-based. Banks of 

all sizes and in all regions showed improvement in 

their average ratio of troubled assets to total assets. 

Except for the seasonal reductions that typically occur 

in the fourth quarter, this was the first quarter that the 

industry's percentage of troubled assets has declined 

since the second quarter of 1988. Asset-quality 

improvements were strongest at banks in the 

Northeast and Southwest Regions. Banks in the West 

Region registered the smallest decline in troubled 

assets. 

Banks charged-off $6 billion (net) in loans and leases 

in the second quarter, one-third less than in the same 

period of 1991. Reserves against future losses shrank 

by $516 million, but, due to a $3.4-billion decline in 

noncurrent loans, banks held 77 cents in reserves for 

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

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

For assistance contact: Section508@fdic.gov
every dollar of noncurrent loans at midyear, up from 

74 cents at the end of the first quarter. Loan-loss 

provisions totaled $6.3 billion in the quarter, down 

from $8.3 billion in the second quarter of 1991. This 

was the industry's lowest quarterly loss provision 

since the first quarter of 1990. 

Total assets increased by only $2.7 billion in the 

second quarter, after increasing by $5.2 billion in the 

first quarter. Banks' short-term investments shrank by 

$11 .6 billion, due to an $11.3-billion decrease in 

federal funds sold. Loans outstanding at commercial 

banks fell by $3.8 billion, the sixth consecutive 

quarterly decline. Much of the loan shrinkage was in 

commercial and industrial loans, which fell by $5.4 

billion. Lending categories that showed the most 

growth during the quarter included adjustable-rate 

home mortgage loans (up $4.9 billion), agricultural 

production loans (up $2.6 billion) and non-construction 

commercial real estate loans (up $2.4 billion). As has 

been the case in recent quarters, the 

strongest-growing asset category was investment 

securities, which increased by $18.6 billion. Most of 

the growth was in U.S. Treasury securities and 

collateralized mortgage obligations, while banks' 

holdings of state/county/municipal securities (SCMs) 

declined. 

Equity capital increased by $9.3 billion during the 

quarter, the largest one-quarter increase ever. 

Retained earnings contributed $4.8 billion of the 

increase, as banks paid $3.1 billion in dividends. The 

banking industry's average equity capital-to-assets 

ratio now stands at 7.23 percent, the highest level 

since 1966, when it was 7.44 percent. In the first six 

months of 1992, total equity capital of the commercial 

banking industry has increased by $16.7 billion. 

Banks in the West Region reported improved 

earnings. Their aver.age return on assets in the 

second quarter was 0. 77 percent, up from 0.61 

percent in the first quarter, and 0.54 percent in the 

second quarter of last year. Troubled assets fell 

slightly, as shrinkage in noncurrent loans exceeded 

growth in banks' holdings of foreclosed real estate 

properties. Noncurrent real estate loans increased by 

$229 million, but noncurrent commercial and industrial 

loans fell by $577 million, and noncurrent consumer 

loans declined by $84 million. Much of the 

improvement in performance indicators for West 

Region banks may be attributable to the accounting 

treatment of several large bank mergers that occurred 

during the quarter. 

At midyear, there were 11,685 commercial banks 

reporting financial results, a net decrease of 120 

institutions from the 11,805 banks that filed Call 

reports for the first quarter. Twenty-six banks failed in 

the second quarter, while 10 new banks were 

chartered and 104 banks merged with other 

institutions. The number of commercial banks on the 

FDIC's "Problem List" shrank by 25 institutions to 956, 

while the combined assets of "Problem" commercial 

banks fell by $41 billion, to $494 billion. 

Commercial banks appear likely to eclipse the 

previous full-year earnings record of $24.9 billion set 

in 1988, even if they are unable to maintain the level 

of profitability they have enjoyed in the first six months 

of 1992. Assuming that interest rates remain relatively 

stable, asset quality will be the crucial determinant of 

industry performance. Especially important will be the 

continued recovery of banks in the Northeast, and the 

direction of asset quality trends at banks in the West. 

Banks still hold $393 billion in commercial real estate 

loans and remain vulnerable to the persistent 

weakness in that sector. The six consecutive quarters 

of shrinking loan portfolios do not bode well for net 

interest margins if interest rates rise. By purchasing 

longer-maturity investment securities rather than 

making new loans, banks may be increasing their 

interest-rate risk exposure rather than taking on new 

credit risk. 

Chart C -Troubled Real Estate Asset Rates By State, June 30, 1992 

Troubled Real Estate Asset Rate: 

D Less Than 4% • Noncurrent real estate loans plus 

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

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

2 
REAL ESTATE LOAN PERFORMANCE AND OTHER REAL ESTATE OWNED, 

JUNE 30, 1992 

ASSET SIZE GEOGRAPHIC DISTRIBUTION 

LESS NORTH- SOUTH- MID- SOUTHALL THAN $100MM $1B T0$10B OR EAST EAST CENTRAL WEST WEST WEST 

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

PERCENT OF LOANS 30-89 DAYS PAST-DUE 

All real estate loans 1.93% 1.66% 1.60% 2.05% 2.16% 2.38% 1.47% 1.57% 1.32% 1.57% 2.27% 

Construction and development 3.40 1.75 2.43 4.22 3.42 3.83 2.06 3.50 2.00 1.27 4.27 

Commercial real estate 2.15 1.56 1.55 2.25 2.93 2.83 1.37 1.56 1.78 1.45 2.89 

Multifamily residential real estate 2.15 1.63 1.61 1.89 3.01 2.32 1.17 1.37 1.38 2.07 3.60 

1-4 Family residential 1.61 1.85 1.62 1.55 1.56 1.96 1.57 1.42 1.14 1.66 1.50 

Home equity lines of credit 0.93 1.45 1.00 0.94 0.83 1.26 0.74 0.87 0.66 1.37 0.65 

Commercial R/E loans not secured by real estate 2.31 1.62 1.84 1.95 2.54 3.06 1.08 1.32 0.76 1.52 2.47 

PERCENT OF LOANS NONCURRENT* 

All real estate loans 4.43% 1.77% 2.28% 4.39% 7.12% 7.32% 2.72% 2.08% 1.71 % 2.76% 4.99% 

Construction and development 14.17 3.00 5.65 13.56 20.46 23.15 7.14 5.95 2.93 3.87 15.33 

Commercial real estate 5.81 2.23 3.13 5.48 10.70 9.82 4.07 3.16 3.26 4.08 5.56 

Multifamily residential real estate 5.34 2.08 2.61 4.41 9.45 9.33 3.26 2.78 2.12 2.78 4.98 

1-4 Family residential 1.62 1.31 1.30 1.63 2.02 2.71 1.17 0.91 0.72 1.49 1.55 

Home equity lines of credit 0.77 0.96 0.91 0.67 0.78 1.19 0.47 0.36 0.42 1.25 0.64 

Commercial R/E loans not secured by real estate 8.30 2.73 4.47 4.37 11.82 14.12 5.39 4.73 4.30 1.27 7.57 

PERCENT OF LOANS CHARGED OFF (NET, ANNUALIZED) 

All real estate loans 0.84% 0.18% 0.26% 0.84% 1.54% 1.71 % 0.53% 0.31 % 0.37% 0.44% 0.54% 

Construction and development 2.70 0.29 0.62 2.84 3.91 5.20 1.66 1.09 0.66 1.01 1.74 

Commercial real estate 1.12 0.27 0.39 1.07 2.34 2.17 0.80 0.53 0.89 0.67 0.69 

Multifamily residential real estate 1.34 0.46 0.37 0.85 2.89 3.03 0.58 0.46 1.01 0.41 0.54 

1-4 Family residential 0.17 0.13 0.13 0.21 0.20 0.31 0.18 0.07 0.09 0.21 0.09 

Home equity lines of credit 0.14 0.20 0.14 0.16 0.12 0.23 0.10 0.06 0.09 0.23 0.11 

Commercial R/E loans not secured by real estate 4.88 3.43 1.98 1.95 6.39 9.37 1.15 2.50 1.70 0.19 2.35 

TOTAL LOANS OUTSTANDING($ BILLIONS) 

All real estate loans $858.0 $98.1 $218.1 $266.2 $275.5 $263.8 $164.5 $144.9 $54.7 $53.4 $176.8 

Construction and development 90.9 5.9 16.8 31.7 36.5 29.3 16.5 11.7 3.4 4.2 25.9 

Commercial real estate 253.9 26.2 72.0 91.0 64.7 72.9 52.2 44.8 15.1 18.4 50.4 

Multifamily residential real estate 26.0 2.1 6.9 8.9 8.2 8.2 4.4 4.7 1.7 1.5 5.6 

1-4 Family residential 372.0 50.6 101.9 103.4 116.0 103.5 76.1 67.0 26.2 26.3 72.8 

Home equity lines of credit 71.8 3.0 14.6 28.5 25.7 26.4 11.9 11.4 2.4 0.7 19.0 

Commercial R/E loans not secured by real estate 22.2 0.6 2.1 5.2 14.3 8.5 2.4 3.0 0.7 0.8 7.0 

OTHER REAL ESTATE OWNED($ BILLIONS) 

All real estate owned $27.7 $2.0 $4.9 $8.6 $12.3 $13.3 $3.8 $2.3 $1.2 $2.5 $4.7 

Construction and development 6.9 0.3 1.1 3.1 2.3 3.3 1.2 0.5 0.2 0.5 1.2 

Commercial real estate 14.0 0.9 2.4 4.1 6.7 6.3 2.0 1.4 0.6 1.4 2.3 

Multifamily residential real estate 2.1 0.1 0.3 0.5 1.2 1.4 0.1 0.1 0.1 0.1 0.3 

1-4 Family residential 3.0 0.6 1.0 0.7 0.8 1.0 0.5 0.2 0.1 0.4 0.7 

Farmland 0.5 0.2 0.1 0.1 0.1 0.0 0.0 0.0 0.1 0.1 0.1 

Other real estate owned in foreign offices 1.3 0.0 0.0 0.1 1.3 1.3 0.0 0.0 0.0 0.0 0.0 

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

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

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

1992* 1991 * 1991 1990 1989 1988 

Return on assets............................... 0.94% 0.61% 0.54% 0.49% 0.49% 0.82% 

Return on equity ............................... 13.37 9.18 8.09 7.61 7.78 13.30 

Equity capital to assets ..................... 7.23 6.71 6.76 6.45 6.21 6.28 

Noncurrent loans and leases plus 

other real estate owned to assets ..... 2.90 3.19 2.99 2.90 2.26 2.14 

Net charge-offs to loans .................... 1.20 1.45 1.60 1.44 1.16 1.00 

Asset growth rate ............................. 1 .81 0.47 1 .21 2.73 5.37 4.36 

Net operating income growth ............. 57.17 -18.73 -0.74 3.20 -38.53 1554.74 

Percentage of unprofitable banks ........ 6.37 11.51 11 .19 13.41 12.50 14.65 

Number of institutions ....................... 11,685 12,153 11,920 12,340 12,707 13,139 

Number of problem banks .................. 956 975 997 1,012 1,092 1,394 

Assets of problem banks (billions) ...... $494.4 $348.8 $528.0 $341.6 $187.9 $304.8 

Number of failed/assisted banks ......... 55 57 108 159 206 221 

• Through June 30; ratios annualized where appropriate. Asset growth rates are for 12 months ending June 30. 

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

(dollar figures in millions) 

Preliminary 

2nd Otr 1st Qtr 2nd Qtr 

1992 1992 1991 

Number of banks reporting .. ............................. . 11,685 11,805 12,153 

Total employees (full-time equivalent) ................ . 1,479,522 1,477,600 1,503,012 

CONDITION DA TA 

Total assets .............................. ....................... $3,437,992 $3,435,329 $3,376,777 

Real estate loans.............. ........................... 857,964 854,572 848,744 

Commercial & industrial loans... .................... 546,201 551,626 588,753 

Loans to individuals.. ................................... 377,372 377,575 386,746 

Farm loans .................................................. 36,003 33,377 34,886 

Other loans and leases ................................. 214,415 218,650 215,778 

Total loans and leases............. ..................... 2,031,955 2,035,801 2,074,907 

LESS: Reserve for losses.............................. 55,285 55,801 54,256 

Net loans and leases....................................... 1,976,670 1,980,001 2,020,651 

Temporary investments.................................. 507,428 519,067 484,629 

Securities over 1 year..................................... 553,724 536,188 472,538 

All other assets.............................................. 400,169 400,074 398,959 

Total liabilities and capital.................................. 3,437,992 3,435,329 3,376,777 

Noninterest-bearing deposits .................... ....... 487,043 470,617 443,269 

Interest-bearing deposits........ ......................... 2,169,721 2,205,640 2,185,609 

Other borrowed funds .... :........... ..................... 394,848 386,441 385,864 

Subordinated debt.......................................... 27,477 24,944 24,202 

All other liabilities.................. ......................... 110,411 108,504 111,213 

Equity capital........................ ......................... 248,493 239,183 226,620 

Goodwill .......................................................... 5,651 4,520 4,330 

Loans and leases 30-89 days past-due............... 34,088 40,083 40,142 

Noncurrent loans and leases .............................. 71,929 75,311 83,019 

Restructured loans and leases............................ 10,812 9,499 9,222 

Other real estate owned.................................... 27,735 27,618 24,808 

Loan commitments and letters of credit.............. 1,397,201 1,383,696 1,332,049 

Domestic office assets.. .. .................................. 3,030,136 3,038,302 2,988,023 

Foreign office assets ................ :........................ 407,856 397,027 388,754 

Domestic office deposits.... ............................... 2,353,196 2,366,732 2,327,567 

Foreign office deposits...... ................................ 303,567 309,526 301,310 

Earning assets.............. .................................... 3,037,823 3,035,255 2,977,818 

Volatile liabilities............................................... 958,946 978,881 1,027,550 

Preliminary Preliminary 

First Half First Half 2nd Otr 2nd Qtr 

1992 1991 %Change 1992 1991 

INCOME DATA 

Total interest income ..................... $129,985 $148,107 -12.2 $64,550 $72,677 

Total interest expense .................... 65,185 88,170 -26. 1 31,579 42,366 

Net interest income ....................... 64,800 59,936 8. 1 32,972 30,311 

Provision for loan losses ................. 12,942 15,425 - 16. 1 6,321 8,269 

Total noninterest income ................ 32,270 29,401 9.8 16,583 14,836 

Total noninterest expense ............... 63,659 60,419 5.4 32,645 30,571 

Securities gains (losses) ................. 1,934 803 140.9 800 374 

Applicable income taxes ................. 6,934 4,754 45.9 3,577 2,342 

Extraordinary gains, net .................. 230 658 -65.0 101 305 

Net income ................................. 15,700 10,200 53.9 7,912 4,645 

Net charge-offs ............................. 11,948 15,173 -21.3 5,982 8,926 

Cash dividends on capital stock ...... 5,886 7,386 -20.3 3,112 3,207 

Net operating income ..................... 14,023 8,922 57.2 7,204 4,054 

1987 

0.09% 

1.55 

6.04 

2.46 

0.92 

2.01 

-89.65 

17.66 

13,696 

1,559 

$329.2 

201 

%Change 

91 :2-92:2 

-3.8 

-1 .6 

1.8 

1. 1 

-7.2 

-2.4 

3.2 

-0.6 

-2. 1 

1.9 

-2.2 

4.7 

17.2 

0.3 

1 .8 

9.9 

-0.7 

2.3 

13.5 

-0.7 

9.6 

30.5 

-15. 1 

-13.4 

17.3 

11 .8 

4.9 

1.4 

4.9 

1 . 1 

0.8 

2.0 

-6.7 

%Change 

91 :2-92:2 

- 11 .2 

-25.5 

8.8 

-23.5 

11 .8 

6.8 

114.1 

52.7 

-67.0 

70.3 

-33.0 

-3.0 

77.7 

4 
Table 111. First Half 1992 Bank Data (Dollar figures in billions, ratios in %) 

ASSET SIZE DISTRIBUTION GEOGRAPHIC DISTRIBUTION 

EAST WEST l1111 $100 Million Greater 

FIRST HALF Preliminary ALL than $100 to $1-10 than $10 Northeast Southeast Central Midwest Southwelt West 

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

Number of banks reporting ................. 11,685 8,554 2,757 328 46 954 1,904 2,579 2,831 2,077 1,340 

Total assets ...................................... $3,438.0 $348.0 $669.2 $1,062.4 $1,358.4 $1,304.0 $521.7 $564.7 $232.8 $271.9 $542.8 

Total deposits ....•.............................. 2,656.8 307.9 578.7 813.5 956.7 925.0 418.4 446.7 190.5 236.7 439.5 

Net income (in millions} ..................... 15,700 1,935 3,475 5,401 4,888 4,846 2,723 3,066 1,510 1,502 2,052 

Percentage of banks losing money ...... 6.4% 6.7% 5.1 % 7.6% 4.3% 14.9% 7.7% 3.7% 2.7% 4.9% 13.7% 

Percentage of banks with earnings gains. 76.0 75.2 78.2 79.3 71.7 75.5 81.3 76.7 72.7 80.3 68.0 

Performance Ratios (annualized) 

Yield on earning assets ...................... 8.82% 8.82% 8.68% 8.53% 9.13% 9.31 % 8.53% 8.46% 8.56% 8.03% 8.82% 

Cost of funding earning assets............ 4.42 4.13 3.99 3.86 5.22 5.30 4.00 4.07 4.12 3.70 3.62 

Net interest margin ............................ 4.39 4.69 4.69 4.67 3.91 4.01 4.54 4.39 4.44 4.33 5.20 

Noninterest income to earning assets... 2.19 1.07 1.30 2.47 2.76 2.72 1.70 1.58 2.30 1.76 2.24 

Noninterest expense to earning assets . 4.32 3.81 3.90 4.56 4.48 4.47 4.06 3.78 4.18 4.22 4.94 

Net operating income to assets ........... 0.84 1.04 0.99 0.92 0.64 0.62 0.97 1.03 1.23 0.96 0.78 

Return on assets ............................... 0.94 1.12 1.05 1.02 0.77 0.77 1.05 1.10 1.30 1. 1 1 0.81 

Return on equity ............................... 13.37 12.13 13.09 14.19 13.26 12.31 14.18 14.51 15.68 15.65 11.08 

Net charge-offs to loans and leases ... .. 1.20 0.44 0.62 1.37 1.53 1.83 0.78 0.74 0.74 0.73 1.04 

Loan loss provision to net charge-offs.. 108.32 127.77 128.21 107.45 103.56 98.78 116.55 118.17 124.11 107.16 127.64 

Condition Ratios 

Loss allowance to: 

Loans and leases ............................ 2.72% 1.78% 1.87% 2.85% 3.24% 3.38% 2.07% 1.91 % 2.05% 2.43% 3.01 % 

Noncurrent loans and leases............. 76.86 94.21 85.67 90.73 66.28 66.80 94.31 95.76 118.28 97.00 75.54 

Noncurrent loans and leases plus 

other real estate owned to assets ..... 2.90 1.56 2 .00 2 .73 3 .82 3.96 2 .05 1.60 1.48 2.08 3.54 

Equity capital ratio .......... ... ............... 7.23 9.39 8.18 7 .49 6.00 6.43 7.67 7.75 8 .55 7.36 7.54 

Core capital (leverage) ratio ................ 6.97 9.29 8.01 7.13 5.71 6.30 7.29 7.56 8.27 7.10 6.99 

Net loans and leases to deposits ......... 74.40 58.18 66.15 77.63 81.87 79.11 73.08 74.53 67.26 51.81 80.87 

Growth Rates (year-to-year) 

Assets ............................................. 1.8% 5.5% 6.1 % 7.3% 15.0% 2.1 % 2.4% 2.2% 2.7% 2.3% -0.6% 

Equity capital .................................... 9 .6 7.7 10.3 16.0 25.4 10.7 9.2 7.8 8.7 11.3 9 .7 

Net interest income ......... .................. 8.1 12.9 13.2 13.2 20.9 10.3 10.6 10.8 4.5 16.4 -1.6 

Net income....................................... 53.9 44.2 33.0 93.5 35.3 144.0 70.8 21.7 17.5 76.5 4.5 

Noncurrent loans and leases plus 

other real estate owned ................... -7.6 -3.7 6.6 -6.5 19.8 -12.8 -12.9 -7.5 -1.8 -17.4 18.5 

Net charge-offs ........................ ......... -21 .3 -14.2 -15.0 -10.2 -13.8 -22.3 -24.3 -0.3 -25.6 -43.9 -17.1 

Loan loss provision ............................ -16.1 -11.6 -9.0 -21.6 14.5 -15.1 -34.2 -1.9 -11.3 -26.5 -10.8 

PRIOR FIRST HALVES 

(The way it was .. .J 

Return on assets ..................... 1991 0.61 % 0 .97% 0 .80% 0.54% 0.47% 0.31 % 0.63% 0.92% 1.13% 0.64% 0.72°3⁄4, 

.............................. 1989 0.91 0.89 0 .96 0.86 0.93 0.87 0.98 1.08 1.15 0.05 1.10 

.............................. 1987 -0.37 0.66 0.70 0.45 -2.00 -1.06 0.96 0.19 0.49 -0.51 -0.63 

Equity capital ratio .................. 1991 6.71 9.10 7.85 6.74 5.45 5.94 7.19 7.35 8.08 6.77 6.83 

.............................. 1989 6 .44 9.06 7.54 6.36 5.17 6.05 7.02 6.87 7.84 5.84 6.16 

.............................. 1987 6 .02 8.65 7.38 6.09 4.22 5.29 6.92 6.68 7.45 6.39 5.47 

Noncurrent loans and leases plus 

other real estate owned to assets. 1991 3.19 1.76 2.09 3.17 4 .17 4.64 2.41 1.77 1.55 2.58 2.97 

.............................. 1989 2.28 1.93 1.82 1.64 3.16 2.52 1 .23 1.29 1.59 4.77 2.64 

.............................. 1987 2.59 2.31 1.96 1.84 3.64 2.58 1.12 1.48 2 .16 4.97 3.63 

Net charge-offs to loans and leases .. 1991 1.45 0.56 0.81 1.64 1.81 2.18 1.01 0.75 1.00 1.29 1.11 

.............................. 1989 0 .86 0.64 0.63 0.87 1.09 0.90 0.46 0.67 0.91 1.77 1.05 

.............................. 1987 0.79 0.99 0.81 0.71 0.80 0 .57 0.51 0 .49 1.43 1.80 1.04 

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

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

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

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

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

Southwest­ Arkansas, Louisiana, New Mexico, Oklahoma, Texas 

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

Washington, Wyoming 

5 
Table IV. Second Quarter 1992 Bank Data (Dollar figures in billions, ratios In o/o) 

ASSET SIZE DISTRIBUTION GEOGRAPHIC DISTRIBUTION 

EAST WEST LeH $100 Million Greater 

SECOND QUARTER Prsliminsry ALL than $100 to $1-10 than $10 Northeast Southeast Central Midwest Southwest Weit 

(The way it is . . .J BANKS Million t1 Billion Billion Billion Region Region Region Region Region Region 

Number of banks reporting .......•.......... 11,685 8,554 2,757 328 46 954 1,904 2,579 2,831 2,077 1,340 

Total assets ....................................... $3,438.0 $348.0 $669.2 $1,062.4 $1,358.4 $1,304.0 $521. 7 $564.7 $232.8 $271.9 $542.B 

Total deposits ..•.•............................... 2,656.8 307.9 578.7 813.5 956.7 925.0 418.4 446.7 190.5 236.7 439.5 

Net income (in millions} ....................... 7,912 976 1,762 2,763 2,411 2,393 1,443 1,580 743 756 998 

Percentage of banks losing money ....... 6.8% 7.4% 5.1% 7.9% 4.3% 14.1% 7.4% 4.3% 3.4% 6.3% 13.9% 

Percentage of banks with earnings gains. 70.9 69.1 76.7 79.0 66.2 73.3 76.3 70.7 66.2 76.9 66.1 

Performance Ratios (annualized) 

Yield on earning assets ........................ 8.66% 8.71% 8.67% 8.40% 8.91% 9.07% 8.36% 8.30% 8.44% 7.90% 8.87°1/o 

Cost of funding earning assets ............. 4.24 3.97 3.83 3.68 4.99 6.07 3.79 3.88 3.96 3.63 3.62 

Net interest margin ............................. 4.42 4.76 4.74 4.71 3.91 4.00 4.66 4.42 4.48 4.36 6.36 

Noninterest income to earning assets .... 2.22 1.07 1.32 2.63 2.78 2.71 1.76 1.62 2.26 1.83 2.39 

Noninterest expense to earning assets ... 4.38 3.81 3.93 4.63 4.68 4.49 4.06 3.81 4.16 4.26 6.24 

Net operating income to assets ............. 0.86 1.06 1.00 0.96 0.64 0.61 1.07 1.06 1.23 0.99 0.76 

Return on assets ....... .... ...................... 0.94 1.13 1.06 1.04 0.74 0.76 1.10 1.13 1.27 1. 11 0.77 

Return on equity ................................. 13.16 12.09 13.08 14.21 12.61 11.86 14.76 14.70 16.18 16.44 10.39 

Net charge-offs to loans and leases ....... 1.20 0.49 0 .69 1.36 1.49 1.84 0.72 0.74 0.78 0.70 1.06 

Loan loss provision to net charge-offs ... 106.68 120.96 120.00 107.76 99.61 93.74 111.76 117.79 119.34 109.47 133.12 

Growth Rates (year-to-year) 

Net interest income ............................. 8.8% 12.5% 12.5% 13.6% 22.3% 10.6% 10.8% 10.3% 4.1% 16.7% 1.4% 

Net income ........................................ 70.3 46.4 38.9 144.5 36.0 224.6 72.1 25.5 14.4 76.3 36.2 

Net charge-offs ................................... -33.0 -18.3 -19.8 -15.8 -33.1 -38.6 -35.2 -8.8 -27.9 -48.8 -12.9 

Loan loss provision ............................. -23.5 -19.0 -18.9 -30.9 7.0 -21.6 -40.1 -9.1 -16.9 -24.3 -26.2 

PRIOR SECOND QUARTERS 

(The way it was .. .J 

Return on assets .... ................. 1991 0.55% 0 .76% 0 .76% 0.42% 0.50% 0.23% 0.66% 0.92% 1.15% 0.65% 0.54% 

............................. 1989 0.87 0.84 0.96 0.80 0.94 0.87 0.98 1.08 1.10 -0.05 1.04 

............................. 1987 -1.48 0.59 0.53 0.06 -4.57 -2.84 0.86 -0.56 0.11 -1.22 -1 .80 

Net charge-offs to loans and leases 

............................. 1991 1.72 0.68 0 .93 1.73 2.32 2.81 1.10 0.82 1.09 1.37 1.09 

............................. 1989 1.04 0.75 0.69 0.93 1.40 1.19 0.50 0.74 0.93 1.91 1.15 

....... ...................... 1987 0.86 1.17 0.91 0.81 0.78 0.60 0.58 0.54 1.44 2.13 1.08 

6 
SAVINGS BANK PERFORMANCE - SECOND QUARTER, 1992 

• BIF-lnsured Savings Banks Earn $217 Million 

• Five Institutions Fail During the Quarter 

• Troubled Assets Held by the Remaining Savings Banks Decline $440 Million 

While Their Capital Ratios Improve 

The 430 savings banks insured by the Bank Insurance Fund 

earned $217 million in the second quarter of 1992. This is 

the second quarter in a row in which savings banks earned 

a profit, following 11 consecutive unprofitable quarters. A 

23 percent increase in net income compared with the previous quarter was attributable to FDIC's resolution of five 

institutions with $4.2 billion in assets during the quarter. 1 

Second quarter 1992 net income reported by the remaining 

430 savings banks would have declined 2 percent if aggregate first quarter losses of $36 million reported by the 

failed institutions are excluded. 

Troubled assets held by the 430 surviving savings banks 

declined by $440 million (down 3.6 percent). Noncurrent 

loans declined by $562 million during the quarter at the 

surviving savings banks while their other real estate owned 

increased $122 million. Net charge-offs of $439 million 

during the quarter contributed to the quarterly reduction in 

noncurrent loans at these institutions. As a result of these 

changes, troubled assets amounted to 5.15 percent of their 

total assets, down from 5.32 percent the previous quarter. 

Improved net interest income (up $1 28 million during the 

quarter at the surviving institutions) was largely offset by 

higher loan loss provisions (up $52 million over the prior 

quarter), and lower gains on the sale of investment 

securities (down $52 million over the same period). Aggregate second quarter return on assets was 0.37 percent. 

The 318 institutions headquartered in the New England 

states reported an aggregate return on assets of 0.21 percent, while the 97 savings banks in the other Northeastern 

states reported a significantly higher figure: 0.41 percent. 

Return on assets at the 15 savings. banks located outside 

the Northeast averaged 1.51 percent. 

Favorable interest rates continued to benefit the industry as 

funding costs dropped more sharply than asset yields. Net 

interest margins reported by the surviving 430 savings 

banks averaged 3.63 percent, up from 3.42 percent the 

previous quarter at these institutions. Institutions in the 

New England states reported wider interest margins (3.80 

percent of earning assets) than those in the other Northeastern states (3.45 percent). Savings banks located outside of the Northeast reported the highest margins (3.87 

percent) but their margins declined slightly compared with 

the first quarter. 

Eighty-seven percent of all savings banks were profitable in 

the second quarter, up slightly from 85 percent in the previous quarter. Fifteen percent of the savings banks located 

in the New England states lost money compared to 9 percent in the other states in the Northeast. All of the savings 

banks located outside of the Northeast reported profits for 

the second quarter. 

Reserve coverage of troubled loans improved during the 

quarter due to the decline in noncurrent loans. As of June 

30, 1992, institutions in the New England states held nearly 50 cents in reserve for each dollar of troubled assets 

while those in the other Northeastern states held 33 cents. 

Reserve coverage levels remain strongest at the institutions 

located outside of New England and the Northeast. These 

institutions held 73 cents in reserves for each dollar of noncurrent loans. 

Total assets of BIF-insured savings banks declined by $4.8 

billion, due mainly to the failure of five savings banks with 

assets of $4.2 billion. Assets at the 430 surviving institutions declined $864 million during the quarter. Their net 

loans were $3.1 billion lower than the previous quarter, 

while their investment security holdings increased $2.6 billion. Home mortgage loans secured by 1-4 family properties 

declined $1.4 billion (down 1.5 percent) in the quarter, 

while commercial real estate and construction loans shrank 

$1.2 billion (down 2.8 percent). Equity capital ratios 

benefited from retained industry profits and shrinking assets. The 430 savings banks had an aggregate equity capital to assets ratio of 7. 30 percent at the end of the second 

quarter, up from 7 .20 percent at the end of the first 

quarter. 

Favorable interest rates have helped savings banks to absorb their credit losses and improve their capital ratios. Increased interest earnings should slow capital depletion at 

troubled institutions. Nevertheless, with one of every five 

savings banks on FDIC's •Problem List•, the industry is 

likely to continue to contract both in terms of the number 

of institutions and its total assets. 

1 Southstata Bank for Savings, Brockton, MA failed on April 24, 1992 but did not submit its final March 31, 1992 Call report. 

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

7992• 1991 • 1991 1990 1989 1988 1987 

Return on assets ...................................... 0.38% -0.56% -0.50% -0.98% -0.27% 0.44% 0.84% 

Equity capital to assets ............................. 7.30 6.69 6.74 6.62 7.06 7.44 7.69 

Noncurrent loans and leases plus 

other real estate owned to assets• • ........ 5.15 6.04 5.86 5.13 2.64 1.51 0.95 

Noncurrent RE loans to total RE loans• • ..... 4.88 5.79 5.65 5.32 3.14 1.67 1.01 

Asset growth rate .................................... -5.12 -8.29 -8.35 -7.46 -1.52 8.52 10.54 

Deposit growth rate .................................. -3.78 -4.97 -5.68 -4.98 1.36 7.90 5.81 

Number of institutions .............................. 430 456 441 469 489 492 484 

Number of problem savings banks .............. 88 58 74 34 17 12 16 

Assets of problem savings banks (billions) .. $73.0 $65.4 $81.8 $67.2 $47.6 $47.4 $29.3 

Number of failed savings banks ................. 11 6 19 10 1 0 2 

• Through June 30; rates annualized where appropriate. Asset and deposit growth rates are for 12 months ending June 30. • • Excludes Federally-chartered Savings Banks before 1990. 

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

(dollar figures in millions) 

Preliminary 

2nd Otr 1st Otr 2nd Otr % Change 

1992 1992 1991 91 :2-92:2 

Number of savings banks reporting ..................... 430 435 456 -5.7 

Total employees (full-time equivalent) ................. 67,819 67,798 70,782 -4.2 

CONDITION DA TA 

Total assets ...................................................... $231,702 $236,466 $244,193 -5.1 

Mortgage loans ............................................... 134,462 139,324 149,069 -9.8 

1-4 family residential .................................... 93,496 95,507 99,957 -6.5 

Construction and land development ................ 4,038 4,493 6,956 -42.0 

Commercial and multi-family ......................... 36,928 39,324 42,157 -12.4 

All other loans and leases ................................ 14,619 15,483 18,987 -23.0 

LESS: Reserves for losses ............................. 2,974 3,121 2,976 -0.0 

LESS: Other contra accounts ......................... 478 549 738 -35.3 

Net loans and leases ....................................... 145,629 151, 136 164,343 -11.4 

Mortgage-backed securities .............................. 20,422 20,568 22,418 -8.9 

Other real estate owned .................................. 4,603 4,689 4,786 -3.8 

Goodwill ........................................................ 803 935 1,183 -32.2 

All other assets ............................................... 60,246 59,137 51,463 17.1 

Total liabilities and capital .................................. 231,702 236,466 244,193 -5.1 

Interest-bearing deposits .................................. 188,820 192,987 197,348 -4.3 

Noninterest-bearing deposits ............................ 7,227 6,955 6,406 12.8 

Other borrowed funds ..................................... 15,876 16,647 20,728 -23.4 

Subordinated debt ........................................... 256 317 654 -60.9 

Other liabilities ................................................ 2,601 2,778 2,730 -4.7 

Equity capital .................................................. 16,922 16,783 16,326 3.6 

Loans and leases 30-89 days past-due ................ 4,015 4,898 5,587 -28.1 

Noncurrent loans and leases ............................... 7,326 8,285 9,973 -26.5 

Other noncurrent assets ..................................... 25 26 22 10.4 

Direct and indirect investments in real estate ....... 710 797 1,110 -36.1 

INCOME DATA Preliminary Preliminary 

First Half First Half 2nd Otr 2nd Otr %Change 

1992 1991 % Change 1992 1991 91 :2-92:2 

Total interest income ..................... $9,030 $10,766 -16.1 $4,497 $5,314 -15.4 

Total interest expense .................... 5,284 7,631 -30.8 2,556 3,730 -31.5 

Net interest income ..................... 3,747 3,136 19.5 1,941 1,585 22.5 

Provisions for losses ...................... 743 1,185 -37.3 398 712 -44.1 

Total noninterest income ................ 686 622 10.2 378 334 13.1 

Total noninterest expense .............. 2,980 3,102 -3.9 1,521 1,633 -6.9 

Securities gains, net ...................... 170 102 67.3 59 31 88.7 

Applicable income taxes................. 463 262 76.7 243 133 83.0 

Extraordinary gains, net ................. 17 1 N/M 2 2 -15.5 

Net income ................................. 435 (688) N/M 217 (526) N/M 

Net charge-offs ............................. 847 1,151 -26.4 439 619 -29.1 

N/M - Not meaningful 

8 
Table Ill. First Half 1992 Savings Bank Data (Dollar figures in billions, ratios in %) 

ASSET SIZE DISTRIBUTION GEOGRAPHIC DISTRIBUTION All 

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

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

Number of savings banks reporting ...................... 430 124 250 56 318 97 15 

Total assets ....................................................... $231.7 $6.7 $79.4 $145.6 $104.4 $115.9 $11.3 

Total deposits .................................................... 196.1 6.0 69.5 120.5 90.1 98.8 7.1 

Net income (in millions) ............................. .... ...... 435 11 111 312 106 248 80 

Percentage of savings banks losing money ........... 14.7% 19.4% 11.2% 19.6% 17.6% 7.2% O.Oo/i0 

Percentage of savings banks with earnings gains .. 79.5 79.8 79.6 78.6 78.6 83.5 73.3 

Performance Ratios (annualized) 

Yield on earning assets ....................................... 8.51% 8.90% 8.57% 8.45% 8.62% 8.34% 9.10% 

Cost of funding earning assets ............................ 4.98 4.91 4.87 5.04 4.94 4.98 5.34 

Net interest margin ............................................. 3.53 3.99 3.71 3.41 3.69 3.37 3.76 

Noninterest income to earning assets ................... 0.65 0.38 0.48 0.75 0.64 0.57 1.55 

Noninterest expense to earning assets ................. 2.81 3.21 2.96 2.10 3.24 2.42 2.71 

Return on assets .................................... ............ 0.38 0.34 0.28 0.43 0.21 0.43 1.40 

Return on equity ................................................. 5.20 4.17 3.62 6.22 2.90 6.00 14.26 

Net charge-offs to loans and leases ..................... 1.13 0.72 0.90 1.28 1.27 1.09 0.24 

Loan loss provision to net charge-offs .................. 87.69 99.50 110.39 78.60 88.64 83.58 218.18 

Condition Ratios 

Loss allowance to: 

Loans and leases ............................................. 2.01% 1.28% 1.62% 2.27% 2.08% 2.03% 1.14% 

Noncurrent loans and leases ............................. 40.60 49.39 46.49 38.47 49.91 33.44 72.91 

Noncurrent loans and leases plus 

other real estate owned to assets ..................... 5.15 3.12 4.04 5.85 5.00 5.58 2.10 

Noncurrent RE loans to total RE loans .................. 4.88 2.59 3.43 5.81 4.04 6.04 1.58 

Equity capital ratio .............................................. 7.30 8.10 7.83 6.98 7.14 7.15 10.32 

Core capital (leverage) ratio ................................. 7 .11 8.07 7.78 6.65 6.93 6.95 10.07 

Net loans and leases to deposits .......................... 74.28 73.35 72.96 75.09 75.55 70.82 106.40 

Growth Rates (year-to-year) 

Assets .............................................................. -5.1% 4.3% 5.2% 4.3% -3.0% -7.3% -1.6% 

Equity capital ..................................................... 3.7 2.5 2.1 1.1 8.0 -2.2 24.1 

Net interest income ............................................ 19.5 25.7 23.1 21.8 24.6 15.5 13.8 

Net income ........................................................ N/M N/M N/M N/M N/M N/M 23.6 

Net charge-offs .................................................. -26.4 -23.5 -7.4 -14.7 -43.8 14.4 -38.1 

Loan loss provision ............................................. -37.3 -13.5 -14.3 -22.6 -45.3 -27.4 94.1 

N/M - Not meaningful 

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

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

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

9 
------------------

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

All ASSET SIZE DISTRIBUTION GEOGRAPHIC DISTRIBUTION 

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

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

Number of savings banks reporting ...................... 430 124 250 56 318 97 15 

Total assets ....................................................... $231.7 $6.7 $79.4 $145.6 $104.4 $115.9 $11.3 

Total deposits .................................................... 196.0 6.0 69.5 120.5 90.1 98.8 7.1 

Net income fin millions) ....................................... 217 6 38 173 56 118 43 

Percentage of savings banks losing money ........... 13.0% 15.3% 11.2% 16.1% 14.8% 9.3% 0.0% 

Percentage of savings banks with earnings gains .. 78.8 75.0 81.2 76.8 77.7 83.5 73.3 

Performance Ratios (annualized} 

Yield on earning assets ....................................... 8.41% 8.73% 8.48% 8.35% 8.54% 8.22% 9.10% 

Cost of funding earning assets ............................ 4.78 4.66 4.65 4.85 4.74 4.77 5.22 

Net interest margin ............................................. 3.63 4.07 3.82 3.50 3.80 3.45 3.87 

Noninterest income to earning assets ................... 0.71 0.39 0.49 0.84 0.68 0.64 1.66 

Noninterest expense to earning assets ................. 2.84 3.18 2.98 2.75 3.33 2.41 2.84 

Return on assets ................................................ 0.37 0.38 0.19 0.47 0.21 0.41 1.51 

Return on equity ................................................. 5.16 4.64 2.46 6.85 3.01 5.71 15.13 

Net charge-offs to loans and leases ..................... 1.17 0.87 1.11 1.23 1.26 1.20 0.26 

Loan loss provision to net charge-offs .................. 90.66 91.24 101.65 85.12 84.81 93.93 204.41 

Growth Rates (year-to-year} 

Assets .............................................................. -5.1% 4.3% 5.2% 4.3% -3.0% -7.3% -1.6% 

Equity capital ..................................................... 3.7 2.5 2.1 1.1 8.0 -2.2 24.1 

Net interest income ............................................ 22.5 26.9 25.7 23.9 27.5 19.0 12.8 

Net income ........................................................ N/M N/M N/M N/M N/M N/M 25.4 

Net charge-offs .................................................. -29.1 -27.5 3.5 -5.8 -49.2 22.5 -58.3 

Loan loss provision ............................................. -44.1 -28.8 -16.7 -22.4 -55.4 -30.1 45.4 

N/M - Not meaningful 

Spread Between Short-Term and Long-Term Yields 

30-Year Treasury Bond Versus 3-Month Treasury Bill 

Yield 

10% ------------------------------

9 

8 -----------

7------------- 7 

30-Year Treasury Bond 

6 

5 3-Month Treasury Bill 

4 

3 ___________________......___...._________________..___....., 

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

Quarterly Average Yield: 

30-Year 

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

3-Month 

Treasury Bill 7.76 7.75 7.48 6.,..9.9 6.,_Q2 5,_.5.6. ~ ~ ~ 3.,_ZQ 

Spread 0.68 0.90 1.32 1.56 2.18 2.76 2.80 3.31 3.90 4.10 

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

1985-1992 

Number of Banks 

1,575 D Savings Banks 

1,500 

I Commercial Banks 

1,000 

500 

0 

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

Number of Problem Institutions: 

Savings Banks 42 27 16 12 17 34 48 58 76 74 70 88 

Commercial Banks 1,098 1,457 1,559 1,394 1,092 1,012 996 975 1,005 1,016 981 956 

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

1985-1992 

$ Billions 

700 

600 D Savings Banks 609.8 607.4 

500 I Commercial Banks 

400 

300 

200 

100 

0 

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

Assets of Problem Institutions: 

Savings Banks 63.9 49.7 29.3 47.4 47.6 67.2 81.8 65.4 85.9 81.8 72.0 73.0 

Commercial Banks 173.9 285.8 329.2 304.8 187.9 341 .6 317.9 348.8 401 .0 528.0 535.4 494.5 

11 
NOTES TO USERS: 

COMPUTATION METHODOLOGY FOR PERFORMANCE AND CONDITION RATIOS 

The data on commercial banka and tate-chartered savings banks were obtained from Call reports filed with the FDIC and Federal Re erva Board. Data on 

Federally-chartered saving■ bank■ (15 in titution ■ aa of June 30, 1992) were obtained from Thrift Financial Reports filed with the Office of Thrift Supervision. Certain adjustment■ are made to the Thrift Financial Reports to provide closer conformance with Call report disclosure requirements. 

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

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

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

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

fourth quarter, 1991 publication. 

DEFINITIONS 

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

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

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

"4"or"5." 

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

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

items. Beginning with the first quart81' 1992 publication, income taxes subtracted from operating income have been adjusted to exclude the portion applicable to securities gains (or loaaes). 

Yield on Earning AHet■ -total int81'eat, dividend and fee income earned on loans and investments aa a p81'centage of average earning asset■. 

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

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

investments. 

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

bank profitability. 

Return on Equity - net income aa a percentage of av Mage total equity capital. 

Loan Commitment■ and Latter■ of Credit - includes unused credit card commitments and overdraft plane, reflecting Call report revisions effective 

March 31, 1990. 

Net Charge-off■ -total loans and leases charged off (removed from balance sheet because of uncollectibility) during the quart81', less amounts recovered 

on loans and leases previously charged off. 

Noncurrent Loana & Lease ■ -the sum of loans past-due 90 days or more and loans in nonaccrual status. 

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

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

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

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

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

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

Net Loana and Lease■ -total loans and leases less unearned income and the allowance for loans and lease losses. 

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

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

repurchase, and other borrowed money. 

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