Second Quarter, 1990 

FDIC 

Division of Research 

& Statistics 

Don Inscoe 

(202) 898-3940 

Ross Waldrop 

(202) 898-3951 

The FDIC 

uarte r lY-_______L_._w_m_iam_Se_id_m_a_n._C_ha_ir_m_an 

anking Rofile 

COMMERCIAL BANKING PERFORMANCE-SECOND QUARTER, 1990 

• Banks Earn $5.3 Billion In Second Quarter 

• Asset Quality Problems Deepen At Eastern Banks 

• Southwestern Banks Report Second Consecutive Quarterly Profit 

• Banks in Far West Report Strong Profitability And Asset Growth 

Sluggish asset growth and deepening credit quality profitability than their larger counterparts. Banks with 

problems held down bank profits in the second assets of less than $1 billion had more favorable 

quarter of 1990. Insured commercial banks reported asset-quality indicators, while larger institutions saw 

profits of $5.3 billion, 24 percent below the $7 billion the credit quality of their loan portfolios deteriorate. 

earned in last year's record second quarter. For the Despite a combination of higher levels of troubled 

first six months of this year, commercial bank assets and decreased earnings, shareholder 

earnings totalled $11.6 billion, down 18.5 percent dividends increased 4.4 percent from a year earlier, 

from the first half of 1989. The main reason for the consuming nearly 70 percent of the banking 

year-to-year decline continues to be provisioning for industry's net income in the second quarter. 

future credit losses, which was $2 billion higher in the 

second quarter than a year earlier. Net loan losses, at 

$8.6 billion in the second quarter, were 66 percent Chart B - Quarterly Net Interest 

higher than a year earlier. As a result, reserve levels Margins, 1983-1990 

fell by more than $2.1 billion despite the increase in Net 5 _____ Interest Margin .,.(%) ____________ loan-loss provisions. Most of the reduction in reserves 

resulted from write-downs of loans to developing 

countries. 

Chart A - Quarterly Net Income of 

FDIC-Insured Banks 4.5 

1986-1990 

8 Banks < $100 Million 4.47% 

4 I 

4 'n , N' ~ .. --• .. ' ~ ' 11 ~' ii- .. .a. ~ Banks > $100 Ml/lion 3.87% 

~. I I I I I I I I I I I I I I I I I 

123412341234123412341234123412 3.5 ----------------- 1983 1984 1985 1986 1987 1988 1989 1990 - (4) 

' '

iJ Securit(es and Other ~ns . ' Net interest margins improved from the previous (8) e§l Net opiirafing Income j quarter at smaller banks, and were unchanged at 

i]jl First Republic Effect : larger banks. Net interest income was slightly above 

12 the level of a year earlier, but interest-earning assets 

< > 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 grew at a higher rate, so average margins were 

1986 1987 1988 1989 1990 smaller than a year ago at both large and small 

institutions. Average funding costs were lower than a 

The return on assets for commercial banks was 0.64 year ago, but asset yields fell even more. 

percent in the second quarter, compared to 0.88 Noninterest expense growth remained high at large 

percent in the second quarter of 1989. Unlike the banks in the Northeast, reflecting the increased 

year-ago quarter, smaller banks enjoyed higher burden of higher levels of troubled assets. 

For assistance contact: Section508@fdic.gov
Noninterest income growth was flat. Overall, the 

increase in noninterest expense levels more than 

offset the modest year-to-year rise in net interest 

income. 

Increasing credit-quality problems were evident at 

banks in the eastern half of the country. Noncurrent 

loans and leases and foreclosed real estate were 

higher than a year ago in the three easter~ regions, 

but were lower in the three western regions. The 

highest percentage increase was registered by 

banks in the Southeast Region, where noncurrent 

loans and leases and foreclosed real estate were 

51 percent above the level at mid-year 1989. At 

Northeast Region banks, troubled assets were 37 

percent higher than a year earlier. Banks in these 

two regions also experienced the largest increases 

in net loan losses. 

Almost all of the banking industry's $2 billion 

increase in loan-loss provisioning was registered by 

banks in the Northeast Region, where provisions 

were up by $1.9 billion. This was more than twice 

the amount set aside for future losses by Northeast 

banks in the second quarter of last year. 

Noncurrent loans and leases plus foreclosed real 

estate increased by $3.4 billion during the quarter, 

to more than $11.7 billion above the level of a year 

earlier. Net charge-offs of $5.1 billion were more 

than twice as high as in the second quarter of 1989. 

Loss reserves declined by $2 billion during the 

quarter, but were still $5.3 billion higher than ~ year 

ago. The credit quality problems of banks in the 

Northeast were not limited to real estate assets. 

Commercial credits, loans to developing countries 

and consumer loans all showed weakness, 

reflecting the increasing difficulties facing many 

large regional and money-center institutions. 

Banks in the Southwest Region reported positive 

net income for the second consecutive quarter, the 

first time since 1985 that the Region's banks have 

had back-to-back profitable quarters. Net 

charge-offs at banks in the Southwest Region were 

13.8 percent lower than in the same period of 1989, 

and noncurrent loans and leases and foreclosed 

real estate at mid-year were down almost $4.4 

billion from a year ago. 

Banks in the West Region continue to register 

above-average asset growth, led by expansion in 

residential real estate lending. At mid-year, real 

estate loans held by the Region's banks were 23.5 

percent above the level of a year earlier; during the 

second quarter, real estate loans grew at a 29 

percent annual rate. Despite ongoing difficulties in 

Arizona, Western banks had the strongest asset 

growth and highest profitability of banks in _any 

region during the second quarter. At the same time, 

asset quality indicators remain favorable. 

Ninety-nine commercial banks failed or required 

assistance to avert failure in the first half of 1990, 

compared to 101 failures in the first half of 1989. 

The number of banks on the FDIC's "Problem List" 

at the end of June was 1,014, the lowest level since 

1985. The pace of bank failures is not expected to 

change significantly in the second half of this year. 

The real estate problems of the Northeast have 

spread to the mid-Atlantic states, and signs of real 

estate weakness have appeared in several 

Southeastern states. For the remainder of this year, 

domestic asset quality problems will continue to 

hurt earnings at banks in the East. If the New 

England economy weakens further, losses in real 

estate assets and commercial loans can be 

expected to increase. Banks that are weakly 

capitalized can be expected to seek to boost their 

net worth ratios through sales of assets, loan 

securitization, and retained earnings. 

Chart C - Noncurrent Real Estate Loan Rates by States 

June 30, 1990 

Midwest 

North Dakota . .. 

1.93 :::::J!,. 

South Dakota 

1.44 

Kansas 

1.82 

Southwest 

Central 

Percent of Real Estate Loans Noncurrent: 

□ 2% or Less □ Between 2% and 3% ■ 3% or Higher 

2 
Table I. Selected Indicators, FDIC-Insured Commercial Banks 

1900• 1989' 1989 1988 1987 1986 1985 

Return on assets ..... . ... . .. . . . ...... •. .. 0.70% 0.00% 0.50% 0.82% 0.12% 0.63% 0.70% 

Return on equity . . ... ...... .. . . . .......• . . 11 .04 14.14 7.00 13.31 2.00 9.94 11.31 

Equity capital to assets ... . ...... . ......... 6.43 6.44 6.21 6.28 6.04 6.20 6.20 

Primary capital ratio .. ... . . .... . .... .. . .. .. 7.00 7.99 7.92 7.85 7.70 7.22 6.91 

Noncurrent loans and leases plus 

other real estate owned to assets ..... . .. . . 2.44 2.25 2.29 2.14 2.46 1.94 1.87 

Net charge-offs to loans ... ... .. .... .. . . .. . . 1.47 0.89 1.16 1.00 0.92 0.98 0.84 

Asset growth rate . . . . . . . .... .. .... .. . .. . . . 4.73 4.93 5.37 5.68 2.03 7.71 8.86 

Net operating income growth . . . . ........... -20.38 32.20 -38.69 1666.92 -85.27 -20.65 6.30 

Percentage of unprofitable banks .... . ...... . 10.59 10.01 12.18 14.63 17.66 19.79 17.09 

Number of problem banks . ...... . . ... . . .. . . 1,014 1,256 1,092 1,394 1,559 1,457 1,098 

Number of failed/assisted banks . .. .. . ...... . 99 101 206 221 201 144 118 

*Through June 30; ratios annualized where appropriate 

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

(dollar figures in millions) 

Preliminary 

2nd Qtr 1st Qtr 2nd Qtr %Change 

1900 1900 1989 89:2-90:2 

Number of banks reporting .... ... .. .. .. . . . ... . ... . . . . .. •. .... . . . . 12,500 12,593 12,943 -3.4 

Total employees (full-time equivalent) . .. .. .. . •. . .. ...... ..•. . ...... . 1,530,856 1,525,783 1,541,487 --0.7 

CONDITTON DATA 

Total assets . . . . . . . . . . . . . . . . . . . . . . . . . • . . . . . . . . . . . . . . . . . . . . . . . . . $3,358,183 $3,310,613 $3,206,496 4.7 

Real estate loans . .... .. . . .......... ...... .... . .......... . . . 002,981 m,497 719,610 11.6 

Commercial & industrial loans .... . ... . .. .. .. .. . . .. . .. . . ..... . 621,046 623,046 612,340 1.4 

Loans to individuals . ... ... .. .. .. ....... . . . . .... ..... .. .. . .. . 391,498 300,476 379,425 3.2 

Farm loans .............. . ... ........ ..... .. . . . ... .. .. .... . 32,316 29,738 31,033 4.1 

Other loans and leases ......... .... . .. . .... . ...... ... ... . . . . 231,730 237,042 246,843 -6.1 

Total loans and leases ... .. . .................. •. ............. 2,079,571 2,057,799 1,989,251 4.5 

LESS: Reserve for losses . .. ..... . ...... . .. ... •... . ... .. ... . . 50,130 52,609 45,111 11.1 

Net loans and leases . ...... ... ..... . ...... .. . . •. . ....... . ..... 2,029,441 2,005,191 1,944,140 4.4 

Temporary investments ....................... ... .. . ...... .. .. . 486,257 400,196 479,140 1.5 

Securities over 1 year . . .... ... .. . ....... . ... . ... . ............ . 433,550 421,157 394,647 9.9 

All other assets .... ........................ .. ....... .. . ... .. . 408,935 394,069 388,569 5.2 

Total liabilities and capital . .. .......... . . . .. . .. . .. ... ... . ....... . . $3,358,183 $3,310,613 $3,206,496 4.7 

Noninterest-bearing deposits . .. . . ... . . ........ . ................ . 450,586 437,335 455,766 -1 .1 

Interest-bearing deposits .. . ........... . .... .. ......... .. ... . . . . 2,135,472 2,105,965 1,997,127 6.9 

Other borrowed funds . . . . .. .. . . . . . ............ . .............. . 420,520 426,645 420,899 --0.1 

Subordinated debt .. ................................ .. .. . ... . . 19,735 19,370 17,709 11.4 

All other liabilities ......... . ..... . ......... . . . ............... . 115,794 109,559 108,560 6.7 

Equity capital .. . . .. ....................... . . . ......... ... . . . . 216,075 211,739 206,435 4.7 

Primary capital . .. .... . .. .. ....... . .. . . .. . .. .. . . .. . .. ... . ... .. . . 266,153 265,938 255,173 4.3 

Noncurrent loans and leases ....... .. ....... . . ........... . .. .... . . 66,2TT 64,405 60,624 9.3 

Other real estate owned . ..... . . ... .. ...... . . .. ... . ... ... . . . .... . 15,608 13,546 11,398 36.9 

Loan commitments and letters of credit' . ....... .. .......... .... ... . 1,288,563 1,235,103 1 

Domestic office assets .............. . ... ... .. . ....... .. .••..•... 2,940,240 2,895,412 2,791,148 5.3 

Foreign office assets ... ........... . .........•........... •. .. .. .. 417,943 415,201 415,348 0.6 

Domestic office deposits ...........•...... . ..• .. ...... . ..• . ...... 2,255,997 2,216,570 2,129,583 5.9 

Foreign office deposits ........ .. .. .•.. . .. . .. .................... 330,061 326,731 323,311 2.1 

Earning assets . ... .... . ... . .... •... •...... . . .... . . ...• .. ..... . . 2,949,248 2,916,544 2,817,927 4.7 

Volatile liabilities ..... •.. ....... . . . . . ... . . .. . ......... ... ....... 1,140,231 1,149,936 1,139,295 0.1 

Preliminary Preliminary 

INCOME DATA First Half First Half 2nd Qtr 2nd Qtr 

1900 1989 %Change 1900 1989 % Change 

Total interest income . .. . .. . . . ... ... ...... . $160,157 $155,519 3.0 $79,362 $00,186 -1.0 

Total interest expense . . ..... . .. . ......... . 103,229 99,339 3.9 50,587 51,956 -2.6 

Net interest income ....... . ..... . ...... . 56,928 56,100 1.3 28,776 28,230 1.9 

Provisions for loan & lease losses ...... ... . . 12,194 8,060 51.3 6,428 4,438 44.8 

Total noninterest income ..... . ...... .. ... . . 27,015 24,539 10.1 13,736 12,829 7.1 

Total noninterest expense ........ •. .. .... •. 56,083 52,858 6.1 28,557 26,982 5.8 

Applicable income taxes ... .... . .... •• ..... 4,633 5,943 -22.0 2,273 2,964 -23.3 

Net operating income .......... ... . .. . .. . 11,033 13,857 -20.4 5,254 6,676 -21.3 

Securities gains, net .......•. . ..• . .... .. ••. 158 212 -25.7 48 161 -70.0 

Extraordinary gains, net ...... . ... . .. .. •.. . . 410 161 155.1 9 150 -94.0 

Net income .... . ... ...... .. .. ......... . 11,600 14,230 -18.5 5,311 6,986 -24.0 

Net charge-offs ..... . . . . ........... . ..... . 15,128 8,732 73.3 8,565 5,183 65.3 

Net additions to capital stock . . . . .......... . 805 300 168.4 105 102 2.5 

Cash dividends on capital stock ...... . ..... . 6,846 6,667 2.7 3,662 3,507 4.4 

'See Notes to Users, p.6 

3 
Table Ill. First Half 1990 Bank Data (Dollar figures in billions, ratios in %) 

Asset Size Distribution Geographic Distribution 

EAST WEST Less $100 Million Greater 

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

All Banks Million $1 Billion Billion Billion Region Region Region Region Region Region 

FIRST HALF Preliminary 

(The way it is .. . ) 

Number of banks reporting . . . .... . . . . .. . 12,500 9,499 2,630 326 45 1,078 1,957 2,790 2,973 2,234 1,468 

Total assets .. ... .. ... . ... .. . ...... ... $3,358.18 $362.62 $634.90 $1,046.72 $1,313.93 $1,312.94 $494.36 $540.10 $213.97 $263.88 $532.94 

Total deposits . . .... . .. .. . .. . .. ........ 2,586.06 321.55 545.47 780.74 938.30 947.17 385.56 431.52 174.59 223.30 423.92 

Net income (in millions) .. ..•. . ... . ... .. .. . 11,600 1,452 2,840 3,353 3,956 2,676 1,846 2,295 1,144 737 2,903 

Percentage of banks losing money . . . . . . . 10.6% 11.7% 6.0% 13.5% 20.0% 17.7% 11.5% 4.0% 4.8% 18.1% 17.0% 

Percentage of banks with earnings gains .. 49.9% 49.5% 52.2% 44.8% 42.2% 40.0% 53.6% 52.3% 48.8% 50.6% 49.3% 

Perfonnance Ratios (annualized) 

Yield on earning assets ... . .. ..... .. . . .. 11 .06% 10.38% 10.57% 10.68% 11 .84% 11.86% 10.53% 10.36% 10.57% 10.04% 11 .04% 

Cost of funding earning assets ... . . .. . ... 7.13 5.94 6.08 6.44 8.60 8.39 6.37 6.49 6.28 6.39 6.10 

Net interest margin .. ..... .......... . .. 3.93 4.44 4.49 4.24 3.24 3.48 4.16 3.87 4.29 3.64 4.94 

Net noninterest expense to earning assets . 2.01 2.76 2.54 1.96 1.56 1.74 2.27 2.07 1.92 2.26 2.29 

Net operating cash flow to assets . .... .. . 1.69 1.53 1.77 2.03 1.43 1.52 1.68 1.60 2.13 1.18 2.30 

Net operating income to assets ...... . ... 0.67 0.79 0.90 0.65 0.54 0.37 0.74 0.87 1.07 0.53 1.07 

Return on assets . .. ... . . . . .......... . . 0.70 0.81 0.91 0.65 0.61 0.41 0.76 0.86 1.08 0.57 1.12 

Return on equity . ........ ..... . .. . .. . . 11 .04 8.94 11.88 10.13 12.41 7.38 10.75 12.37 13.83 8.83 17.57 

Net charge-offs to loans and leases .. . .. . . 1.47 0.65 0.65 1.36 2.13 2.19 0.71 0.96 0.96 1.42 1.11 

Loan loss provision to net charge-offs .... . 80.61 113.08 124.80 125.04 48.19 69.98 155.23 78.30 109.16 73.89 84.30 

Condition Ratios 

Loss allowance to: 

Loans and leases .... .. . . .. . .... . .... 2.41% 1.66% 1.61% 2.08% 3.25% 3.23% 1.54% 1.56% 1.85% 2.70% 2.19% 

Noncurrent loans and leases ..... ... . .. 75.64 81.14 77.71 77.72 73.51 68.83 80.95 83.70 99.57 74.41 89.86 

Noncurrent loans and leases plus 

other real estate to assets ... . ..... . . . . 2.44 1.71 1.77 2.17 3.18 3.33 1.57 1.38 1.45 3.00 2.23 

Equity capital ratio . . .. . .. . . .. . ..... . .. . 6.43 9.09 7.76 6.52 4.99 5.66 7.17 7.04 7.94 6.61 6.36 

Primary capital ratio ... .. . ...... . . ..... . 7.90 9.96 8.66 7.72 7.12 7.68 7.99 7.98 8.88 7.68 8.01 

Net loans and leases to deposits .. . .. .... 78.48 58.99 70.24 85.49 84.10 83.39 79.31 75.05 69.56 54.46 86.54 

Growth Rates (year-to-year) 

Assets ....... . ... .. . ... ........... . .. 4.7% 7.9% 10.1% 7.7% 7.7% 2.9% 8.0% 3.9% 3.1% 2.3% 9.3% 

Equity capital . . . . ..... .. ..... .. . . ..... 4.7 4.9 10.9 8.2 3.7 -3.8 10.3 6.2 4.7 16.1 12.9 

Net interest income ... .... ... . ..... . ... 1.3 4.3 6.6 6.8 1.5 -1 .1 5.3 1.1 -0.2 3.6 2.6 

Net income . . . . .. ... .. .. . .. . . ..... . ... -18.5 -6.8 -2.6 -22.3 -29.1 -51.3 -16.4 -16.8 -0.6 1075.2 13.4 

Noncurrent loans and leases plus 

other real estate owned .. ... . .. . . .... . 13.7 2.3 18.0 45.8 13.0 36.6 50.9 11 .1 -5.8 -35.6 -5.3 

Net charge-offs .. ................ ... .. . 73.3 22.0 29.3 63.1 125.4 151 .6 65.1 49.9 6.0 -25.1 17.3 

Loan loss provision . . . •... ... . ......... 51 .3 6.3 24.3 69.6 82.4 135.1 81.2 26.6 -1.6 -44.5 2.7 

PRIOR FIRST HALVES 

(The way it was ... ) 

Return on assets . .. .. ... ... . . . .. .1989 0.90% 0.89% 0.96% 0.86% 0.92% 0.87% 0.99% 1.08% 1.13% 0.05% 1.08% 

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

.... . .. . . . ... . .. .1985 0.75 0.90 0.91 0.87 0.48 0.80 1.10 0.84 0.84 0.64 0.34 

Equity capital ratio ........ ..... . .1989 6.44 9.07 7.54 6.35 5.16 6.05 7.02 6.89 7.82 5.83 6.15 

... . .... ....... . .1987 6.02 8.65 7.38 6.09 4.22 5.29 6.92 6.68 7.45 6.39 5.47 

... .... .. .. . ..... 1985 6.27 8.68 7.23 5.95 4.87 5.64 6.83 6.88 7.62 7.07 5.54 

Noncurrent loans and leases plus 

other real estate to assets . . .. ... 1989 2.25 1.92 1.76 1.58 3.16 2.51 1.12 1.29 1.59 4.76 2.58 

... ... •....... . .. 1987 2.59 2.31 1.96 1.84 3.64 2.58 1.12 1.48 2.16 4.97 3.63 

. ........·... . ... .1985 2.08 2.08 1.67 1.66 2.67 1.85 1.07 1.65 2.33 2.62 3.22 

Net charge-offs to loans and leases . 1989 0.89 0.64 0.63 0.87 1.09 0.90 0.46 0.67 0.93 1.78 1.06 

... . .. ... . . .. .. . .1987 0.79 0.99 0.81 0.71 0.80 0.57 0.51 0.49 1.43 1.80 1.04 

... .. . . . .. . ... ... 1985 0.66 0.93 0.60 0.56 0.67 0.39 0.44 0.56 1.27 1.03 0.95 

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 

4 
Table IV. Second Quarter 1990 Bank Data (Dollar figures in billions, ratios in %) 

Asset Size Distribution Geographic Distribution 

Less $100 Million Greater EAST WEST 

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

PRELIMINARY SECOND QUARTER All Banks Million $1 Billion Billion Billion Region Region Region Region Region Region 

(The way it is ... ) 

Number of banks reporting . . .... ........ 12,500 9,499 2,630 326 45 1,078 1,957 2,790 2,973 2,234 1,468 

Net income (in millions) . .. . .. .. ..... . .. . $5,311 $710 $1,381 $1,602 $1,619 $1,026 $940 $1,151 $533 $391 $1,270 

Percentage of banks losing money .... ... 11 .2% 12.0% 7.6% 16.6% 15.6% 20.6% 12.0% 4.8% 5.2% 18.2% 17.1% 

Percentage of banks with earnings gains .. 51.1% 50.6% 53.3% 48.8% 33.3% 41 .4% 54.1% 52.3% 50.6% 52.4% 50.7% 

Per1onnance Ratios (annualized) 

Yield on earning assets .. ....... . ... . ... 10.86% 10.41% 10.64% 10.75% 11 .19% 11.31 % 10.51% 10.35% 10.63% 10.09% 11 .06% 

Cost of funding earning assets ... .. .. . ... 6.92 5.94 6.10 6.50 7.98 7.85 6.36 6.46 6.33 6.35 6.13 

Net interest margin ... . .. . . ... ......... 3.94 4.47 4.53 4.26 3.21 3.46 4.15 3.89 4.30 3.74 4.93 

Net noninterest expense to earning assets . 2.03 2.75 2.52 1.98 1.60 1.76 2.24 2.11 1.97 2.30 2.30 

Net operating cash flow to assets . . .. . ... 1.68 1.57 1.82 2.02 1.37 1.48 1.71 1.59 2.09 1.22 2.29 

Net operating income to assets .. . ... .. . . 0.63 o.n 0.87 0.62 0.49 0.31 0.75 0.87 0.99 0.57 0.98 

Return on assets ...................... 0.64 0.79 0.88 0.62 0.50 0.32 0.77 0.86 1.00 0.60 0.97 

Return on equity . .... . . . .. ... . ..... . . . 9.94 8.68 11.37 9.52 9.95 5.60 10.72 12.25 12.72 9.08 15.09 

Net charge-offs to loans and leases . ..... . 1.66 0.86 0.79 1.32 2.54 2.48 0.74 0.84 1.03 1.77 1.51 

Loan loss provision to net charge-offs ... .. 75.05 98.66 119.91 132.05 41.87 66.29 153.47 82.83 111 .81 61 .10 68.29 

Growth Rates (year-to-yearj 

Net interest income .... . ... ...... .. .. .. 1.9 4.7 7.5 6.9 2.2 -0.7 6.4 1.3 -1.1 7.7 2.9 

Net income ....... . ... . . . . . .. . . ... .... -24.0 - 7.6 -5.9 -18.6 -43.4 -62.9 -15.8 -16.5 -1 .6 N/M 4.3 

Net charge-offs . .... . ... . ....... . . .. . . . 65.3 37.1 39.4 48.9 103.3 112.4 56.9 18.3 15.1 -13.8 46.0 

Loan loss provision .......... .... . . .. .. 44.8 8.2 41 .4 50.6 82.5 134.0 75.6 4.5 9.2 -50.4 -2.1 

PRIOR SECOND QUARTERS 

(The way it was . . . ) 

Return on assets ..... . ... . ..... . . 1989 0.88% 0.85% 0.95% 0.79% 0.93% 0.87% 0.99% 1.08% 1.07% -0.05% 1.01% 

....... . ......... 1987 -1 .48 0.59 0.53 0.06 -4.57 -2.84 0.86 -0.56 0.11 -1 .22 - 1.80 

........ . ........ 1985 0.74 0.88 0.96 0.94 0.37 0.83 1.09 0.85 0.87 0.70 0.16 

Net charge-offs to loans and leases .1989 1.05 0.76 0.70 0.94 1.41 1.20 0.51 0.74 0.92 1.93 1.16 

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

........... .. .. .. 1985 0.76 1.17 0.73 0.60 0.74 0.43 0.54 0.66 1.48 1.17 1.10 

N/M - not meaningful 

5 
FDIC FIRST CLASS

MAIL 

Federal Deposit Insurance Corporation 

Washington, DC 20429 

OFFICIAL BUSINESS 

Penalty for Private Use, $300 

Postage & 

Fees Paid 

FDIC 

Permit No. G36 

Attn: Chief Executive Officer 

NOTES TO USERS 

COMPUTATION METHODOLOGY FOR PERFORMANCE AND CONDITION RATIOS 

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

All asset and liability figures used in calculating performance ratios represent average amounts for the period (beginning-of-period amount plus end-of-period amount 

plus any periods in between, divided by the total number of periods). 

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

DEFINITIONS 

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

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

weaknesses that threaten their continued financial viability. Depending upon the degree of risk and supervisory concern, they are rated either "4" or "5". 

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

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

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

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

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

costs. 

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

banking business. 

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

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

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

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

Loan Commitments and Letters of Credit-includes unused credit card commitments and overdraft plans, reflecting Call report revisions effective March 31, 1990. 

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

and leases previously charged off. 

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

Primary Capital-total equity capital plus the allowance for loan and lease losses plus minority interests in consolidated subsidiaries plus qualifying mandatory convertible debt (cannot exceed 20 percent of total primary capital), less intangible assets except purchased mortgage servicing rights. 

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

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

securities with remaining maturities of one year or less. 

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

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

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