--

The FDIC 

uarterlY-______w_i_ma_mT_ay_lo_r,C_ha_irm_an 

anking Profile 

COMMERCIAL BANKING PERFORMANCE - FIRST QUARTER, 1992 

• Commercial Banks Earn Record $7.6 Billion In First Quarter 

• Favorable Interest Rates Boost Net Interest Income 

• Over 93 Percent of Commercial Banks Show Quarterly Profit 

• Loan Portfolios Shrink for Fifth Consecutive Quarter 

First Quarter, 1992 

FDIC 

Division of Research 

& Statistics 

Don Inscoe 

(202) 898-3940 

Ross Waldrop 

(202) 898-3951 

Insured commercial banks earned a record $7.6 billion 

in the first quarter of 1992, a $2-billion increase from 

the first quarter of 1991. Favorable interest-rate 

conditions produced wider spreads between the rates 

banks earned on their assets and the rates they paid 

for their liabilities. Low interest rates also created 

opportunities for profits on sales of investment 

securities. Net interest income was $2.8 billion higher 

than a year ago, while gains from securities sales 

added $682 million to the year-to-year improvement in 

the industry's pre-tax earnings. Commercial banks' 

return on assets averaged 0.88 percent in the first 

quarter, the highest percentage since the second 

quarter of 1989. Almost three out of every four banks 

reported higher earnings than a year ago, and over 93 

percent of commercial banks were profitable. Although 

quarterly earnings reached an all-time high, dividend 

payments were one-third lower than in 1991, and 

retained earnings also set a quarterly record, 

contributing $4.7 billion to a $7.5-billion increase in 

banks' equity capital during the quarter. 

Chart A - Quarterly Net Income of 

FDIC-Insured Commercial Banks 

$ Billions 1988 - 1992 

4 

.4 

D Net Operating Income 

0 

-8 .. Securities and 0ther Gains, Net 

' ' 0 First Republic Effect 

-12 _______..._..__........._..........._._................._....... 

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

1988 1989 1990 1991 1992 

Although there was some slight improvement in credit 

quality compared to a year ago, it had little impact on 

earnings. Banks charged-off $6.3 billion in bad loans, 

and set aside $7.2 billion in provisions for future loan 

losses, both unchanged from the first quarter of 1991. 

The high level of loan charge-offs contributed to a 

$691-million reduction in noncurrent loans and a 

$1-billion increase in the industry's foreclosed property 

holdings during the quarter. At the end of March, 

noncurrent loans were $7.9 billion below the peak 

level reached a year earlier, while foreclosed 

properties were $4.5 billion higher. Most of the 

improvement in noncurrent loan levels in the past 

twelve months has been in commercial and industrial 

loans. 

Chart B - Quarterly Net Interest Margins of 

FDIC-Insured Commercial Banks 

Net Interest Margin (%) 1984-1992 

5 

11 I 11 

Banks< $1 00 MIiiion 

' 

" 

-

. '.. 

-

.. 

~~ 4.5 . ••• ~- . ... . '. 

lli 

4.62"1 

--~ """ ~ .ii 

~ 

~ ' ' ~' ...... 

... ., . . ..

' 

-~ ~- . ' ,_, ~--- -

- -~-rti ...."'"" 

~- Banks > $100 MIiiion 4.27"1 r-r-r- 3.5 

1 2 ~ 4; 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 

1984 1985 1986 1987 1988 1989 1990 1991 1992 

The average net interest margin at commercial banks in 

the first quarter was 4.31 percent, the highest level since 

the fourth quarter of 1988, when sizable payments of 

past-due loan interest from developing-country 

borrowers provided a one-time boost to large banks' net 

interest income. The interest that banks earned on their 

assets and paid for their liabilities both declined during 

the quarter, but liability costs fell more sharply, producing 

the wider net margins. This marked the fourth 

consecutive quarter that net interest margins have 

widened. The benefits of the favorable interest-rate 

environment were distributed relatively evenly among 

banks of different sizes and regions. 

Total loans at commercial banks fell by $16.6 billion in 

the first quarter, the fifth consecutive quarter that they 

have declined. Consumer loans had the largest dedine 

in the first quarter; they fell by $13.6 billion, due to 

decreasing levels of installment debt and seasonal 

factors in credit-card loans. Commercial and industrial 

For assistance contact: Section508@fdic.gov
loans fell by $7.3 billion, largely due to a $9.8-billion 

reduction in banks' exposure to highly leveraged 

transactions (HL Ts). Real estate loans registered 

moderate growth of $3 billion, due to increases in 

residential mortgage lending. Commercial real estate 

loans increased slightly, while loans for construction 

and development continued to decline sharply. Total 

loans and leases held by commercial banks are now 

at their lowest level since the third quarter of 1989. 

The largest decline has been in commercial and 

industrial loans, which have shrunk by $71.5 billion 

(11.5 percent) in the past two years. 

Despite the shrinkage in loan portfolios, bank assets 

grew by $5.3 billion in the first quarter, as banks 

increased their holdings of U.S. Treasury securities, 

mortgage-backed securities, and other liquid 

investments. Banks' holdings of U.S. Treasury securities 

increased by $19 billion, while they added $8.3 billion to 

their holdings of mortgage-backed securities. 

Collateralized mortgage obligations (CMOs) accounted 

for about 80 percent of the increase in mortgage-backed 

securities. 

Credit losses remained highest at banks in the Northeast 

Region. Although quarterly net charge-offs fell for the 

third consecutive quarter, they were still above the level 

of the first quarter of 1991. Almost one-third (30.7 

percent) of the loans charged-off in the first quarter were 

for commercial real estate or construction and 

development. Despite continuing credit-quality woes, 

earnings at Northeast Region banks were almost double 

the level of a year ago, thanks to improved net interest 

margins, gains from sales of securities, control of 

overhead expense growth, and lower provisions for 

future loan losses. 

Banks in the West Region were the only regional group 

with lower net income than a year ago, but this decline 

was due to depressed results at the five largest 

California banks. Earnings at the other banks in the West 

Region registered a slight year-to-year increase. The 

proportion of unprofitable banks declined and two out 

of every three banks reported improved earnings. 

Provisions for future loan losses were 75 percent 

higher than a year ago (also due to increases at the 

five largest California banks), while gains from 

securities sales were below year-ago levels. Although 

earnings were about one-third lower than in the first 

quarter of 1991, banks in the West Region reduced 

their dividend payments by two-thirds compared with 

last year, so that their retained earnings actually 

increased. The West Region was also the only area 

whose banks showed a 12-month increase in 

noncurrent loans. 

The number of commercial banks continued to decline in 

the first quarter. At the end of March, there were 11,806 

banks reporting financial results, a net reduction of 114 

institutions since year-end 1991. Twenty-nine banks 

failed in the first quarter, while 15 new banks were 

chartered and 97 merged with other institutions. The 

number of commercial banks on the "Problem List" 

shrank by 35 institutions, while the combined assets of 

"Problem" commercial and savings banks remain at 

historically high levels. 

Favorable interest-rate conditions have allowed banks to 

improve their earnings and capitalization even as credit 

losses remain high. In the near term, conditions are likely 

to remain favorable for continued wide lending margins, 

although further margin improvement will be more 

difficult to achieve. In the longer term, the outlook for 

commercial bank profitability is closely tied to trends in 

credit quality. Loan losses and provisioning for future 

losses are no longer rising, although they remain at 

record-high levels. As loan portfolios have shrunk, banks' 

balance sheets have become more liquid. If lending 

conditions improve, commercial banks will face few 

balance-sheet constraints to increasing their loan 

volume. 

Chart C - Troubled Real Estate Asset Rates* By State 

March 31, 1992 

Midwest Central Northeast 

North Dakota 

3.15 

South Dakota MA 9.52 

2. 42 

I 10.97 11.27 11.81 

46 

8.62 

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, 

MARCH 31, 1992 

ASSET SIZE GEOGRAPHIC DISTRIBUTION 

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

BANKS $1 OOMM TO $1 B $1 OB MORE REGION REGION REGION REGION REGION REGION 

PERCENT OF LOANS 30-89 DA VS PAST DUE 

All real estate loans 2.38% 2.04% 2.01 % 2.53% 2.64% 3.03% 1.75% 1.92% 1.86% 2.14% 2.58% 

Construction and development 4.53 2.01 3.51 5.34 4.68 5.21 2.52 3.50 3.07 1.96 6.06 

Commercial real estate 2.71 1.91 2.04 2.84 3.56 3.94 1.74 2.15 2.49 2.08 2.72 

Multifamily residential real estate 3.15 1.90 1.98 3.18 4.43 3.69 1.81 3.41 2.05 2.72 3.66 

1-4 Family residential 1.87 2.20 1.91 1.72 1.83 2.27 1.73 1.62 1.43 2.16 1.74 

Home equity lines of credit 0.86 1.40 1.03 0.97 0.60 1.19 0.76 0.73 0.78 2.27 0.49 

Commercial R/E loans not secured by real estate 2.35 2.34 2.14 2.69 2.26 2.85 2.99 0.92 0.79 1.78 2.43 

PERCENT OF LOANS NONCURRENT* 

All real estate loans 4.63% 1.91 % 2.45% 4.37% 7.48% 7.75% 2.97% 2.09% 1.91 % 3.18% 4.82% 

Construction and development 14.75 3.24 5.82 12.20 22.39 23.93 7.80 6.20 3.82 5.22 14.93 

Commercial real estate 5.93 2.47 3.40 5.52 10.53 10.00 4.31 3.09 3.39 4.43 5.51 

Multifamily residential real estate 5.74 2.45 2.94 4.84 9.96 9.86 3.67 2.81 2.35 3.81 5.57 

1-4 Family residential 1.69 1.40 1.41 1.69 2.05 2.83 1.30 0.93 0.83 1.71 1.48 

Home equity lines of credit 0.75 0.93 0.82 0.75 0.70 1.27 0.46 0.37 0.43 1.60 0.44 

Commercial R/E loans not secured by real estate 8.22 3.38 4.94 4.16 10.40 13.51 8.35 3.28 4.57 1.27 5.41 

PERCENT OF LOANS CHARGED OFF (NET, ANNUALIZED) 

All real estate loans 0.85% 0.18% 0.25% 0.73% 1.64% 1.66% 0.51 % 0.25% 0.32% 0.41 % 0.72% 

Construction and development 3.14 0.41 1.55 2.49 5.13 5.64 1.52 1.19 0.54 1.37 2.63 

Commercial real estate 1.01 0.31 0.38 0.85 2.17 1.87 0.75 0.35 0.83 0.50 0.85 

Multifamily residential real estate 1.28 0.60 0.24 0.55 3.14 3.29 0.60 0.03 0.77 0.27 0.50 

1-4 Family residential 0.15 0.10 0.13 0.20 0.16 0.23 0.18 0.07 0.05 0.23 0.09 

Home equity lines of credit 0.14 0.16 0.13 0.18 0.11 0.21 0.09 0.07 0.13 0.06 0.12 

Commercial R/E loans not secured by real estate 5.01 2.87 1.50 1.58 6.77 9.95 1.78 3.16 0.78 0.09 1.68 

TOTAL LOANS OUTSTANDING($ BILLIONS) 

All real estate loans $854.2 $96.7 $217.5 $258.2 $281.9 $263.5 $163.7 $143.9 $52.9 $51.6 $178.6 

Construction and development 96.3 5.8 17.5 32.8 40.2 32.3 17.3 12.1 3.6 4.1 26.9 

Commercial real estate 251.0 25.8 71.3 87.5 66.5 72.3 51.4 44.0 14.9 18.3 50.2 

Multifamily residential real estate 24.9 2.0 6.7 8.3 7.8 7.6 4.2 4.5 1.7 1.5 5.4 

1-4 Family residential 368.6 50.1 101.8 100.3 116.4 102.5 75.7 67.4 24.9 24.9 73.2 

Home equity lines of credit 70.3 3.0 14.5 26.5 26.2 26.3 11.6 10.9 2.3 0.8 18.4 

Commercial R/E loans not secured by real estate 24.0 0.8 2.4 5.4 15.4 9.0 2.0 3.4 0.6 0.8 8.3 

OTHER REAL ESTATE OWNED($ BILLIONS) 

All other real estate owned $27.6 $2.1 $4.9 $8.3 $12.3 $12.9 $3.9 $2.3 $1.2 $2.8 $4.5 

Construction and development 6.9 0.3 1.2 3.2 2.2 3.3 1.2 0.5 0.2 0.5 1.2 

Commercial real estate 14.1 0.9 2.3 3.8 7.0 6.3 2.0 1.3 0.7 1.5 2.3 

Multifamily residential real estate 2.0 0.1 0.3 0.5 1.2 1.3 0.2 0.1 0.1 0.1 0.2 

1-4 Family residential 2.8 0.6 1.0 0.6 0.6 0.9 0.5 0.2 0.1 0.5 0.5 

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

Other real estate owned in foreign offices 1.3 0.0 0.0 0.1 1.2 1.1 0.0 0.0 0.0 0.0 0.2 

* 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 1987 

Return on assets............................... 0.88% 0.66% 0.54% 0.49% 0.49% 0.82% 0.09% 

Return on equity ............................... 12.87 10.05 8.09 7.61 7.78 13.30 2.00 

Equity capital to assets ..................... 6.96 6.66 6.76 6.45 6.21 6.28 6.04 

Noncurrent loans and leases plus 

other real estate owned to assets ... 3.00 3.17 2.99 2.90 2.26 2.14 2.46 

Net charge-offs to loans .................... 1.23 1.19 1.60 1.44 1.16 0.99 0.92 

Asset growth rate ............................. 2.52 1.01 1.21 2.73 5.37 4.36 2.01 

Net operating income growth ............. 36.21 -15.59 -0.74 3.20 -38.53 1554.74 -89.65 

Percentage of unprofitable banks ........ 6.57 10.79 11.19 13.41 12.50 14.65 17.66 

Number of institutions ....................... 11,806 12,246 11,920 12,340 12,707 13,139 13,696 

Number of problem banks .................. 981 996 1,016 1,012 1,092 1,394 1,559 

Assets of problem banks (billions) ...... $535.4 $318.6 $528.0 $341.6 $187.9 $304.8 $329.2 

Number of failed/assisted banks ......... 29 28 108 159 206 221 201 

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

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

(dollar figures in millions) 

Preliminary 1st Qtr 4th Qtr 1st Qtr %Change 

1992 1991 1991 91 :1-92:1 

Number of banks reporting ............................... . 11,806 11,920 12,246 -3.6 

Total employees (full-time equivalent) ........... .. ... . 1,477,474 1,486,210 1,501,569 -1.6 

CONDITION DA TA 

Total assets ..................................................... $3,435,475 $3,430,143 $3,350,898 2.5 

Real estate loans......................................... 854,106 851,138 837,562 2.0 

Commercial & industrial loans....................... 551,642 558,891 605,866 -8.9 

Loans to individuals..................................... 377,572 391,194 389,363 -3.0 

Farm loans................ .................................. 33,386 34,988 32,354 3.2 

Other loans and leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 8,731 215,807 224,114 -2.4 

Total loans and leases.................................. 2,035,436 2,052,018 2,089,260 -2.6 

LESS: Reserve for losses..... ......................... 55,795 55,093 55,041 1.4 

Net loans and leases..................................... .. 1,979,641 1,996,925 2,034,219 -2.7 

Temporary investments.................................. 518,987 499,033 467,221 11.1 

Securities over 1 year.. ................................... 536,379 514,565 466,242 15.0 

All other assets.............................................. 400,4El9 419,620 383,217 4.5 

Total liabilities and capital.................................. 3,435,475 3,430,143 3,350,898 2.5 

Noninterest-bearing deposits.............. ............. 470,770 480,296 418,586 12.5 

Interest-bearing deposits.......... ....................... 2,205,554 2,207,252 2,189,884 0.7 

Other borrowed funds................. .................... 386,416 379,166 378,880 2.0 

Subordinated debt.......................................... 24,953 24,863 23,999 4.0 

All other liabilities.......................................... . 108,523 106,776 116,355 -6.7 

Equity capital................................................. 239,259 231,790 223,194 7.2 

Goodwill .......................................................... 4,517 4,502 4,254 6.2 

Loans and leases 30-89 days past-due............... 40,080 41,756 47,686 -15.9 

Noncurrent loans and leases .............................. 75,318 76,009 83,265 -9.5 

Restructured loans and leases............................ 9,516 9,746 8,729 9.0 

Other real estate owned......................... ........... 27,616 26,534 23,082 19.6 

Loan commitments and letters of credit.. ............ 1,381,720 1,369,977 1,308,569 5.6 

Foreign office assets......................... .. .............. 397,172 398,073 395,428 0.4 

Domestic office deposits......... .......................... 2,366,798 2,382,919 2,303,298 2.8 

Foreign office deposits...................................... 309,526 304,630 305,172 1.4 

Earning assets.................................................. 3,035,006 3,010,523 2,967,682 2.3 

Volatile liabilities......... ...................................... 977,517 986,321 1,046,550 -6.6 

Preliminary Full Year Full Year 1st Qtr 1st Qtr 

1991 1990 %Change 1992 1991 %Change INCOME DATA 

Total interest income ..................... $289,170 $320,391 -9.7 $66,709 $75,614 -11.8 

Total interest expense .................... 167,267 204,918 -18.4 34,211 45,915 -25.5 

Net interest income ..................... 121,904 115,473 5.6 32,498 29,699 9.4 

Provision for loan losses ................. 34,235 32,080 6.7 7,191 7,193 -0.0 

Total noninterest income ................ 59,698 55,064 8.4 16,087 14,576 10.4 

Total noninterest expense ............... 124,639 115,694 7.7 31,770 29,949 6.1 

Securities gains (losses) ................. 2,963 482 514.4 1,125 443 154.3 

Applicable income taxes ............... .. 8,333 7,764 7.3 3,320 2,384 39.2 

Extraordinary gains, net .................. 687 648 6.0 129 352 -63.5 

Net income ................................. 18,045 16,129 11.9 7,559 5,544 36.3 

Net charge-offs ............................. 32,763 29,662 10.5 6,325 6,288 0.6 

Net additions to capital stock .......... 1,038 2,180 -52.4 544 898 -39.4 

Cash dividends on capital stock ...... 14,284 13,852 3.1 2,820 4,181 -32.6 

Net operating income ..................... 15,000 15, 112 -0.7 6,598 4,844 36.2 

4 
Table Ill. First Quarter 1992 Bank Data (Dollar figures in billions, ratios in%/ 

ASSET SIZE DISTRIBUTION GEOGRAPHIC DISTRIBUTION 

EAST WEST LeH t100 Million Greater 

FIRST QUARTER Preliminary ALL than t100 to tl-10 than t10 Northeast Southeast Central Midwest Southw111t Weet 

(The way it is... ) BANKS Million tl Billion Billion Billion Region Region Region Region Region Region 

Number of banks reporting ............ ..... 11,806 8,662 2,775 318 51 967 1,914 2,612 2,860 2,088 1,365 

Total assets .................... .. ............... . $3,435.47 $350.62 $675.83 $1,031.21 $1,377.82 $1,287.46 $528.50 $559.15 $235.38 $272. 77 $552.21 

Total deposits ................................... 2,676.32 311.22 686.86 789.70 988.66 926.01 422.67 448.01 192.83 237.63 449.27 

Net income {in millions) .... ... .............. 7,559 955 1,719 2,639 2,245 2,444 1,281 1,489 752 751 842 

Percentage of banks losing money ...... 6.6% 7.0% 5.1% 7.2% 11.8% 14.7% 7 .4% 3.7% 3 .8% 5.6% 12.4% 

Percentage of banks with earnings gains . 72.6% 71.6% 75.6% 74.2% 64.7% 70.5% 76.8% 74.2% 70.3% 76.0% 64.5% 

Performance Ratios (annualized) 

Yield on earning assets ..................... . 8.85% 8 .92% 8.77% 8 .78% 8.93% 9.21 % 8.58% 8.61 % 8 .67% 8.14% 8 .95 % 

Cost of funding earning a&sets ......... ... 4.54 4.29 4.15 4.03 5.20 5.34 4.13 4.24 4.29 3.85 3.82 

Net interest margin ............................ 4.31 4.62 4.62 4.74 3.73 3.87 4.44 4.37 4.39 4.29 5.13 

Noninterest income to earning assets... 2.13 1.09 1.29 2.44 2.62 2.65 1.62 1.54 2.34 1.68 2.19 

Noninterest expense to earning assets . 4.21 3.84 3.87 4.51 4 .26 4.28 4 .00 3.75 4.20 4.16 4.79 

Net operating income to assets ........... 0.77 0.99 0.96 0 .92 0.51 0.60 0.87 1.00 1.20 0.94 0.58 

Return on assets ...... ...... ................ .. . 0.88 1.10 1.02 1.03 0 .65 0 .76 0 .98 1.06 1.29 1 . 11 0.61 

Return on equity ........ ...................... . 12.87 11.93 12.97 14.43 11.71 12.35 13.54 14.25 15.83 15.91 8.82 

Net charge-offs to loans and leases .... . 1.24 0.41 0.59 1.51 1.52 1.77 0 .83 0.74 0 .74 0.77 1.28 

Loan loss provision to net charge-offs.. 113.70 137.42 136.53 107.26 113.02 103.99 120.88 118.92 129.94 105.17 132.37 

Condition Ratios 

Loss allowance to: 

Loans and leases ............................ 2.74% 1.80% 1.86% 2 .79% 3.33% 3.43% 2.05% 1.89% 2.05% 2 .52% 2.99°3⁄4, 

Noncurrent loans and leases........... .. 74.08 87.34 80.03 87.03 65.35 65.23 86.26 90.57 108.12 89.96 74.53 

Noncurrent loans and leases plus 

other real estate owned to assets .. ... 3.00 1.65 2.08 2.78 3.95 4.09 2.16 1.67 1.55 2.27 3.57 

Equity capital ratio ............................ 6.96 9.25 7 .95 7.24 5.69 6.29 7.27 7.60 8 .21 7.04 7.04 

Core capital (leverage) ratio ................ 6 .70 9.23 7.79 6.93 5.38 6.05 7.03 7.38 8.11 6.87 6.56 

Net loans and leases to deposits ..... .... 73.97 56.86 65.61 78.33 80.83 78.72 72.62 73.88 65.55 50.21 81. 71 

Growth Rates (year-to-year) 

Assets ................ ............................. 2.5% 6.1% 7.5% 7 .3% 5.3% 1.6% 4.3% 2.8% 4.2% 3.3% 1.5% 

Equity capital ...... .............................. 7.2 6.5 9.1 12.9 10.2 8.1 6 .3 7.5 7.4 8 .5 5.1 

Net interest income .......... ................. 9.4 12.8 12.9 13.2 13.3 9 .6 9.8 11.6 5.4 15.1 6.2 

Net income.................. ....••.•............. 36.3 38.4 24.5 56.2 12.7 99.0 69.6 16.7 21.1 81.9 -32.6 

Noncurrent loans and leases plus 

other real estate owned ................... -3.2 1.4 13.4 1.9 7.1 -10.9 -5.9 -3.2 2.7 -15.3 34.5 

Net charge-offs ...... .... ....................... 0.6 -6.6 -9.0 -2.1 17.3 5.9 -12.5 9.8 -19.6 -39.3 8.9 

Loan loss provision ......................... .. . -0.0 -1 .0 6.7 -11.2 26.0 -8.2 -29.1 6.7 -0.8 -30.0 75.6 

PRIOR FIRST QUARTERS 

(The way it was .. . } 

Return on assets ............. ... .... . 1991 0 .66% 1.16% 0 .84% 0.66% 0 .43% 0 .39% 0.60% 0 .93% 1.09% 0 .62% 0.92 % 

.............................. 1989 0 .93 0 .92 0 .97 0.93 0.91 0.87 0.99 1.09 1.27 0.12 1.14 

.............................. 1987 0.72 0 .70 0.85 0.83 0.55 0.73 1.07 0.95 0.84 0.09 0 .52 

Equity capital ratio ... ... ... ......... 1991 6 .66 9.05 7 .85 6.67 5.38 5 .91 7.14 7.27 7.96 6.71 6.80 

.............................. 1989 6.41 8.92 7 .52 6.40 5.11 5.99 6.98 6.91 7.89 5.86 6.12 

.............................. 1987 6.43 8.55 7.37 6 .17 5.32 6.01 6.87 7.05 7 .39 6.57 5.96 

Noncurrent loans and leases plus 

other real estate owned to assets. 1991 3 .17 1.78 2 .10 3 .09 4 .18 4.66 2.39 1.77 1.57 2 .77 2.70 

.............................. 1989 2.23 1.94 1.76 1.51 3.13 2 .46 1.14 1.21 1.61 4.69 2 .64 

1987 2.61 2.37 1.98 1.82 3.73 2.58 1 .11 1.55 2 .24 4.62 3 .90 ······························ 

Net charge-off, to loana and leaa111 ..... 1991 1.20 0.46 0.72 1.55 1.31 1.59 0.94 0.68 0.93 1.24 1.15 

0 .73 0.53 0.59 0 .80 0.79 0 .61 0.42 0 .60 0 .95 1.67 0 .95 ······························ 1989 

.............................. 1987 0 .74 0 .86 0 .75 0.61 0.82 0.55 0 .44 0.45 1.43 1.52 0 .99 

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

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

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

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

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

Southwest- Arkansas, Louisiana, New Mexico, Oklahoma, Texas 

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

Washington, Wyoming 

5 
Table IV. Full Year 1991 Bank Data (Dollar figures in billions, ratios in %) 

ASSET SIZE DISTRIBUTION GEOGRAPHIC DISTRIBUTION 

EAST WEST leH t100 Million Greater 

ALL than $100 to t1-10 than t10 Northeallt Southeallt Central Midwellt Southwallt Welt 

BANKS Million t1 Billion Billion Billion Region Ragion Region Region Ragion Region 

Number of banks reporting .................. 11 ,920 8,798 2,754 319 49 994 1,924 2,633 2,881 2,103 1,385 

Total assets ...................................... $3,430.14 t363.83 $673.79 $1 ,050.31 $1,352.21 1$1.286.46 $514.62 t667.72 $233.02 t270.33 t559.09 

Total deposits ............... ................... . 2,687.55 314.05 583.53 810.52 979.45 933.28 418.93 451.69 192.75 236.92 453.98 

Net income (in millions) ................ .... .. 18,045 2,645 4,949 5,684 4,767 3,488 3,169 4,798 2,430 1,740 2,419 

Percentage of banks losing money ..... . 11.2% 11.6% 9.0% 17.5% 24.5% 26.8% 14.8% 6.4% 4 .5% 10.7% 18.9% 

Percentage of banks with earnings gains 62.5% 61.9% 64.3% 66.8% 57.1 % 56.1 % 60.0% 63.2% 64.6% 70.4% 53.3% 

Performance Ratios 

Yield on earning assets ................... .. .. 9.91 % 9.75% 9 .74% 9.87% 10.07% 10.33% 9.57% 9.59% 9.76% 9.10% 10.04% 

Cost of funding earning assets .... ........ 5.73 5.28 5.25 5.35 6.40 6.52 5.33 5.43 5.34 5.13 5.09 

Net interest margin .. .... ............... .... ... 4.18 4 .47 4 .49 4 .52 3 .66 3.81 4.24 4.16 4.42 3.97 4.95 

Noninterest income to earning assets ... 2.05 1.02 1.28 2.31 2 .52 2.53 1.52 1.53 2.12 1.67 2.13 

Noninterest expense to earning assets .. 4.27 3.88 3.88 4.51 4.39 4.47 3.98 3.70 4.15 4.24 4.73 

Net operating income to assets ............ 0.45 0.71 0.71 0.47 0 .24 0.16 0.50 0.84 1.04 0 .50 0 .41 

Return on assets .. .. ................... ....... .. 0 .54 0.77 0.76 0 .56 0.36 0.28 0.63 0.88 1.08 0.65 0.44 

Return on equity ................ .... ..... ....... 8.09 8.40 9.78 8.23 6.64 4.72 8.76 12.05 13.39 9.68 6.56 

Net charge-offs to loans and leases ...... 1.60 0.67 0.95 1. 71 2 .03 2 .37 1.22 0.88 1.07 1 .25 1.32 

Loan loss provision to net charge-offs .. 104.49 120.90 118.94 120.28 89.85 88.92 118.21 119.40 108.49 85.25 145.39 

Condition Ratios 

Loss allowance to: 

Loans and leases ... .............. ............ 2.68% 1.76% 1.83% 2.73% 3 .27% 3.41 % 2.01 % 1.85% 1.99% 2.48% 2.84% 

Noncurrent loans and leases ............. 72.48 90.87 79.72 83.57 63.80 63.26 83.42 88.78 109.74 87.83 75.31 

Noncurrent loans and leases plus 

other real estate owned to assets... . 2.99 1.61 2.07 2.81 3 .95 4.13 2 .21 1.63 1.53 2.38 3.36 

Equity capital ratio ... .......................... 6.76 9.10 7.79 6.95 5.48 6.06 7 .24 7.31 8.13 6.87 6.73 

Core capital (leverage) ratio .......... ....... 6 .50 9 .10 7 .68 6 .66 5.15 5.83 6.90 7.19 8.04 6.72 6.29 

Net loans and leases to deposits .. ........ 74.30 57.41 66.48 77.98 81.34 78.94 73.08 73.44 65.34 50.88 82.78 

Growth Rates (year-to-year) 

Assets ...... ............................... ......... 1.2% 5.8% 6.0% 6.7% 3.6% -0.4% 1.3% 3.0% 0.8% 1.0% 3.4% 

Equity capital ... ....... ... ..... .................. 6.0 5.3 8.3 12.5 7.1 6.8 4 .5 6.9 6.3 6.6 4.2 

Net interest income ................... ...... ... 5.6 7.4 8.0 11.5 10.0 4.0 3.7 9 .0 8.3 8.5 4.9 

Net income ... ... ... ........... .. ........ ......... 11.9 13.4 0.8 31.2 -22.2 914.1 4.5 8.7 11.0 44.1 -51.0 

Noncurrent loans and leases plus 

other real estate owned .... ..... ... .... .... 4.5 4.9 19.7 14.0 14.6 -5.4 10.4 6 .3 8.1 -11.3 50.8 

Net charge-offs ..... ..... ............... ......... 10.5 4 .6 33.3 26.1 12.6 8.2 35.7 -0.1 9.7 -9.3 17.8 

Loan loss provision ................... ......... 6.7 -0.1 19.4 1.3 35 .9 -7.4 3.8 13.4 5.2 -15.3 68.5 

PRIOR FULL YEARS 

(The way it was.. . ) 

Return on assets .. ..... ..... ......... 1990 0 .49% 0 .70% 0.77% 0 .37% 0.39% 0.03% 0 .62% 0.83% 1.01 % 0.46% 0.94% 

............................. 1988 0.82 0 .64 0.73 0.77 0.95 0.98 0.98 1.07 0.87 -0.71 0.81 ............................. 1986 0.62 0.46 0.66 0.75 0.57 0.78 1.02 0 .87 0 .73 -0.39 0.33 

Equity capital ratio ..... ... ... ....... 1990 6 .45 8.98 7.68 6.34 5.26 5.65 7 .02 7.05 7.70 6.51 6.67 ............................. 1988 6.28 8.72 7.23 6.15 5 .10 5.93 6.93 6.75 7 .44 5.67 5.90 ............................. 1986 6.19 8.35 6 .97 5.95 5.14 5 .81 6 .57 6.79 7.12 6.39 5.67 

Noncurrent loans and leases plus 

other real estate owned to assets 

1990 2.90 1.69 1.92 2.80 3.77 4.35 2.03 1.58 1.42 2.71 2.30 ............................. 1988 2.14 1.91 1.72 1.53 2 .96 2 .35 1.02 1.15 1.52 4.55 2.65 ............................. 1986 1.95 2 .24 1.89 1.44 2.30 1.55 0 .96 1.30 2.01 4.10 2.98 

Net charge-offs to loans and leases 

1990 1.44 0 .71 0.84 1.38 1.91 2.05 0.90 0.90 1.00 1.39 1.16 ............................. 1988 0.99 0.88 0.78 1.04 1.08 0.82 0.63 0 .72 1.31 2.32 1.23 ............................. 1986 0.98 1 .56 1.07 0.78 0.91 0.62 0.61 0 .69 2.09 2.11 1 .21 

6 
SAVINGS BANK PERFORMANCE - FIRST QUARTER, 1992 

• BIF-lnsured Savings Banks Earn $176 Million -the First Quarterly Profit in Three Years 

• Six Institutions Fail During the Quarter 

• Troubled Assets Decline at the Remaining Savings Banks 

Savings banks insured by the Bank Insurance Fund earned 

$176 million in the first quarter of 1992. This is the first 

quarterly profit reported by the savings bank industry since 

the first quarter of 1989. FDIC resolutions of the most impaired institutions continued to reduce losses and to 

remove troubled assets from the industry, and figured significantly in the profitable first quarter. During the first 

quarter of 1992, six institutions with assets of $12. 7 billfon failed, including two of the largest institutions 

-Crossland Savings Bank, FSB, with $7.4 billion in total 

assets, and Dollar Dry Dock Bank, with $4 billion in total 

assets. 

The earnings performance and asset quality indicators at 

the remaining savings banks showed improvement in the 

first quarter compared with the final quarter of 1991. 

First-quarter earnings of the 435 remaining savings banks 

were aided by improved net interest income, reduced loanloss provisioning and lower noninterest expenses. The 321 

institutions headquartered in the New England states 

reported an aggregate average return on assets of 0.21 

percent, while the 99 savings banks in the other Northeastern states reported a slightly higher figure: 0.27 percent. Return on assets at the 1 5 savings banks located 

outside the Northeast averaged 1.43 percent. 

Favorable interest rates continued to benefit the industry. 

Funding costs declined faster than asset yields, boosting 

net interest income for the quarter. Interest margins - net 

interest income as a percent of earning assets - reported 

by the 435 surviving institutions averaged 3.41 percent 

during first quarter 1992, compared with 3.07 percent the 

previous quarter. Sixteen percent lost money in the first 

quarter, compared with 30 percent in the final quarter of 

1991. 

The savings bank industry's troubled assets -noncurrent 

loans plus other real estate owned - declined overall by 

$943 million during the quarter, reflecting FDIC's resolution activities as well as improvement in the surviving institutions. A $374-million decrease in noncurrent loans 

during the quarter in the 435 remaining institutions was 

partially offset by an increase of $196 million in their 

other real estate owned. Troubled assets comprised 5.5 

percent of these BIF-insured saving banks' assets at the 

end of the quarter, down slightly from 5. 7 percent at the 

end of 1991. Net charge-offs of $422 million were down 

significantly from the $610 million charged-off by the 435 

savings banks during the fourth quarter of 1991. 

Lower loan-loss provisions enhanced earnings while 

reserves against loan losses increased compared with the 

previous quarter. Loan loss reserves at the remaining 

savings banks increased $162 million (5.5 percent) compared with their reserve levels at the end of the previous 

quarter. As of March 31, 1992, savings banks held almost 

38 cents in reserve for each dollar of noncurrent loans, up 

from 34 cents reported by the same institutions at the end 

of the previous quarter. Reserve coverage levels remain 

strongest for savings banks located outside New England 

and the Northeast. These institutions have 79 cents in 

reserves for each dollar of troubled loans. Reserve 

coverage levels are significantly higher in the New England 

states than elsewhere in the Northeast. Aggregate capital 

ratios benefited from the positive earnings of the remaining savings banks. At the end of the quarter, equity capital 

increased to 7.10 percent of assets, up from 6.87 percent 

at year-end 1991. 

Assets of the entire industry decreased by $943 million 

( - 0.4 percent) in the quarter if the assets reported by 

those six institutions that failed during the first quarter are 

taken into account. However, both assets and deposits 

held by the 435 surviving institutions increased by $4.6 

billion, or nearly 2 percent. At these institutions, mortgage 

loans increased $752 million, but total loans showed a net 

decrease of $560 million (-0.4 percent) for the quarter. 

Cash and investments, including short-term government 

securities, increased by more than $4 billion (9 percent). 

The increases in deposits, mortgage loans and cash assets 

largely reflect the acquisition of unimpaired loans and 

deposits from failed savings banks during the quarter. 

Lower interest rates will help the remaining institutions 

cover credit losses. The viability of some savings banks 

still in operation today depends on market values of 

troubled real estate assets. Troubled assets were equal to 

65 percent of the industry's equity and reserves at March 

31, 1992. Institutions with strong balance sheets should 

benefit from continuing consolidation of the banking industry in the Northeast. 

1 Includes Crossland Savings, a newly-chartered Federal mutual savings bank which assumed the assets and deposits of Crossland Savings, 

FSB, Brooklyn, New York, on January 24, 1992. Excludes Southstate Bank for Savings, Brockton, MA, which 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) 

1992· 1991 • 1991 1990 1989 1988 1987 

Return on assets ...................................... 0.30% -0.29% -0.50% -0.98% -0.27% 0.44% 0.84% 

Equity capital to assets ............................. 7.10 6.64 6.74 6.62 7.06 7.44 7.69 

Noncurrent loans and leases plus 

other real estate owned to assets• • ........ 5.49 5.80 5.86 5.13 2.64 1.51 0.95 

Noncurrent RE loans to total RE loans•• ..... 5.29 5.66 5.65 5.32 3.14 1.67 1.01 

Asset growth rate .................................... -8.25 -7.51 -8.35 -7.46 -1.52 8.52 10.54 

Deposit growth rate .................................. -5.82 -5.32 -5.68 -4.98 1.36 7.90 5.81 

Number of institutions .............................. 435 463 441 469 489 492 484 

Number of problem savings banks .............. 70 48 74 34 17 12 16 

Assets of problem savings banks (billions) .. $72.0 $81.1 $81.8 $67.2 $47.6 $47.4 $29.3 

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

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

• • Excludes Federally-<:hartered Savings Banks before 1990. 

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

(dollar figures in millions) 

Preliminary 

1st Otr 4th Otr 1st Otr % Change 

1992 1991 1991 91:1-92:1 

Number of savings banks reporting ..................... 435 441 463 -6.0 

Total employees (full-time equivalent) ................. 67,656 68,210 74,075 -8.7 

CONDITION DA tA 

Total assets ...................................................... $236,477 $237,420 $257,753 -8.3 

Mortgage loans ............................................... 139,382 141,903 156,785 -11.1 

1-4 family residential .................................... 95,505 96,758 103,999 -8.2 

Construction and land development ................ 4,493 5,205 7,763 -42.1 

Commercial and multi-family ......................... 39,384 39,940 45,023 -12.5 

All other loans and leases ................................ 15,485 17,161 20,636 -25.0 

LESS: Reserves for losses ............................. 3,115 3,018 3,091 0.8 

LESS: Other contra accounts ......................... 549 602 835 -34.3 

Net loans and leases ....................................... 151,202 155,445 173,494 -12.8 

Mortgage-backed securities .............................. 20,530 20,743 25,296 -18.8 

Other real estate owned .................................. 4,677 4,866 4,544 2.9 

Goodwill ........................................................ 935 1,146 1,584 -40.9 

All other assets ............................................... 59,133 55,221 52,835 11.9 

Total liabilities and capital .................................. 236,477 237,420 257,753 -8.3 

Interest-bearing deposits .................................. 192,679 193,909 206,303 -6.6 

Noninterest-bearing deposits ............................ 7,261 6,649 5,999 21.0 

Other borrowed funds ........ ............................. 16,647 17,688 24,569 -32.2 

Subordinated debt ........................................... 317 517 675 -53.0 

Other liabilities ................................................ 2,782 2,665 3,096 -10.1 

Equity capital .................................................. 16,791 15,992 17,111 -1 .9 

Loans and leases 30-89 days past-due ................ 4,904 5,215 6,474 -24.2 

Noncurrent loans and leases ............................... 8,301 9,055 10,396 -20.1 

Other noncurrent assets ..................................... 26 27 38 -31.2 

Direct and indirect investments in real estate ....... 798 929 1,175 -32.1 

INCOME DATA Preliminary 

Full Year Full Year 1st Otr 1st Otr 

1991 1990 % Change 1992 1991 % Change 

Total interest income ..................... $20,204 $24,521 -17.6 $4,616 $5,746 -19.7 

Total interest expense .................... 13,890 18,085 -23.2 2,784 4,134 -32.7 

Net interest income ..................... 6,315 6,437 -1 .9 1,832 1,612 13.7 

Provisions for losses ...................... 2,494 3,566 -30.1 388 499 -22.1 

Total noninterest income ................ 1,247 1,255 -0.6 319 316 0.9 

Total noninterest expense .............. 6,174 6,512 -5.2 1,493 1,553 -3.8 

Securities gains (losses) ................. 289 (25) N/M 112 73 53.6 

Applicable income taxes ................. 445 191 133.0 218 131 66.0 

Extraordinary gains, net ................. 96 11 764.2 13 (1) N/M 

Net income ................................. (1,167) (2,591) N/M 176 (184) N/M 

Net charge-offs ............................. 2,102 2,204 -4.6 422 551 -23.4 

N/M - Not meaningful 

8 
Table Ill. First Quarter 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 QUARTER Preliminary Savings than $100 to than 

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

Number of savings banks reporting ...................... 435 126 252 57 321 99 15 

Total assets ..........................•............................ $236.48 $6.78 $79.90 $149.80 $104.02 $120.87 $11.59 

Total deposits .................................................... $199.94 $6.08 $69.68 $124.18 $89.93 $102.75 $7.26 

Net income fin millions) ....................................... 176 5 81 90 55 80 41 

Percentage of savings banks losing money ........... 15.63 20.64 11.91 21.05 17.45 11. 11 6.67 

Percentage of savings banks with earnings gains .. 73.10 72.22 73.41 73.68 72.90 73.74 73.33 

Performance Ratios (annualized) 

Yield on earning assets ....................................... 8.58% 8.95% 8.73% 8.48% 8.71% 8.37% 9.58% 

Cost of funding earning assets ............................ 5.17 5.15 5.11 5.21 5.14 5.15 5.69 

Net interest margin ............................................. 3.41 3.80 3.62 3.27 3.57 3.22 3.89 

Noninterest income to earning assets ................... 0.30 0.18 0.25 0.32 0.30 0.24 0.78 

Noninterest expense to earning assets ................. 1.39 1.57 1.48 1.33 1.58 1.22 1.36 

Return on assets ................................................ 0.30 0.29 0.41 0.24 0.21 0.27 1.43 

Return on equity ................................................. 4.20 3.63 5.28 3.57 3.01 3.83 14.97 

Net charge-offs to loans and leases ..................... 1.10 0.54 0.71 1.33 1.28 1.01 0.25 

Loan loss provision to net charge-offs .................. 92.04 117.71 112.84 85.60 88.39 93.56 203.47 

Condition Ratios 

Loss allowance to: 

Loans and leases ............................................. 2.03 1.30 1.59 2.30 2.07 2.10 1.02 

Noncurrent loans and leases ............................. 37.52 38.73 43.08 35.77 46.07 31.30 78.84 

Noncurrent loans and leases plus 

other real estate owned to assets ..................... 5.49 3.87 4.26 6.22 5.30 5.97 2.14 

Noncurrent RE loans to total RE loans .................. 5.29 3.34 3.65 6.27 4.35 6.58 1.30 

Equity capital ratio .............................................. 7.10 7.90 7.78 6.70 7.05 6.91 9.59 

Core capital (leverage) ratio ................................. 6.71 7.91 7.71 6.12 6.84 6.31 9.65 

Net loans and leases to deposits .......................... 75.62 73.32 73.90 76.70 76.97 72.20 107.45 

Growth Rates (year-to-year) 

Assets .............................................................. -8.25% 4.21% 6.31% 3.89% -5.09% -11.51% 0.28% 

Equity capital ..................................................... -1.87 -0.46 0.15 -3.69 1.45 -6.81 19.98 

Net interest income ............................................ 13.66 23.32 21.86 19.25 20.99 6.38 23.33 

Net income ........................................................ N/M N/M 1538.07 N/M N/M 848.13 35.45 

Net charge-offs .................................................. -23.43 -25.34 -16.18 12.03 -37.50 2.90 97.27 

Loan loss provision ............................................. -22.12 7.56 -16.81 -8.90 -36.01 -2.00 214.20 

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. Full Year 1991 Savings Bank Data (Dollar figures in billions, ratios in %) 

All ASSET SIZE DISTRIBUTION GEOGRAPHIC DISTRIBUTION 

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

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

Number of savings banks reporting ...................... 441 130 253 58 326 100 15 

Total assets ....................................................... $237.42 $6.99 $79.23 $151.20 $105.02 $121.04 $11.36 

Total deposits .................................................... $200.56 $6.27 $69.16 $125.13 $90.92 $102.35 $7.29 

Net income (in millions) ....................................... (1,167) (23) (199) (944) (657) (642) 132 

Percentage of savings banks losing money ........... 33.79 36.92 30.44 41.38 39.26 21.00 0.00 

Percentage of savings banks with earnings gains .. 64.17 62.31 65.61 62.07 64.11 62.00 80.00 

Performance Ratios 

Yield on earning assets ....................................... 9.34% 9.65% 9.49% 9.24% 9.41% 9.20% 10.13% 

Cost of funding earning assets ............................ 6.42 6.23 6.26 6.51 6.31 6.48 6.73 

Net interest margin ............................................. 2.92 3.42 3.23 2.73 3.11 2.71 3.40 

Noninterest income to earning assets ................... 1.15 0.74 0.98 1.26 1.22 0 .92 2.96 

Noninterest expense to earning assets ................. 5.71 6.45 5.97 5.54 6.37 5.17 5.44 

Return on assets ................................................ -0.50 -0.34 -0.26 -0.63 -0.65 -0.53 1.16 

Return on equity................................................. -7.06 -4.19 -3.25 -9.60 -8.91 -7.86 13.49 

Net charge-offs to loans and leases ..................... 1.32 1.08 1.15 1.41 1.66 1. 11 0.26 

Loan loss provision to net charge-offs .................. 118.67 107.90 117.03 119.76 106.18 134.82 159.16 

Condition Ratios 

Loss allowance to: 

Loans and leases ............................................. 1.91 % 1.27% 1.59% 2.11 % 2.08% 1.85% 0 .96 % 

Noncurrent loans and leases ............................. 33.33 36.69 39.62 31.28 43.77 26.07 68.21 

Noncurrent loans and leases plus 

other real estate owned to assets ..................... 5.86 3.84 4.71 6.56 5.65 6.39 2.21 

Noncurrent RE loans to total RE loans .................. 5.65 3.50 4.00 6.63 4.65 7.00 1.41 

Equity capital ratio .............................................. 6.74 7.90 7.66 6.20 6.85 6.37 9.56 

Core capital (leverage) ratio ................................. 6.04 7.85 7.53 5.17 6.68 5.17 9.45 

Net loans and leases to deposits.......................... 77 .51 74.70 75.33 78.85 78.13 74.86 106.90 

Growth Rates (year-to-year) 

Assets .............................................................. -8.35% 5.92% 5.22% - 1.87% -5.19% -11.61% 0.27 % 

Equity capital ..................................................... -6.68 -0.21 -2.28 -10.13 -0.97 - 14.11 21.65 

Net interest income ............................................ -1.91 10.05 6.60 3.96 1.15 -6.42 16.65 

Net income ........................................................ N/M N/M N/M N/M N/M N/M 119.70 

Net charge-offs .................................................. -4.64 15.48 5.63 -1.07 -19.74 27.77 15.18 

Loan loss provision ..................... ........................ -30.05 -14.69 -13.43 -12.79 -42.95 -7.63 -27.22 

N/M - Not meaningful 

Spread Between Short-Term and Long-Term Yields 

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

10% ~-------------------------------------, 

9 

8 

7 /

30-Year Treasury Bond 

6 

5 3•Month Treasury Bill 

4 

3 

1990:1Q 1990:20 1990:3Q 1990:4Q 1991 :1Q 1991 :2Q 1991 :03 1991 :Q4 1992:01 

Quarterly Average Yield : 

30 Yr Treasury Bond 8 .44 8.65 8.80 8.55 8.20 8.32 8.18 7.85 7.80 

3 Month Treasury Bill 7.76 7.75 7.48 6.99 6.02 5.56 5.38 4.54 3.90 

Spread 0.68 0.90 1.32 1.56 2.18 2.76 2.80 3.31 3.90 

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

Number of Banks 1985-1992 

1,575 I 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 

Number of Problem Institutions: 

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

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

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

$ Billions 1985-1992 

700 ,------------------------------.

1±1 Savings Banks 609.8 607.4 

600 I Commercial Banks 

500 

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 

Assets of Problem Institutions: 

Savings Banks 63.9 49.7 29.3 47.4 47.6 67.2 81 .1 65.4 85.9 81 .8 72.0 

Commercial Banks 173.9 285.8 329.2 304.8 187.9 341.6 318.6 348.8 401.0 528.0 535.4 

11 
NOTES TO USERS: 

COMPUTATION METHODOLOGY FOR PERFORMANCE AND CONDITION RATIOS 

The dete on commwcial bwika and atat chertwed 11vinga bank• w•• obtained from Call report■ filed with the FDIC and Fedwal Reaerve Board. Data on 

Fedwally-chertwed 11vinga bwika (15 inatitutiona H of Mwch 31, 1992) w•• obtained from Thrift Financial Report• filed with the Office of Thrift Superviaion. Certain edjuatrnenta •• made to the Thrift Financial Report■ to provide cloaw conformance with Call report diacloaure requirement■. 

All income figurN uaed in calculeting performance retioa repreaent amount• for thet period, annualized (multiplied by the number of period• in • year). 

All HIit and liability fipN uaed in c:.lculating performance ratio• reprHent avwage amount• for the period (beginning-of-period amount plua end-ofperiod amount plua any periode in between, divided by the total number of perioda). 

All Ht and liability fipH ueed in c:.lculating the condition ratio• repreaent amount• H of the end of the quarter. 

DEFINITIONS 

"Problem" Banka-Fedwal regulator• auign to each financial inatitution • compoaite rating, baaed upon an evaluation of financial and operational criteria. 

The rating ia baaed on • acala of 1 to 5 in aacending ord« of 1uperviao,y concern. •Problem" bank• are thoae inatitutiona with financial, operational, or 

managerial weakn..•• that threaten their continued financial viability. Depending upon the degree of riak and 1uperviao,y concern, they are rated either a 

•4• or •5," 

Earning Aaeeta -all loan• and othw inv..tmenta that um inter..t, dividend or fee income. 

Nat OparatJne Income -income excluding diacretionery tranuctiona auch H gain• (or louea) on the aale of inv..tment aecuriti.. and extraordinary 

itama. Beginning with the firat quertw 1992 publication, income tax.. aubtracted from op«eting income have been edjuatN:I to exclude the portion applicable to aecuritiN geina (or loaHa). 

Yield on Earning Aaeeta -total intw..t, div~ and fee income earned on loana and inv..tmenta H • percentage of avwaga earning HHta. 

Coat of Funding Earning Aaeeta -total intw..t expen11 paid on dapoeita and othw borrowed money •• • percentage of avwage earning HHU. 

Net lntareat Margin-the diffwenca between the yield on earning HHta and the coat of funding tham, i.e., the profit margin• benk eama on ita loan, and 

inv..tmenta. 

Return on Aaeeta - net income (including eecuriti.. tren11ction1 and nonrecurring itama) H • percentage of avwage total HHta. The baaic yardatick of 

bank profitability. 

Return on Equity- net income •• • percentage of avwage total equity capital. 

Loan Commhmenta and lAttara of Credit -includea unuaed credit card commitment, end overdraft plan,, reflecting Call report reviaiona affective 

March 31, 1990. 

Nat Charga-offe-totel loana and lea,.. charged off (removed from balance aheet becauae of uncollectibility) during, the quarter, leu amount, recovered 

on loan• and 1..... pravioulJly charged off. 

Noncurrant Loww • t..--the aurn of loan• pHt-dua 90 day, or more and loan, in nonaccrual 1t1tu1. 

Other Real Eatata Ownad-primerily forecloaed property. Direct and indirect inv..tment, in real ..tat• ventur.. ere excluded whwe appropriate. 

Other noncurrant -ta-debt aecuriti.. end othw HHta (excluding loan,, lea,.. and othw real ..tat• owned) that are eithw put-due et leaet 90 day, 

or in nonaccrual atatua. Dua to reporting diffwenc.., only defaulted debt eecuriti.. ere included for Federal Saving• Banke. 

Core capital -common equity capital plua noncumulative perpetual preferred atock plua minority intweat in conaolidated aubaidiariea, 1... goodwill and 

othw ineligible intangible HHta. Eligible intangiblN (including mo,tgaga eervicing righta) are limited to 100 percent of core capital for 11ving1 bank,, to 50 

percent of core capital for atat chertered commercial banka that are not Federal R..erve member,, and to 25 percent for National banka . 

Nat Loal'MI and lA--total loana and leaa.. 1..a unearned income and the allowance for loan, and leaH loaan. 

Temporary ln-tmenta -th• ,urn of intw..t-bearing balanc.. due from dapoaito,y inatitutiona, federal fund• eold and eecuriti.. purchued undw agreement, to reaell, trading-account HHtl and inv..tment eecuritiH with remaining maturitiH of one yur or leaa. 

Volatile UabilitlN -th• aurn of large denomination time depoaita, foreign office depoaita, fedwal fund• purchHed, eecuritiea eold undw agreamenu to 

rapurchHa, and oth« borrowed money. 

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