The FDIC 

uarte r 1J-______L_._W_illi_am_S_e_id_ma_n_,C_h_air_m_an 

Second Quarter, 1991 

FDIC 

Division of Research 

&Statistics 

Don Inscoe 

(202) 898-3940 

Ross Waldrop 

(202) 898-3951 

Insured commercial banks earned $4.6 billion in the 

second quarter of 1991, their lowest second-quarter 

result since the banking industry reported an 

aggregate net loss in the second quarter of 1987. 

Earnings for the quarter were 12 percent below the 

level registered a year ago, and 7.8 percent below the 

$5.6 billion earned in the first quarter of this year. 

Higher loan-loss provisioning was the primary reason 

for the decline in bank profits. Banks set aside $8.2 

billion for future losses in the second quarter. This was 

$1 .7 billion more than the loss provision taken in the 

second quarter of 1990, and $1.1 billion more than the 

first-quarter 1991 provision. The largest increases in 

loss provisions occurred at banks in the West and 

Northeast Regions. Banks in these areas also 

experienced the largest declines in net income. Banks 

in the Southwest Region were the only regional group 

with lower second-quarter loan-loss provisions than a 

year ago. 

Gains from sales of investment securities and other 

nonrecurring gains continued to boost 1991 earnings. 

These gains contributed $417 million (nine percent) of 

commercial banks' net income in the second quarter, 

an increase of $390 million from last year's second 

quarter. For the first six months of 1991, securities and 

other gains accounted for $1.2 billion of the $10.3 

billion earned by commercial banks. Net income was 

$1.2 billion below the $11 .5 billion earned in the first 

half of 1990. The earnings drop was due to a $3 billion 

Chart A - Quarterly Net Income of 

FDIC-Insured Commercial Banks 

1987-1991 

$ BIiiions 

8 

52 

4 

D Ne! Operating l~come .4 

■ Securt1!11!1 and Other Gains . . .a 0 Fln1t Republic Effect 

-12 ......__._.................._.__.__._......_.__.________ 

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

1987 1988 1989 1990 1991 

anking Profile 

COMMERCIAL BANKING PERFORMANCE - SECOND QUARTER, 1991 

• Commercial Banks Earn $4.6 Billion In Second Quarter 

• Growth In Troubled Assets Slows 

• Loan Portfolios Shrink For Second Consecutive Quarter 

• Banks In West See Sharp Earnings Decline 

increase in loan-loss provisioning this year from the 

amount set aside in the first six months of 1990. 

Chart B - Quarterly Net Interest Margins of 

FDIC-Insured Banks 

N81 lnterus1 Margin(%) 

5.0 

l~ ,- ~ .- .. .. ..... 4.5 Ill .. ~--~,--- ~/ '"' 'II 

~I Banks < $100 MIIHon I ~ [4.~ 

4.0 ...... ... rr,r .- 1111 _, -~~ ,~ .I\l' 

' ~ Banks > $100 MIIHon I 

3.5 I I I I I I I I I I ¥fi 1 234123412341234 1 2341 23412341 2 

1984 1985 1988 1987 1988 1989 1990 1991 

Interest expense continued to decline more rapidly 

than interest income as interest rates fell in the second 

quarter, and net interest margins widened for all 

groups of banks. Net interest income in the second 

quarter was $1.6 billion higher than in the second 

quarter of 1990. For the first six months of 1991, net 

interest income was almost $3 billion higher than a 

year ago. Noninterest income was $1.3 billion above 

the amount earned in the second quarter of 1990, but 

this improvement was offset by a $2 billion increase in 

noninterest expense. The increase in noninterest 

expense has been caused in part by growth in 

overhead expenses associated with larger inventories 

of troubled assets. Higher deposit insurance 

premiums accounted for roughly $400 million of the 

increase in noninterest expense in the second quarter. 

Asset growth remained very weak in the second 

quarter. Total banking assets increased by $26 billion 

(0. 79 percent) during the quarter. For the twelve 

months prior to June 30, assets increased by only $16 

billion, or one-half of one percent. Loans outstanding 

at commercial banks shrank by $14 billion during the 

quarter, the second consecutive quarterly decline. 

Over the past twelve months, total loans at 

commercial banks have decreased by $7 billion. This 

is the only time since 1973, when quarterly data is first 

available, that the banking industry has reported two 

For assistance contact: Section508@fdic.gov
consecutive quarterly declines in loans outstan?ing. It 

is the first 12-month drop since 1975. The shrinkage 

can be attributed to the recent difficulties in many real 

estate markets, continuing soft loan demand 

stemming from a weak economy, and the longer-term 

defection of many large commercial borrowers to 

nonbank competitors. Banks' equity capital increased 

by $3.6 billion during the quarter, to 6.7 perce~t of 

total assets, the highest level since 1975. Retain~d 

earnings contributed only $1.2 billion of the increase 1!1 

equity, as banks paid out 73 percent of their 

second-quarter earnings in dividends. 

Asset-quality problems showed signs of moderating 

as noncurrent loans fell by $232 million in the second 

quarter. This was the first quarterly decline for the 

industry since the fourth quarter of 1989, but 

noncurrent loans remained 25 percent above the level 

of a year ago, and are 6.3 percent higher than at the 

beginning of this year. Net charge-offs have stay~d 

roughly even with last year's record pace. Com~erctal 

banks' inventories of foreclosed property continue to 

accumulate. They have increased by 24 per?9nt i!'l the 

first six months of this year, to a level two-thirds higher 

than a year ago, although the rate of increase has 

slowed. 

Banks in the Northeast Region continued to confront 

the most severe asset-quality difficulties. More than 

one out of every four banks reported a net loss for the 

second quarter. The Region's banks charged-o!f $5.5 

billion (net) in the second quarter, t~e ,highest 

proportion of loans charged-off by that Region s banks 

in any one quarter since quarterly income reporting 

began in 1983. They accounted for 62. percent of all 

commercial bank net loan charge-offs in the second 

quarter, and $1.1 billion of the banking industry'.s $1 . 7 

billion increase in foreclosed property. Despite the 

high level of charge-offs, Northeast Region banks' 

noncurrent loan rate shrank only slightly, and 

remained the highest of any region. 

Banks in the West Region had the largest rise in 

noncurrent loans in the second quarter, an increase of 

$1.3 billion from the level at the end of the first quarter. 

Loan-loss provisioning also was higher, up 69 percent 

from a year ago, and 82 percent above the level of t~e 

first quarter. Net charge-offs were slightly lower than in 

the first quarter, and were lower than in the second 

quarter of 1990. 

The number of banks continues to shrink. Sixty-one 

commercial banks were established in the first six 

months of 1991, the lowest annual rate since 115 

charters were issued in 1965. There have been 190 

unassisted mergers in the first half of 1991, compa~ed 

to 199 during the same period last ye~r. :rwenty-nine 

banks failed in the second quarter, bringing the total 

for the first six months of the year to 57 failures. This 

is well below the 99 banks that failed during the first 

half of 1990, but the average asset size of failed 

banks in 1991 has been considerably larger than last 

year. The average asset size of th~ _159 commercial 

banks that failed in 1990 was $65 million; the average 

asset size of failed banks in the first half of this year 

was $475 million. Similarly, the number of "problem" 

commercial banks continues to fall - at mid-year there 

were 975 the lowest number since 1985 - but the 

aggregat~ assets of banks o~ the FDIC's "Problem 

List" has increased above previous quarterly levels. 

For the rest of the year, commercial bank performance 

will continue to be burdened by the industry's large 

inventory of nonperforming assets. The pause in t~e 

growth of commercial b~nks' ~on_current loans Is 

unlikely to yield any immediate relief in loan-loss rates. 

Slack loan demand will mean slower recovery for the 

industry, but the positive signs in asset-quality trends 

offer hope for the banking industry in 1992. 

Chart C - Troubled Real Estate Asset Rates* By State 

June 30, 1991 

Central Northeast 

11.118 

17.15 

12.86 

6.83 

1.76 

20 

8.15 

Hawail 0.84 

Troubled Real Estate Asset Rate: • Noncurrent Real Estate Loans Plus 

D Other Real Estate Owned As A Percent Less Than 4% 

D Of Total Real Estate Loans Plus OREO. Between 4% and 8% 

■ 8% or Higher 

2 
DELINQUENCY, NONACCRUAL AND NET CHARGE-OFF RATES FOR NEW LOAN CATEGORIES* 

JUNE 30, 1991 

ASSET SIZE GEOGRAPHIC DISTRIBUTION 

LESS $1OOMM $1B $1OB NORTH- SOUTH- MID- SOUTH· 

ALL THAN TO TO OR EAST EAST CENTRAL WEST WEST WEST 

BANKS $1OOMM $1B $10B MORE REGION REGION REGION REGION REGION REGION 

PERCENT OF LOANS 30-89 DAYS PAST-DUE 

All real estate loans 2.25 1.96 2.00 2.31 2.48 2.77 1.98 1.69 1.87 2.06 2.27 

Construction & development 4.30 2.34 3.30 4.74 4.58 5.18 3.21 2.83 3.28 2.99 4.80 

Commercial real estate 2.34 1.86 2.10 2.12 3.09 2.77 1.91 1.68 2.67 1.90 2.75 

Multifamily residential 2.49 1.96 2.05 3.05 2.49 3.23 2.44 2.06 2.55 1.43 2.14 

1-4 family residential 1.79 2.15 1.81 1.74 1.66 2.22 1.84 1.61 1.40 2.06 1.38 

Home equity lines of credit 0.99 1.43 1.18 0.92 0.90 1.43 0.83 0.81 0.99 1.97 0.48 

Commercial RIE loans not secured by real estate 3.11 5.51 5.21 2.67 2.24 3.19 1.94 3.10 4.34 1.91 3.69 

Highly leveraged transa~tions (HLTs) 0.52 NIM 1.16 0.52 0.51 0.65 0.13 0.29 1.03 0.07 0.53 

Loans to foreign governments and institutions 0.22 NIM 0.00 0.19 0.22 0.25 0.00 0.05 NIM 0.01 0.16 

PERCENT OF LOANS NONCURRENT• • 

All real estate loans 4.89 1.98 2.55 5.02 7.59 8.62 3.64 2.20 1.79 3.83 3.54 

Construction & development 14.07 3.35 6.41 13.77 18.99 23.32 9.32 6.78 4.30 6.81 10.28 

Commercial real estate 6.16 2.73 3.34 5.70 11.20 10.87 5.01 2.95 2.68 5.29 4.14 

Multifamily residential 7.65 2.73 3.45 6.45 14.20 17.36 4.80 3.66 2.43 4.92 1.96 

1-4 family residential 1.57 1.42 1.40 1.57 1.81 2.62 1.37 0.94 0.95 1.96 0.98 

Home equity lines of credit 0.73 1.23 0.83 0.61 0.73 1.21 0.55 0.34 0.56 1.25 0.33 

Commercial RIE loans not secured by real estate 8.03 8.42 8.96 6.23 8.86 13.82 4.46 5.44 5.14 4.25 3.34 

Highly leveraged transactions (HLTs) 11.07 NIM 5.59 10.14 11.38 12.26 5.71 9.54 13.59 5.60 12.25 

Loans to foreign governments and institutions 16.01 NIM 22.69 13.57 16.11 17.02 2.45 23.88 NIM 7.56 10.15 

PERCENT OF LOANS CHARGED OFF (NET, ANNUALIZED) 

All real estate loans 0.82 0.23 0.38 1.03 1.15 1.43 0.70 0.33 0.38 1.10 0.40 

Construction & development 2.71 0.53 1.08 3.06 3.36 4.68 2.36 1.39 1.27 2.63 1.06 

Commercial real estate 0.89 0.34 0.52 1.08 1.25 1.32 0.73 0.49 0.66 1.65 0.53 

Multifamily residential 1.63 0.51 0.59 1.33 3.23 2.77 2.75 0.24 1.52 1.42 0.46 

1-4 family residential 0.17 0.16 0.16 0.27 0.10 0.26 0.17 0.07 0.10 0.45 0.08 

Home equity lines of credit 0.11 0.27 0.10 0.10 0.11 0.17 0.12 0.04 0.14 0.17 0.06 

Commercial RIE loans not secured by real estate 3.05 2.90 4.44 2.73 2.77 3.74 4.44 2.75 3.31 2.92 1.26 

Highly leveraged transactions (HLTs) 2.16 NIM 1.56 1.63 2.31 2.14 1.01 1.91 1.05 1.78 3.29 

Loans to foreign governments and institutions 17.08 NIM 8.89 5.11 17.90 17.96 0.23 4.14 NIM 4.69 19.63 

TOTAL LOANS OUTSTANDING($ BILLIONS) 

All real estate loans 847.8 97.4 211.1 265.3 274.1 272.2 158.1 135.9 50.2 50.2 181.3 

Construction & development 116.9 6.3 19.9 43.4 47.4 42.3 20.9 13.9 3.9 4.5 31.4 

Commercial real estate 246.3 25.6 68.6 88.1 64.0 74.7 50.7 40.7 14.1 18.0 48.1 

Multifamily residential 22.6 1.9 6.5 7.2 7.0 6.9 3.7 3.8 1.5 1.4 5.3 

1-4 family residential 353.1 50.7 96.6 98.0 107.8 99.8 68.9 62.5 23.2 23.5 75.3 

Home equity lines of credit 66.0 3.1 14.2 25.8 23.0 25.8 10.8 10.0 2.2 0.6 16.6 

Commercial RIE loans not secured by real estate 28.3 2.1 4.7 8.7 12.7 11.1 4.0 4.3 1.0 1.1 6.7 

Highly leveraged transactions (HLTs) 68.2 0.0 0.6 14.3 53.3 38.8 5.8 8.8 1.1 3.1 10.7 

Loans to foreign governments and institutions 24.9 0.0 0.2 1.5 23.3 19.1 0.3 1.3 0.0 0.4 3.9 

* Reported for the first time in the March 31, 1991 Call reports. 

* * 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. 

NIM - Not meaningful 

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

1991 • 1990· 1990 1989 1988 1987 1986 

Return on assets ............................... 0.61% 0.70% 0.49% 0.49% 0.82% 0.12% 0.63% 

Return on equity ............................... 9.24 10.95 7.66 7.76 13.30 2.00 9.94 

Equity capital to assets ...................... 6.72 6.43 6.46 6.21 6.28 6.04 6.20 

Noncurrent loans and leases plus 

other real estate owned to assets .... 3.19 2.42 2.90 2.26 2.14 2.46 1.94 

Net charge-offs to loans .................... 1.45 1.46 1.41 1.16 1.00 0.92 0.98 

Asset growth rate ............................. 0.48 4.82 2.73 5.37 4.36 2.01 7.71 

Net operating income growth ............. -17.38 -20.82 4.49 -35.84 1905.16 -91.04 -20.65 

Percentage of unprofitable banks ........ 11 .17 10.81 13.23 12.51 14.65 17.66 19.79 

Number of institutions ....................... 12, 150 12,502 12,340 12,707 13,139 13,696 14,200 

Number of problem banks .................. 975 1,014 1,012 1,092 1,394 1,559 1,457 

Number of failed/assisted banks ......... 57 99 159 206 221 201 144 

• 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 Otr 2nd Otr %Change 

1991 1991 1990 90:2-91 :2 

Number of banks reporting ................................ 12,150 12,246 12,502 -2.8 

Total employees (full-time equivalent) ................ 1,503,391 1,501,561 1,532,777 -1.9 

CONDITION DA TA 

Total assets .................................................... $3,377,219 $3,350,747 $3,360,962 0.5 

Real estate loans ......................................... 847,842 836,413 804,425 5.4 

Commercial & industrial loans ...................... 588,837 606,355 621,156 -5.2 

Loans to individuals ..................................... 386,979 389,462 391,893 -1.3 

Farm loans ................................................. 34,880 32,362 32,308 8.0 

Other loans and leases ................................ 215,866 224,165 231,862 -6.9 

Total loans and leases ................................. 2,074,404 2,088,757 2,081,645 -0.3 

LESS: Reserve for losses ............................. 54,179 55,031 50,208 7.9 

Net loans and leases ...................................... 2,020,224 2,033,726 2,031,437 -0.5 

Temporary investments ................................. 485,381 467,656 486,090 -0.1 

Securities over 1 year .................................... 472,585 466,380 434,234 8.8 

All other assets ............................................. 399,030 382,986 409,201 -2.5 

Total liabilities and capital ................................. 3,377,219 3,350,747 3,360,962 0.5 

Noninterest-bearing deposits ................ ........... 443,353 418,530 450,425 -1.6 

Interest-bearing deposits ................................ 2,185,549 2,189,849 2,138,187 2.2 

Other borrowed funds .................................... 385,654 378,759 420,658 -8.3 

Subordinated debt ......................................... 24,199 23,999 19,735 22.6 

All other liabilities .......................................... 111,623 116,390 115,777 -3.6 

Equity capital ................................................ 226,840 223,220 216,180 4.9 

Goodwill ......................................................... 4,340 4,210 3,612 20.1 

Loans and leases 30-89 days past-due .............. 40,164 47,712 36,372 10.4 

Noncurrent loans and leases .............................. 83,070 83,302 66,269 25.3 

Restructured loans and leases ........................... 9,198 8,488 4,896 87.9 

Other real estate owned ................................... 24,797 23,052 14,914 66.3 

Loan commitments and letters of credit ............. 1,332,758 1,306,242 1,298,382 2.6 

Foreign office assets ........................................ 393,256 395,669 419,856 -6.3 

Domestic office deposits .................................. 2,327,592 2,303,208 2,258,551 3.1 

Foreign office deposits ..................................... 301,310 305,172 330,061 -8.7 

Earning assets ..................................... ............ 2,978,188 2,967,762 2,951,761 0.9 

Volatile liabilities .............................................. 1,027,271 1,046,128 1,140,647 -9.S 

INCOME DATA Preliminary Preliminary 

First Half First Half 2nd Otr 2nd Otr 

1991 1990 % Change 1991 1990 % Change 

Total interest income ...................... $148,135 $160,251 -7.6 $72,834 $79,407 -8.3 

Total interest expense .................... 88,199 103,287 -14.6 42,465 50,615 -16. 1 

Net interest income ..................... 59,936 56,964 5.2 30,369 28,792 5.5 

Provision for loan losses ................. 15,305 12,257 24.9 8,178 6,446 26.9 

Total noninterest income .. .............. 29,601 27,020 9.5 15,027 13,746 9.3 

Total noninterest expense ............... 60,394 56,142 7.6 30,617 28,592 7.1 

Applicable income taxes ................. 4,775 4,616 3.4 2,385 2,260 5.5 

Net operating income .. ................. 9,063 10,968 -17.4 4,216 5,240 -19.5 

Securities gains, net ....................... 806 159 408.2 368 39 835 .0 

Extraordinary gains, net .................. 404 390 3.4 49 -12 N/M 

Net income ................................. 10,272 11,517 -10.8 4,633 5,267 -12.0 

Net charge-offs .............................. 15, 129 15,049 0.5 8,907 8,454 5.3 

Net additions to capital stock .......... 1,133 812 39 .5 111 112 -1.5 

Cash dividends on capital stock ....... 7,549 6,657 13.4 3,384 3,470 -2.5 

N/A -Not available 

N/M - Not meaningful 

4 
Table Ill. First Half 1991 Bank Data (Dollar figures in billions, ratios in%) 

ASSET SIZE DISTRIBUTION GEOGRAPHIC DISTRIBUTION 

EAST WEST Less $100 Million Greater 

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

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

Number of banks reporting ............... .... ... 12,150 9,071 2,712 321 46 1,038 1,933 2,679 2,921 2,128 1,451 

Total assets .......................................... $3,377.22 $357.46 $663 .59 $1,058.62 $1,297.55 $1,276.60 $509.32 $552.40 $227.04 $265. 70 $546.15 

Total deposits .... .. ... .... ..... .... .. .. ...... ........ 2,628.90 317.01 572.98 807.69 931.22 928.09 406.08 440.00 185.94 228 .19 440.60 

Net income (in millions)........................... 10,272 1,755 2,683 2,859 2,976 2,068 1,559 2,523 1,301 875 1,946 

Percentage of banks losing money ......... .. 11.2% 11.9% 7.8% 16.8% 19.6% 25.7% 13.4% 6.0% 4 .9% 11.6% 19.2% 

Percentage of banks with earnings gains .. 55.5% 54.9% 57.3% 57 .9% 58.7% 43.9% 50.9% 57.5% 58.1% 61 .7% 51 .8% 

Performance Ratios (annualized) 

Yield on earning assets ........................... 10.04% 9.88% 9 .93% 10.05% 10.13% 10.31 % 9.83% 9.76% 9.92% 9.35% 10.28% 

Cost of funding earning assets.. .... ........... 5.98 5.49 5.49 5.64 6 .66 6.70 5.62 5.68 5.58 5.46 5.35 

Net interest margin .............. ... ... .. .... ... ... . 4.06 4 .38 4.44 4.42 3.46 3.61 4 .21 4.08 4 .33 3.89 4.93 

Noninterest income to earning assets .... ... 2 .01 0.99 1.21 2.24 2.53 2 .49 1.48 1.48 2.10 1.68 2.04 

Noninterest expense to earning assets ...... 4 .09 3 .77 3 .79 4 .27 4.20 4.22 3.87 3.57 3.99 4.12 4.58 

Net operating income to assets.. ... .. ...... ... 0.54 0.76 0.78 0.48 0.41 0.23 0.53 0.89 1.12 0.55 0.69 

Return on assets ......... .. ..... ...... ... ....... .... 0 .61 0 .99 0 .82 0 .54 0.46 0.33 0.62 0 .92 1.15 0.66 0.72 

Return on equity .................................... 9 .24 10.91 10.52 8 .20 8.58 5.56 8.66 12.78 14.44 9.91 10.58 

Net charge-offs to loans and leases .......... 1.45 0.55 0.80 1.63 1.81 2.17 1.01 0.75 1.00 1.27 1.12 

Loan loss provision to net charge-offs .... .. 101.17 121.81 114.06 124.62 79.57 89.44 134.40 120.01 103.35 82.36 118.49 

Condition Ratios 

Loss allowance to: 

Loans and leases .................................. 2.61% 1.73% 1.75% 2 .65% 3 .21% 3.48% 2 .00% 1.78% 1.91% 2 .57% 2.31% 

Noncurrent loans and leases ....... ... .. ....... 65 .22 80.66 73 .55 72.01 58.30 57 .17 72.03 79.07 101.22 88.06 69.06 

Noncurrent loans and leases plus 

other real estate owned to assets .......... . 3.19 1.76 2 .09 3 .17 4.18 4 .63 2.41 1.77 1 .55 2.58 2 .98 

Equity capital ratio ........ .. ... .. ..... ... ........ .. 6.72 9 .11 7 .86 6.75 5.44 5 .94 7.18 7 .35 8 .10 6 .77 6.85 

Core capital (leverage) ratio ..... ..... ........ .. . 6.48 9 .08 7 .71 6.44 5.17 5.76 6.88 7.21 7.89 6 .66 6.38 

Net loans and leases to deposits .... ... ....... 76.85 58.53 68.26 81.46 84.37 81.62 75 .83 74.47 68.13 52.74 86.27 

Growth Rates (year-to-year) 

Assets .............. ... .... ..... ... .......... ...... ..... 0.5% 5.4% 7.1% 4 .5% -1.3% -2.8% 2.4% 2.3% 6 .1% 0.7% 2.5% 

Equity capital ..... ..... .. ... .......................... 4.9 4.2 7.7 7 .2 7.7 2.1 2.7 6.8 8.3 3.2 10.4 

Net interest income ................................ 5.2 5.4 7 .9 9.0 8 .1 1.2 5.5 8.3 8.5 10.4 6.5 

Net income .. ........ .. ............ ...... .. ............ -10.8 22.9 -3.1 -12.0 -28 .6 -21.7 -15.6 10.2 13.7 21.1 -32.3 

Noncurrent loans and leases plus 

other real estate owned .... .. ............. ... . 32.9 11 .3 33 .2 51.8 31 .9 35.5 57.5 31.7 13.6 -13.3 44.0 

Net charge-offs .. .................. ....... .... ....... 0.5 7.8 44.2 38.5 -15.8 -4.0 47.8 -18.9 9.2 -0.7 8.0 

Loan loss provision ................................. 24.9 -0.4 27 .3 19.0 55.1 22.4 27.9 24.3 5.0 -1 .5 48.4 

PRIOR FIRST HALVES 

(The way it was...) 

Return on assets ... ...... ...... .......... 1990 0 .70% 0 .80% 0 .91% 0.65% 0.61% 0.41% 0.76% 0.86% 1.08% 0.56% 1.11% 

................................ 1988 0.69 0.72 0 .78 0.69 0.64 0.96 0.99 1.09 1.06 -2.08 0 .77 

................................ 1986 0 .68 0.75 0.85 0 .75 0.49 0.80 1.10 0.93 0.77 -0.08 0.26 

Equity capital ratio .. ... ........ ..... .... 1990 6.43 9.08 7 .75 6.52 4.99 5 .66 7.16 7.04 7.94 6.60 6.36 

.... ... .............. .... ....... 1988 6 .15 8.78 7 .35 6.20 4.58 5 .67 7 .01 6.76 7.53 5.41 5.80 

6.33 8.65 7.23 6.16 5 .03 5.83 6.80 7.02 7.53 6.92 5.57 ···· ····· ···················· ··· 1986 

Noncurrent loans and leases plus 

other real estate owned to assets 1990 2.42 1.71 1.76 2.17 3.13 3.33 1.57 1.37 1.44 3.00 2.12 

.......... ..... ... ..... ......... 1988 2 .39 2 .07 1.81 1.72 3 .36 2 .33 1.07 1.21 1 .75 6.26 2.99 

.... .... .. ... .......... ... .... .. 1986 2.03 2 .37 1.90 1.59 2 .33 1.59 1.03 1.52 2.44 3.57 3.16 

Net charge-offs to loans and 

leases .. .... .......... ................ 1990 1.46 0.55 0 .66 1.36 2 .13 2.19 0.71 0 .96 0 .96 1.28 1 .11 

1.00 0.75 0.74 1.16 1.06 0 .65 0.62 0.75 1.40 3.40 1.09 ···· ·· ····· ··················· ·· 1988 ... ...... .. .............. .. ..... 1986 0.84 1.16 0 .78 0 .80 0 .81 0.57 0 .50 0.60 1.81 1.53 1.12 

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 1991 Bank Data (Ratios in%) 

ASSET SIZE DISTRIBUTION GEOGRAPHIC DISTRIBUTION 

Less $100 Million Greater EAST WEST 

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

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

Number of banks reporting ........... ............. 12,150 9,071 2,712 321 46 1,038 1,933 2,679 2,921 2,128 1,451 

Net income (in millions) ............................ $4,633 $705 $1,295 $1,072 $1,561 $814 $801 $1 ,254 $641 $424 $699 

Percentage of banks losing money .... ........ . 11 .8% 12.4% 8 .7% 19.6% 15.2% 26.6% 14.1% 7.0% 5.1% 12.9% 18.9% 

Percentage of banks with earnings gains .... 54.3% 53.3% 57 .4% 58.3% 58.7% 45.0% 51.6% 56.1% 56.1% 59.8% 49.8% 

Performance Ratios {annualized) 

Yield on earning assets ............................. 9.82% 9 .86% 9 .86% 9 .88% 9 .74% 9.95% 9.68% 9.66% 9.89% 9.18% 10.10% 

Cost of funding earning assets .... .............. 5.73 5.41 5 .36 5.44 6.26 6.32 5.44 5.53 5.48 5.26 5.16 

Net interest margin ....... ............. .............. 4.09 4.45 4.49 4.45 3 .48 3 .63 4.24 4 .14 4 .42 3.92 4.94 

Noninterest income to earning assets ......... 2.03 1.02 1.24 2.27 2.54 2.53 1.49 1.53 2 .13 1.65 2.02 

Noninterest expense to earning assets ....... 4.13 3.80 3 .84 4.34 4.20 4.26 3 .90 3.62 4.07 4.14 4.58 

Net operating cash flow to assets .... .. .. ...... 1.75 1.53 1.73 2.09 1.55 1.65 1.64 1.82 2.24 1.24 2.07 

Net operating income to assets ................. 0.50 0.76 0 .76 0.34 0.43 0.21 0.55 0 .89 1 .12 0 .54 0.49 

Return on assets...... .... ........... ...... .. ..... .. .. 0 .55 0.79 0 .79 0.41 0.48 0 .26 0 .63 0.92 1.13 0.64 0 .51 

Return on equity ......... ..................... ... .. ... 8 .25 8 .72 10.05 6.05 8.91 4.32 8.82 12.55 14.10 9.52 7.52 

Net charge-offs to loans and leases .. ....... .. 1.71 0 .66 0 .93 1 .73 2.32 2.80 1.10 0.83 1.08 1.37 1 .09 

Loan loss provision to net charge-offs ........ 91.82 116.84 112.77 129.39 63.00 72.10 121.89 117.40 101.90 74.21 156.60 

Growth Rates {year-to-year) 

Net interest income ................................ .. 5.5% 5 .5% 7.7% 9.3% 8.2% 1.9% 5.3% 9 .0% 10.1% 8.2% 6.4% 

Net income ........ ...... .. ...... ....... ................ -12.0 - 1.0 -4.2 -35.1 -5.2 -20.7 -14.3 9.5 19.6 11.3 -43.8 

Net charge-offs ................ ....... ... .. ... .. ... ... 5.3 9 .2 38.6 36.9 -6.6 9.4 51.5 1 .9 9 .4 -7.2 -23.4 

Loan loss provision ....... ... .. ... ... ....... .... .. .. . 26.9 - 1 .2 22.9 30.8 45.9 19.3 19.8 44.3 2 .5 -7.0 68.7 

PRIOR SECOND QUARTERS 

(The way it was... ) 

Return on assets........ .............. .. ... . 1990 0.63% 0.78% 0.89% 0.61% 0.49% 0.31% 0.76% 0 .86% 1.01% 0.58% 0.95% 

··················· ·· ······· ·· ·· ··· 1988 0 .71 0.67 0.75 0 .67 0 .74 0.97 0.96 1.06 1.08 -1 .79 0.73 

...... ......... .. ..... ... .. ... .. ... 1986 0 .60 0.63 0.80 0.80 0 .32 0.77 1 .09 0.90 0.77 -0.15 -0.04 

Net charge-offs to loans and leases 1990 1 .64 0.66 0.77 1.32 2.54 2.47 0 .74 0.84 1.04 1.47 1.51 

............... ...... .... .. .. ... ... 1988 1.14 0.89 0.93 1.38 1.10 0.63 0.57 0.73 1 .41 4.75 1.40 

... ......... ... ........ .. .......... 1986 0.97 1.45 0 .94 0.86 0.92 0 .64 0.56 0.66 2 .06 1.93 1.28 

6 
SAVINGS BANK PERFORMANCE - SECOND QUARTER, 1991 

• BIF-lnsured Savings Banks Lose $506 million in Second Quarter 

• Loan Deterioration Slows in New England 

• Four Institutions Fail, Problem List Grows 

• Construction Loans Have Shrunk by One-third in Past Year 

Savings banks insured by the FDIC Bank Insurance 

Fund (BIF) lost $506 million during the second 

quarter of 1991, more than three times the $156 

million net loss reported in the first quarter, and an 

85 percent increase compared with second-quarter 

1990 losses of $274 million. Nearly one of every 

three BIF-insured institutions lost money during the 

quarter. For the first six months of 1 991, savings 

banks lost $662 million, 38 percent more than the 

$481 million lost in the first six months of the previous year. Deeper losses for both the quarter and 

first half resulted from declines in net interest income 

and noninterest income, while noninterest expenses 

have increased . Higher deposit insurance assessment rates have raised noninterest expense by an 

estimated $35 million in the quarter. Loan-loss provisions were higher in the second quarter but down 

slightly ( 1. 1 percent) for the entire first half. 

Losses increased throughout the Northeast during 

the quarter. In the six New England states, 38 percent of all savings banks were unprofitable and twothirds of the 23 largest institutions with more than 

$1 billion in assets lost money. In aggregate, savings 

banks in the other Northeastern states were unprofitable, following break-even results the prior 

quarter. Fourteen of the 15 institutions outside of the 

Northeast were profitable, with an annualized 

second-quarter return on assets of 1.2 percent. 

Noncurrent loans totaled almost $ 10 billion as of 

June 30, a $396 million improvement since the first 

quarter. Troubled loans in New England decreased 

$292 million, to $4.5 billion as of June 30. Nearly 25 

percent of the reduction in noncurrent loans in New 

England is attributable to the failure of three Massachusetts savings banks during the second quarter. 

Noncurrent loans declined $75 million (1.4 percent) 

in the Northeast outside of New England. Asset quality benefited from the failure of one of the largest 

savings banks (Goldome, Buffalo, New York, $9.9 

billion in assets.) Goldome reported $187 million in 

noncurrent loans before it was closed on May 31 . 

Other real estate owned (OREO) - primarily foreclosed properties - continued to increase but at a 

slower rate than the previous quarter. OREO was up 

by $246 million, well below the $1.2 billion increase 

in the first quarter. The four institutions that failed 

during the quarter reported $261 million in OREO before they were closed. At the end of the second 

quarter, savings banks held $4.8 billion of OREO. 

Second-quarter net loan losses of $607 million were 

16 percent higher than in the first quarter, and 19 

percent above the $508 million charged-off in the 

second quarter one year ago. Loan losses increased 

37 percent over the same quarter last year at 

savings banks in New England and decreased nine 

percent in the rest of the Northeast. Loan-loss 

reserves at Bl F-insured savings banks were $120 

million lower than at the end of the first quarter, and 

equity capital decreased $764 million over the same 

period. 

Total assets, which have declined every quarter 

since the third quarter of 1989, decreased $13.5 bil1ion. Construction and land development loans 

decreased by more than $800 million in the quarter 

and are one-third lower than 12 months ago. Commercial real estate and home mortgage loans also 

shrank, but at lower rates. The industry's capital 

ratio has remained steady at 6. 7 percent of assets, 

despite the erosion of equity capital, due to asset 

shrinkage. 

In aggregate, troubled asset ratios have declined in 

the New England Region while they have increased 

in the other Northeastern states. New York had the 

largest increase in troubled assets-an increase of 

$25 7 million in noncurrent loans plus OREO during 

the quarter. Overall, 5.8 percent of the industry's 

real estate loans are either delinquent at least 90 

days or are in nonaccrual status. Nearly 27 percent 

of all construction loans are noncurrent, even higher 

than the 23 percent ratio reported by commercial 

banks operating in the Northeast. The residential 

noncurrent rate, at 3. 1 percent, is almost twice as 

high as the 1.6 percent average for all commercial 

banks. 

On average, reserve coverage of noncurrent loans 

has improved slightly. At the end of the second 

quarter, savings banks in New England held 36 cents 

in loan loss reserves against every dollar of troubled 

loans. Northeast savings banks outside of New England had lower coverage ratios - 24 cents for every 

dollar of noncurrent loans. 

Four institutions with combined assets of $ 11 .3 billion failed during the second quarter; six have failed 

during the entire first half. The number of problem 

savings banks increased to 58 at the end of the second quarter of 1991 from 48 as of March 31, 1991. 

Slower growth of troubled assets and the benefits of 

lower interest rates should limit losses in New England. Insolvencies are likely in Northeastern states 

outside of New England where reserve cushions are 

lower. The viability of many savings banks depends 

on recovery values of distressed assets because 

these comprise 76 percent of the industry's equity 

and reserves. 

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

1991 • 1990* 1990 1989 1988 1987 1986 

Return on assets .......... .. .. ........ .. .. ..... -0.54% -0.36% -0.96% -0.27% 0.44% 0 .84% 1.08% 

Equity capital to assets ... ................... 6.70 7.26 6.64 7.06 7.44 7.69 7.41 

Noncurrent loans and leases plus 

other real estate owned to assets• •. 6.05 3.87 5.11 2.64 1.51 0.95 0.83 

Noncurrent RE loans to total RE loans . 5.79 4.31 5.31 3.14 1.67 1.01 1.02 

Asset growth rate ............................. -8.29 - 6.25 -7.46 -1.52 8.52 10.54 15.40 

Deposit growth rate .......................... -4.97 -3.98 -4.98 1.36 7.90 5.81 8.26 

Number of institutions ... .................... 456 478 469 489 492 484 472 

Number of problem savings banks .. .... 58 31 34 17 12 16 27 

Number of failed savings banks .......... 6 4 10 1 0 2 1 

• Through June 30; ratios 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 

1991 1991 1990 90:2-91 :2 

Number of savings banks reporting .................... 456 463 478 -4.6 

CONDITION DA TA 

Total assets ................................... ................. $244,145 $257,666 $266,215 -8.3 

Mortgage loans .... ............... ..... ................. .... 149,000 156,717 163,070 -8.6 

1-4 family residential ......... ................. .. ....... 99,665 103,929 107,175 -7.0 

Construction and land development .............. 6,957 7,762 10,459 -33.5 

Commercial and multi-family ........ ....... ......... 42,377 45,025 45,436 -6.7 

All other loans and leases ... ........... .. ........ ....... 19,003 20,634 24,044 -21.0 

LESS: Reserves for losses ............................ 2,966 3,086 2,362 25.6 

LESS: Other contra accounts ............ ............ 738 835 1,019 -27.6 

Net loans and leases ........................ ................ 164,299 173,429 183,733 -10.6 

Mortgage-backed securities ............................... 22,420 25,300 26,984 -16.9 

Other real estate owned ................................... 4,791 4,545 2,171 120.7 

Goodwill ......................... .......... ...................... 1,183 1,584 1,727 -31.5 

All other assets ...................... .......................... 51 ,452 52,808 51 ,600 -0.3 

Total liabilities and capital ................ ........ ......... 244,145 257,666 266,215 -8.3 

Interest-bearing deposits .. ......................... ..... 197,336 206,303 207,877 -5.1 

Noninterest-bearing deposits ....... ..... .......... ..... 6,417 5,988 6,531 -1.7 

Other borrowed funds .................................... 20,648 24,488 28,433 -27.4 

Subordinated debt .............. ...... .............. ....... 654 675 691 -5.3 

Other liabilities ..... .............. ........................... 2,730 3,089 3,355 -18.6 

Equity capital ............................... ................. 16,359 17,123 19,328 -15.4 

Loans and leases 30-89 days past-due .............. 5,596 6,511 5,050 10.8 

Noncurrent loans and leases ............ .......... ..... ... 9,967 10,363 8,129 22.6 

Other noncurrent assets ................................... 22 N/A N/A N/A 

Direct and indirect investments in real estate...... 1,102 1, 167 1,591 -30.7 

INCOME DATA 

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

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

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

Provisions for loan losses .............. .. 

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

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

Securities gains, net.. ...... ............... 

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

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

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

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

Preliminary 

First Half 

1991 

$10,764 

7,630 

3,135 

1,158 

616 

3,092 

102 

265 

0 

-662 

1, 131 

First Half 

1990 

$12,504 

9,224 

3,281 

1,171 

698 

3,085 

-5 

222 

24 

-481 

N/A 

% Change 

-13.9 

-17.3 

-4.4 

-1.1 

- 11 .7 

0.2 

N/M 

19.4 

- 98.2 

N/M 

N/A 

Preliminary 

2nd Otr 2nd Otr 

1991 1990 

$5,312 $6,219 

3,729 4,593 

1,584 1,626 

697 616 

330 394 

1,627 1,587 

31 -11 

130 84 

2 3 

-506 -274 

607 508 

% Change 

-14.6 

-18.8 

-2.6 

13.1 

-16.2 

2.5 

N/M 

55.3 

-42.8 

N/M 

19.4 

N/A -Not available 

N/M-Not meaningful 

8 
Table Ill. First Half 1991 Savings Bank Data (Dollar figures in billions, ratios in %) 

ASSET SIZE DISTRIBUTION GEOGRAPHIC DISTRIBUTION All 

PRELIMINARY FIRST HALF 

BIF-lnsured 

Savings 

Banks 

Less 

than $100 

Million 

$100 Million 

to 

$1 Billion 

Greater 

than 

$1 Billion 

New 

England 

Other 

Northeast 

Rest 

of U.S. 

Number of savings banks reporting ...................... 456 132 262 62 338 103 15 

Total assets .......................................... ............. $244.14 $6.97 $83.06 $154.11 $107.64 $124.98 $11 .52 

Total deposits ...................................... .............. 203 .75 6.24 72.31 125.20 92.08 104.22 7.45 

Net income (in millions) ... .................................... -662 -14 -276 -372 -571 -156 65 

Percentage of savings banks losing money .... ....... 32 .02% 34.85% 29 .01 % 38.71 % 37.57% 17.48% 6.67% 

Percentage of savings banks with earnings gains .. 46.05 46 .21 45.04 50.00 45.56 43 .69 73.33 

Performance Ratios (annualized} 

Yield on earning assets ............ ...... ........... .......... 9.60% 9.76% 9.69% 9.55% 9.75% 9.41% 10.25% 

Cost of funding earning assets ....................... ..... 6.80 6.51 6.65 6.90 6.88 6.72 6.97 

Net interest margin ........................................ ..... 2.80 3.26 3.03 2.65 2.87 2.69 3.28 

Noninterest income to earning assets ...... .. .. ......... 0.55 0.37 0.49 0.59 0.57 0 .46 1.34 

Noninterest expense to earning assets ................. 2.76 3.20 3.07 2.57 3.23 2.37 2.63 

Return on assets ........................................... ..... -0.54 -0.40 -0.67 -0.48 -1 .06 -0.25 1.13 

Return on equity ................................................. -7.88 -4.88 -8.81 -7.47 -15.84 -3.60 14.08 

Net charge-offs to loans and leases ... .. .. ............ .. 1.35 0.87 1.34 1.37 1.98 0.84 0.37 

Loan loss provision to net charge-offs .. ............ .. .. 102.36 108.15 104.35 101 .12 89.96 131 .67 70.39 

Condition Ratios 

Loss allowance to: 

Loans and leases ............... .............................. 1.78% 1.07% 1.58% 1.92% 2.11 % 1.56% 0.76% 

Noncurrent loans and leases ............... .. ............ 29.75 26.82 34.19 28 .18 35.96 23.97 52 .53 

Noncurrent loans and leases plus 

other real estate owned to assets ....... .......... .... 6.05 3.93 5.36 6.51 6.89 5.66 2.37 

Noncurrent RE loans to total RE loans ................. . 5.79 4.07 4.48 6.60 5.62 6.40 1 .49 

Equity capital ratio ........ ........... .................... ....... 6.70 8.06 7 .37 6.28 6.45 6.78 8.18 

Core capital (leverage) ratio ............................ ..... 6.03 8.06 7.29 5.27 6.32 5.59 8.05 

Net loans and leases to deposits .......................... 80.64 76.64 78.54 82 .05 82 .13 77 .48 106.36 

Growth Rates (year-to-year} 

Assets . ............................................... .............. -8.29% 5.34% 2.27% -5.45% -5.36% -10.97% -4.77% 

Equity capital .. ...... .................. .. ......................... - 15.36 -4.10 -10.07 -15.93 -20.38 -12.74 5.09 

Net interest income .. ............. .. .................... .. ..... -4.45 5.46 -0.21 -1.17 -5.30 -5.47 14.81 

Net income ............ ................. ... ........................ N/M N/M N/M N/M N/M N/M 38.64 

Net charge-offs ................................... .......... .... . 50.07 106.48 64.28 9.22 64.31 25.00 71.12 

Loan loss provision ...... ........................ .... ........... - 1 .12 43 .75 14.04 -1.64 -9.66 16.07 - 11 .34 

BACKGROUND 

The preceding tables present information on savings banks insured by the FDIC Bank Insurance Fund (BIF) . In aggregate, the 456 thrift institutions hold approximately 10 percent of all BIF-insured deposits. Information on thrift institutions insured by the FDIC Savings Association Insurance Fund (SAIF) is available from the Office of Thrift Supervision. SAIF-insured institutions are primarily savings and loans. 

The BIF-insured savings banks analyzed here differ from commercial banks in several ways: 

1. In general, savings banks hold a higher portion of home mortgages and other real estate loans. For example, while commercial banks 

have invested about a quarter of their assets in real estate loans, savings banks average over 60 percent in these types of loans. 

2. There are relatively few BIF-insured savings banks. While there are over 12,000 commercial banks, there are fewer than 500 savings 

banks. 

3. The average savings bank's asset size is $535 million, compared with $278 million for commercial banks. The largest BIF-insured 

savings bank has about $10 billion in assets; the largest commercial bank has over $1 50 billion. 

4. As the preceding tables show, most savings banks are located in the Northeast, especially in New England. In 3 of the 6 New England 

states (Connecticut, Massachusetts, New Hampshire). savings banks have a higher market share in real estate lending than commercial banks. 15 institutions with $11 .5 billion in assets -less than 5 percent of the industry 's assets -are located in states outside the 

region (Washington, Indiana, Alaska, Florida, Oregon). 

Regardless of the differences described above, depositors in all BIF-insured institutions - both savings banks and commercial banks - have 

the same benefits and restrictions governing their FDIC deposit insurance protection. 

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

Other Northeast - Delaware , Maryland, New J ersey, Ne w York, Pennsylvania 

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

N/M - not meaningful 

9 
Table IV. Second Quarter 1991 Savings Bank Data (Ratios in%) 

All ASSET SIZE DISTRIBUTION GEOGRAPHIC DISTRIBUTION 

PRELIMINARY SECOND QUARTER 

BIF-lnsured 

Savings 

Banks 

Less $100 Million 

than $100 to 

Million $1 Billion 

Greater 

than 

$1 Billion 

New 

England 

Other 

Northeast 

Rest 

of U.S. 

Number of savings banks reporting ..................... . 456 132 262 62 338 103 15 

Net income (in millions) ... .. ...... .................... .... ... . -$506 -$10 -$220 -$277 -$365 -$175 $35 

Percentage of savings banks losing money ........... 32.02% 34.09% 29.39% 38.71 % 37.57% 17.48% 6.67% 

Percentage of saving banks with earnings gains ... . 45 .83 50.76 43.13 46.77 44.38 49.52 53.33 

Performance Ratios (annualized) 

Yield on earning assets ....................................... 9.47% 9.68% 9.58% 9.41 % 9.60% 9.29% 10.24% 

Cost of funding earning assets ............................ 6.65 6.38 6.52 6.73 6.70 6.59 6.85 

Net interest margin ............................................. 2.82 3.30 3.06 2.67 2.90 2.70 3.39 

Noninterest income to earning assets ................... 0 .59 0 .39 0.50 0.65 0.64 0.46 1.52 

Noninterest expense to earning assets ............. .... 2.90 3.30 3.24 2.70 3.45 2.44 2.82 

Return on assets .. .............................................. -0.83 -0.55 -1 .06 -0.72 -1.36 -0.56 1.20 

Return on equity ................................................. -12.15 -6.78 -14.08 -11 .24 -20.55 -8.14 14.77 

Net charge-offs to loans and leases ..................... 1.45 1.00 1.67 1.35 2.12 0.90 0.62 

Loan loss provision to net charge-offs .................. 114.77 114.70 109.31 118.50 94.63 163.75 58.60 

Growth Rates (year-to-year) 

Net interest income ............................................ -2.63% 7.12% 0 .53% 0 .85% - 1.62% -5.25% 15.18% 

Net income ...................................................... .. N/M N/M N/M N/M N/M N/M 36.02 

Net charge-offs .............................................. .... 19.39 105.45 51.39 6.40 36.67 -9.02 106.45 

Loan loss provision ............................................. 13.12 62.61 13.28 22 .43 -10.20 71.56 -2.47 

N/M - not meaningful 

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

1985 • 1991 

Number of Banks 

2,000 ------------------------------

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

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

1985 • 1991 

$ Billions 

$500 .--------------------------------

400 

300 

200 

100 

12/85 12/86 12/87 12/88 12/89 12/90 3/91 

11 

0 

6/91 
FDIC 

Federal Deposit Insurance Corporation FIRST CLASS

Washington, MAIL DC 20429 Postage & 

OFFICIAL Fees Paid BUSINESS FDIC 

Permit No. G36 Penalty for Private Use, $300 

Attn: Chief Executive Officer 

NOTES TO USERS: 

COMPUTATION METHODOLOGY FOR PERFORMANCE AND CONDITION RATIOS 

The data on commercial banks and state-chartered savings banks were obtained from Call reports filed with the FDIC and Federal Reserve Board. 

Data on Federally-chartered savings banks (17 institutions as of June 30, 1991) were obtained from Thrift Financial Reports f~ed with the Office of 

Thrift Supervision. Certain adjustments are made to the Thrift Financial Reports to provide closer conformance with Call report disclosure requirements. 

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

All asset and liability figures used in calculating performance ratios represent average amounts for the period (beginnin!l-of-period amount plus andof-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" Bank■ - Federal regulators assign to each financial institution a composite rating, based upon an evaluation of financial and operational 

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

erational, or managerial weaknesses that threaten their continued financial viability. Depending upon the degree of risk and supervisory concern, they 

are rated either 11 •4• or "5.• 

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

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

Cost of Funding Earning A1Hts -total interest expense paid on deposits and other borrowed money as a percentage of average earning 11B11eta. 

Net lnterHt 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 A11ets - net income (including securities transactions and nonrecurring items) as II 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 Coinmltmants and Lattare of Credjt -includes unused credit card commitments and overdraft plans, reflecting Call report revisions effective 

March 31 , 1990. 

Nat Charge-off• -total loans and leases charged off (removed from balance sheet because of uncollactibility) during the quarter, less amounts 

recovered on loans and leases previously charged off. 

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

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

Other noncurrent 11et1 -debt securities and other assets (excluding loans, leases and other real estate owned) that are either p&1t·due at lea1t 90 

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

Core capital-common equity capital plus noncumulative perpetual preferred stock plus minority interest in consolidated subsidiaries, l1188 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 

benks. · 

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

Temporary Investments -the sum of interest-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 lass. 

Volatile UabilitiH -the sum of large denomination time deposits, foreign office deposits, federal funds purchased, securities sold under sgreem nts 

to repurchase, and other borrowed money. 

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

Office of Corporate Communications, 550 17th Street N.W., Washington, D.C. 20429; telephone (2021 898-6996.