The FDIC 

uarterlY-------Wi_ma_mT_ay_lor,_ch_air_man 

Third Quarter, 1991 

FDIC 

Division of Research 

&Statistics 

Don Inscoe 

(202) 898-3940 

Ross Waldrop 

(202) 898-3951 

Insured commercial banks earned $4.3 billion in the 

third quarter, less than the $4.6 billion earned in the 

second quarter, but 16.9 percent above the $3.6 

billion in net income they reported in the third quarter 

of 1990. The year-to-year improvement in net income 

was due to higher gains on sales of investment 

securities and higher extraordinary gains:These items 

added $650 million more to third-quarter earnings than 

in the same period in 1990. Net operating income 

(income before securities and extraordinary gains) of 

$3.47 billion was slightly below the amount earned in 

the third quarter of 1990. Industry profitability, as 

measured by return on average assets, was 0.51 

percent in the third quarter, a modest improvement 

from 0.45 percent a year earlier. For the first three 

quarters of 1991, the banking industry earned $14.9 

billion, $344 million less than in the same period last 

year. Securities and extraordinary gains have 

accounted for over 15 percent of industry net income 

this year, more than three times the share of a year 

ago. Average profitability for the first nine months of 

the year was 0.60 percent, virtually unchanged from 

0.61 percent for the same period in 1990. 

Commercial banks' provisions for future loan losses 

continue to increase. Banks set aside $9 billion in 

loan-loss provisions in the third quarter, an increase of 

$629 million over the third quarter of last year. 

Through the first three quarters of . 1991, loan-loss 

provisioning is $3.4 billion ahead of last year's pace. 

Chart A - Quarterly Net Income of 

FDIC-Insured Commercial Banks 

1987 -1991 

4 

10. 0 

-4 

C r.t Openlllng Income 

■ .... and~ ~ CRrtt~lcl:n.ot 

-12 

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

1987 11188 1B 1990 1991 

anking Rofile 

COMMERCIAL BANKING PERFORMANCE -THIRD QUARTER, 1991 

• Commercial Banks Earn $4.3 Billion in Third Quarter 

• Loans Decline for Third Consecutive Quarter 

• Loan Losses Continue at Record Pace 

• Asset-Quality Indicators Worsen for West Region Banks 

Chart B - Quarterly Net Interest Margins of 

FDIC-Insured Banks 

Net lnterwt MM In (%) 5.0 

l 1111~

( Ban C, ~ 1100 11!1t n jn 11111 

4.5 -

~ 

. 

-· .. .... ••• -. • Ill ... 

..... . ' -~ ~~ ~ ~~

.. . . . . 4.0 ' .. :..ii

-

- ' 

, 

II 

' 

---~ ~~ .. - ----- ~ 

Banks> 1100 Minion ~:J ~ 3

.5 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 2 3 

1984 1986 11186 11187 11188 11189 1980 1991 

Most of the increased provisioning has occurred at 

banks in the West Region, although banks in all 

regions except the Southwest have had higher 

provisions in 1991 than in 1990. Banks reported net 

loan charge-offs of $8.5 billion in the third quarter, 

bringing the total for the first three quarters of 1991 to 

$23.3 billion. This is $2.4 billion ahead of last year's 

pace, when net charge-offs taken by the industry set 

an all-time record. 

As interest rates have declined, the CQSt of funds to 

commercial banks has fallen more rapidly than the 

yield on assets, producing increased net interest 

income. Net interest income totaled $31 .3 billion in the 

third quarter, an increase of $2.1 billion over the 

amount earned in last year's third quarter. The 

industry's average net interest margin widened to 4.22 

percent, the highest level since the fourth quarter of 

1988. Noninterest income was also higher; at $15.3 

billion, it was $1.7 billion more than in the third quarter 

of 1990. However, these gains were offset by the 

$629 million increase in loan-loss provisioning and a 

$3.2 billion increase in overhead expense. Higher 

deposit insurance premiums accounted for 

approximately 20 percent of the increase in overhead 

costs. 

The deterioration in asset quality at commercial banks 

continued to slow in the third quarter. FDIC resolution 

of a large Northeast Region banking company - Bank 

of New England Corp. - that failed earlier in the year 

caused total noncurrent loans reported by commercial 

For assistance contact: Section508@fdic.gov
banks to show a $2.6-billion decline during the third 

quarter. The FDIC resolution also led to a quarterly 

drop in the amount of foreclosed real estate properties 

reported by commercial banks. However, absent the 

impact of the resolution, noncurrent loans at the 

remaining commercial banks increased by $778 

million, and foreclosed properties increased by $900 

million. Noncurrent loans remained above the levels of 

a year ago in all regions except the Southwest. Small 

banks continue to outperform the rest of the industry 

with respect to asset quality. Banks with less than 

$100 million in assets had the lowest net charge-off 

rate and the lowest level of troubled assets of any 

asset size group. 

Total assets of commercial banks increased by $56 

billion during the quarter, although total loans fell for 

the third consecutive quarter. The main areas of asset 

growth were U.S. Treasury and mortgage-backed 

securities, and trading account assets. Only banks in 

the Northeast and West Regions saw a decline in total 

loans during the quarter. The shrinkage in loan 

portfolios continues to be concentrated in commercial 

and industrial loans, although real estate loans at 

commercial banks declined during the quarter for the 

first time since the first quarter of 1978. Equity capital 

increased by $3.7 billion in the third quarter, and the 

industry's average equity-to-assets ratio remained 

unchanged from the previous quarter, at 6.71 percent. 

Banks in the West Region were the only group to 

experience equity shrinkage during the third quarter. 

Their average equity-to-assets ratio fell from 6.85 

percent to 6.70 percent. 

Northeast Region banks reported a net profit of $833 

million for the third quarter, slightly better than the 

$814 million they earned in the previous quarter, and a 

considerable improvement over their $385 million net 

loss in the third quarter of 1990. Their noncurrent 

loans declined for the second consecutive quarter, 

mainly due to the FDIC resolution mentioned above. 

Nevertheless, for the fourth consecutive quarter, they 

had the highest level of net loan losses of any region 

in the U.S., and for the sixth consecutive quarter, they 

had the highest level of troubled assets. 

Banks in the West Region earned $334 million in the 

third quarter, less than half the $699 million they 

earned in the previous quarter, and a little more than 

one-fourth as much as the $1.28 billion they earned a 

year ago. Their average return on assets of 0.24 

percent was the lowest for West Region banks since 

the second quarter of 1987. Loan-loss provisions of 

$2.3 billion were more than double the amount set 

aside a year earlier. Noncurrent loans increased to 

$14.3 billion, almost $4.8 billion above the level at the 

end of last year's third quarter. 

Twenty-nine new commercial banks were chartered 

during the third quarter, while 93 banks merged or 

were absorbed. Twenty-five banks failed during the 

quarter. At the end of the third quarter, there were 

1,005 commercial banks on the FDIC's MProblem Lisr, 

thirty more than at the beginning of the quarter, and 

one less than at the same point in 1990. 

Fourth-quarter earnings may be higher than the $1.4 

billion earned in the last quarter of 1990. The absence 

of growth in noncurrent loans in the third quarter could 

result in lower provisioning for loan losses, although 

commercial banks now have 67 cents in reserves for 

every dollar of noncurrent loans, compared to 73 

cents a year ago. Gains from sales of investment 

securities can be expected to remain high. Any 

improvement in aggregate industry performance will 

be gradual and will not be evenly distributed across 

the country. 

Chart C - Troubled Real Estate Asset Rates* By State 

September 30, 1991 

Midwest 

Troubled Real Ea1BIB "-1Ra: 

0 l.N&Than4% • Noncurrent real Nta loane ph• 

m a.tween 4"- and 8% other real --owned•.~ • 8% or Higher of IDtal l'NI ..... loans plus OREO. 

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

SEPTEMBER 30, 1991 

ASSET SIZE GEOGRAPHIC DISTRIBUTION 

LESS $100MM $1B $108 NORTH- SOUTH- MID- SOUTHALL THAN TO TO OR EAST EAST CENTRAL WEST WEST WEST 

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

PERCENT OF LOANS 30-89 DAYS PAST DUE 

All real estate loans 2.20 1.91 1.93 2.31 2.41 2.63 1.77 1.77 1.51 2.01 2.52 

Construction & development 3.77 2.29 3.41 4.64 3.39 3.64 2.45 3.25 2.85 1.79 5.40 

Commercial real estate 2.45 1.69 1.89 2.40 3.42 3.21 1.69 1.86 1.70 2.01 2.98 

Multifamily real estate 3.07 1.76 1.65 2.54 5.58 4.03 2.23 1.85 2.76 1.46 4.03 

1-4 Family residential 1.81 2.15 1.86 1.70 1.70 2.22 1.78 1.63 1.36 2.14 1.48 

Home equity lines of credit 0.94 1.70 1.07 0.90 0.83 1.40 0.81 0.75 0.82 1.57 0.44 

Commercial R/E loans not secured by real estate 2.97 2.17 3.27 2.80 3.04 3.38 1.76 1.71 2.41 0.76 3.90 

Highly leveraged transactions (HLTs) 0.54 N/M 0.24 0.28 0.61 0.60 0.01 0.22 4.68 0.00 0.61 

Loans to foreign governments and institutions 0.50 N/M 0.00 0.28 0.52 0.61 0.00 0.41 0.00 0.00 0.08 

PERCENT OF LOANS NONCURRENT• • 

All real estate loans 4.86 1.98 2.61 4.60 7.86 8.39 3.34 2.27 1.90 3.69 4.12 

Construction & development 14.04 3.33 6.76 12.14 20.17 22.80 7.76 6.96 4.09 6.46 12.49 

Commercial real estate 6.24 2.66 3.35 5.56 11.66 11.02 4.91 2.92 3.13 5.10 4.61 

Multifamily real estate 6.07 2.62 3.44 5.55 10.52 12.23 4.17 3.74 3.28 5.04 3.09 

1-4 Family residential 1.67 1.46 1.48 1.71 1.91 2.73 1.40 1.10 0.90 1.86 1.18 

Home equity lines of credit 0.71 1.23 0.72 0.59 0.76 1.25 0.44 0.32 0.43 1.20 0.31 

Commercial R/E loans not secured by real estate 8.09 4.03 5.95 5.96 10.11 14.46 5.37 3.73 3.07 0.89 4.19 

Highly leveraged transactions (HLTs) 10.89 N/M 6.13 9.58 11.27 12.10 4.87 8.45 11.52 6.63 12.78 

Loans to foreign governments and institutions 12.65 N/M 20.17 6.04 12.89 13.20 2.11 21.73 0.00 8.47 7.63 

PERCENT OF LOANS CHARGED-OFF (NET, ANNUALIZED) 

All real estate loans 0.86 0.23 0.38 0.9'7 1.33 1.44 0.76 0.39 0.40 0.98 0.52 

Construction & development 2.87 0.51 1.14 2.92 3.87 4.71 2.73 1.50 1.26 2.14 1.51 

Commercial real estate 0.97 0.35 0.53 1.07 1.55 1.46 0.83 0.63 0.73 1.50 0.56 

Multifamily real estate 1.97 0.49 0.61 1.50 4.34 4.05 2.51 0.50 1.45 1.18 0.58 

1-4 Family residential 0.18 0.16 0.16 0.28 0.13 0.28 0.19 0.08 0.11 0.40 0.09 

Home equity lines of credit 0.11 0.23 0.09 0..12 0.10 0.17 0.10 0.04 0.12 0.46 0.06 

Commercial R/E loans not secured by real estate 3.62 3.30 5.87 2.91 3.39 4.40 4.95 2.97 3.24 2.99 2.47 

Highly leveraged transactions (HLTs) 2.71 N/M 0.80 2.31 2.84 2.73 1.52 2.75 1.81 2.35 3.43 

Loans to foreign governments and institutions 14.29 NIM 7.91 5.94 14.70 15.70 -0.28 2.39 -46.85 3.59 12.76 

TOTAL LOANS OUTSTANDING fl BILLIONS) 

All real estate loans 846.7 97.7 212.9 259.5 276.2 268.0 158.8 139.2 51.0 49.9 179.8 

Construction & development 109.7 6.2 19.4 38.3 45.8 38.3 19.4 13.3 3.9 4.5 30.3 

Commercial real estate 248.8 25.7 69.9 88.0 65.1 73.9 51.2 42.3 14.2 17.9 49.2 

Multifamily real estate 22.2 2.0 6.8 7.0 6.4 6.2 3.8 4.1 1.5 1.4 5.3 

1-4 Family residential 353.3 50.9 97.0 96.3 108.8 99.3 70.3 63.8 23.7 23.3 72.8 

Home equity lines of credit 68.8 3.1 14.3 27.0 24.4 26.8 11.0 10.5 2.3 0.6 17.6 

Commercial R/E loans not secured by real estate 25.4 1.4 3.6 6.8 13.6 9.9 2.8 3.9 0.8 0.9 7.1 

Highly leveraged transactions (HLTs) 62.4 0.0 0.6 1~.5 49.3 35.6 5.1 8.1 1.o 2.7 9.8 

Loans to foreign governments and institutions 25.7 0.0 0.2 1.1 24.4 19.8 0.3 1.4 0.0 0.3 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. 

N/M - Not meaningful 

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

1991* 1990* 1990 1989 1988 1987 1986 

Return on assets ............................... 0.60% 0.61% 0.49% 0.49% 0.82% 0.12% 0.63% 

Return on equity ............................... Equity capital to assets ..................... 8.92 

6.71 

9.59 

6.45 

7.63 

6.46 

7.78 

6.21 

13.30 

6.28 

2.00 

6.04 

9.94 

6.20 

Noncurrent loans and leases plus 

other real estate owned to assets .... 3.07 2.63 2.90 2.26 2.14 2.46 1.94 

Net charge-offs to loans .................... Asset growth rate ............................. 1.51 

1.48 

1.35 

5.06 

1.41 

2.73 

1.16 

5.37 

1.00 

4.36 

0.92 

2.01 

0.98 

7.71 

Net operating income growth ... ; ......... -13.33 

Percentage of unprofitable banks ........ 11.25 

Number of institutions ....................... 12,072 

12.95 

11.46 

12,409 

3.72 

13.35 

12,340 

-35.84 1905.16 

12.50 

12,707 

14.65 

13,139 

-91.04 

17.66 

13,696 

-20.65 

19.79 

14,200 

Number of problem banks .................. Number of failed/assisted banks ......... 1,005 

82 

1,006 

134 

1,012 

159 

1,092 

206 

1,394 

221 

1,559 

201 

1,457 

144 

•Through September 30; ratio, annualized where appropriate. A111et growth ret11 are for 12 months ending September 30. 

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

(dollar figures in millions) 

Preliminary

3rd Otr 2nd Otr 3rd Otr %Change 

1991 1991 1990 90:3-91:3 

Number of banks reporting ................................ 12,072 12,153 12,409 -2.7 

Total employees (full-time equivalent)................. 1,491, 193 1,503,364 1,517,776 -1.8 

CONDITION DA TA 

Total assets ..................................................... $3,433,222 $3,376,995 $3,383,264 1.5 

Real estate loans........................................ 846,655 847,915 820,327 3.2 

Commercial & industrial loans...................... 572,321 588,765 620,841 -7.8 

Loans to individuals .................................... 386, 145 386,920 399,970 -3.5 

Farm loans................................................. 35,952 34,885 33,632 6.9 

Other loans and leases . . . . . .. . . . . . . ........... ........ 219, 172 215,864 231,099 -5.2 

Total loans and leases................................. 2,060,245 2,074,348 2,105,869 -2.2 

LESS: Reserve for losses............................. 54,204 54,225 52,417 3.4 

Net loans and leases...................................... 2,006,040 2,020,124 2,053,452 -2.3 

Temporary investments ................................. 509,338 485,259 467,087 9.0 

Securities over 1 year.................................... 490,846 472,599 449,932 9.1 

All other assets............................................. 426,998 399,014 412,793 3.4 

Total liabilities and capital... .............................. . 3,433,222 3,376,995 3,383,264 1.5 

Noninterest-bearing deposits ......................... . 464,869 443,263 441,290 5.3 

Interest-bearing deposits ............................... . 2,200,965 2,185,512 2,162,163 1.8 

Other borrowed funds ................................... . 397,778 385,688 421,337 -5.6 

Subordinated debt ........................................ . 24,374 24,198 19,130 27.4 

All other liabilities ......................................... . 114,730 111,570 121,087 -5.3 

Equity capital ............................................... . 230,505 226,765 218,257 5.6 

Goodwill ......................................................... . 4,593 4,340 3,764 22.0 

Loans and leases 30-89 days past-due .............. . 39,613 40,412 40,098 -1.2 

Noncurrent loans and leases ............................. . 80,474 83,049 71,702 12.2 

Restructured loans and leases ........................... . 9,471 9,196 6,614 43.2 

Other real estate owned ................................... . 24,809 24,808 17,286 43.5 

Loan commitments and letters of credit ............. . 1,347,693 1,331,988 1,302,601 3.5 

Foreign office assets ........................................ . 405,019 388,766 416,847 -2.8 

Domestic office deposits .................................. . 2,363,946 2,327,464 2,273,864 4.0 

Foreign office deposits ..................................... . 301,889 301,310 329,589 -8.4 

Earning assets ................................................. . 3,006,224 2,977,982 2,970,471 1.2 

Volatile liabilities .............................................. . 1,025,613 1,027,490 1,136,461 -9.8 

INCOME DATA Preliminary First Preliminary First Three Three Otrs 3rd Otr 3rd Otr 

Otrs 1991 1990 % Change 1991 1990 % Change 

Total interest income ..................... $218,639 $240,207 -9.0 $72,743 $80,573 -9.7 

Total interest expense .................... 128,128 154,229 -16.9 41,412 51,317 -19.3 

Net interest income .................... 90,511 85,979 5.3 31,331 29,256 7.1 

Provision for loan losses ................. 23,918 20,494 16.7 8,991 8,362 7.5 

Total noninterest income ................ 44,017 40,536 8.6 15,259 13,601 12.2 

Total noninterest expense ............... 91,225 84,762 7.6 32,089 28,861 11.2 

Applicable income taxes................. 6,773 6,707 1.0 2,037 2,128 -4.3 

Net operating income ................... 12,612 14,551 -13.3 3,472 3,507 -1.0 

Securities gains, net ....................... 1,523 ~32 557.8 687 72 854.8 

Extraordinary gains, net .................. 762 459 66.1 105 68 54.0 

Net income ................................. 14,897 .5,241 -2.3 4,264 3,647 16.9 

Net charge-offs ............................. 23,336 20,985 11.2 8,482 6,026 40.8 

Net additions to capital stock .......... 414 828 -50.0 -72 -22 NIM 

Cash dividends on capital stock ...... 10,184 9,634 5.7 2,864 3,018 -5.1 

NIM - Not meaningful 

4 
Table Ill. First Three Quarters 1991 Bank Data (Dollar figures In billions, ratios In %) 

ASSET SIZE DISTRIBUTION GEOGRAPHIC DISTRIBUTION 

EAST WEST Leas $100 Million Greater 

FIRST THREE QUARTERS Preliminary ALL than $100 to $1-10 than $10 NortheHt Southeaet Central Midweat Southwest West 

(ThB WBY it is... ) BANKS Million $1 Billion Billion Billion Region Region Region Region Region Region 

Number of benks reporting ...................... 12,072 8,967 2,735 322 48 1,013 1,937 2,649 2,905 2,120 1,448 

Total ••set■ .......................................... $3,433.22 $356.47 $668.93 $1,043.60$1,364.23 $1,293.07 $523.17 $560.19 $229.69 $271.89 $555.21 

Total depo1it1 ........................................ 2,665.83 316.00 579.67 802.91 967.26 929.50 415.91 448.16 187.74 235.04 449.49 

Net income (in millions) ........................... 14,897 2,473 3,814 4,808 3,802 3,051 2,675 3,619 1,939 1,333 2,279 

Percentage of bank• losing money ........... 11.3% 11.8% 8.6% 16.8% 25.0% 25.5% 14.6% 5.6% 4.8% 11.6% 19.5% 

Percentage of banks with earnings gains .. 58.0% 57.5% 59.1% 62.7% 58.3% 47.4% 54.2% 59.9% 61.6% 64.3% 50.8% 

Performance Ratios (annualized) 

Yield on earning usats ........................... 9.95% 9.84% 9.85% 10.02% 9.98% 10.26% 9.66% 9.70% 9.89% 9.22% 10.17 

Coat of funding earning 1ets ................. 5.83 5.40 5.39 5.48 6.47 6.54 5.46 5.57 5.48 5.31 5.24 

Net interest margin ................................. 4.12 4.44 4.46 4.54 3.51 3.72 4.20 4.12 4.41 3.91 4.93 

Noninterest income to earning assets ....... 2.00 0.99 1.23 2.28 2.48 2.47 1.49 1.52 2.10 1.66 2.04 

Noninterest expense to earning aHets...... 4.15 3.78 3.84 4.40 4.23 4.32 3.84 3.65 4.05 4.13 4.63 

Net operating income to aHet■ ................ 0.50 0.77 0.74 0.55 0.28 .0.18 0.60 0.85 1.10 0.55 0.53 

Return on set■ ...•................................ 0.60 0.94 0.78 0.63 0.39 0.33 0.71 0.89 1.14 0.67 0 .56 

Return on equity .................................... 8.92 10.34 10.08 9.22 7.16 5.49 9.92 12.19 14.24 9.96 8.23 

Net charge-off• to loans and laeH■ .......... 1 .51 0.57 0 .82 1.64 1.95 2.32 1.03 0.80 1.00 1.17 1.17 

Loen loH provision to net oharge-off• ...... 102.49 123.39 123.26 121.72 84.17 86.19 125.35 122.70 108.72 87.92 141.62 

Condition Ratios 

LoH allowance to: 

Loans and leases ................................. 2.63% 1.75% 1.81% 2.65% 3.21% 3.39% 1.96% 1.83% 1.96% 2.57% 2.60 

Noncurrent loans and leases ................. 67.36 82.73 73.35 11.12 59.46 58.86 75.89 80.98 101.26 90.17 70.05 

Noncurrent loans and leas81l plus 

other real estate owned to assets .......... 3.07 1.73 2.12 2.92 3 .99 4.27 2.27 1.76 1.58 2.45 3.24 

Equity capital ratio ................................. 6.71 9.15 7.80 6.97 5.35 5.98 7.14 7.38 8.23 6.11 6.70 

Core capital (leverage) ratio ..................... 6.58 9.15 7.67 6.12 5.23 5.88 7.14 7.30 8.11 6.74 6.25 

Nat loans and leaaea to deposits .............. 75.25 58.26 67.02 79.33 82.34 80.11 74.09 73.70 67.46 51.35 83.56 

Growth Rates (year-to-year) 

Assets .................................................. 1.5% 5.7% 7.3% 6.5% 3.1% -2.5% 4.5% 2.9% 6.2% 3.2% 4.2% 

Equity capital ......................................... 5.6 3.7 7.5 10.6 9.5 4.7 4.1 6.9 8.4 4.9 6.6 

Net intere t income ................................ 5.3 6.2 7.8 10.3 9.9 2.5 3.3 8.3 9.6 10.3 5.8 

Net income ............................................ -2.3 16.6 -6.1 8.4 -23.0 31.8 4.2 4.9 13.5 28.2 -45.2 

Noncurrent loans and leases plus 

other reel tate owned ........................ 18.3 8.8 28.7 33.3 26.7 11 .9 35.3 21.5 12.4 -12.0 51.2 

Net charge-offs ...................................... 11.2 7.8 39.4 30.6 7.4 12.5 31.3 -5.2 9.9 ·-11.2 14.6 

Loan loss proviaion ................................. 16.7 2.8 30.6 10.0 43.1 6.1 9.4 22.2 7.9 -11.6 ,76.5 

PRIOR FIRST THREE QUARTERS 

(Th• wey it was•.• ) 

Return on assets ......................... 1990 0.61% 0.83% 0.87% 0.53% 0.50% 0.24% 0.70% 0.87% 1.07% 0.54% 1.07° 

................................ 1988 0.82 0.74 0.78 0.78 0.91 0.96 1.01 1.08 1.06 -0.80 0.84 

................................ 1986 0.68 0.67 0.78 0.80 0.53 0.80 1.09 0.93 0.77 -0.13 0.33 

Equity capital ratio ...................... 1990 6.45 9.18 7.79 6.54 5.01 5.57 7.17 7.11 8.06 6.66 6.55 

................................ 1988 6.24 8.92 7.33 6.23 4.81 5.74 7.10 6.83 7.63 5.70 5.88 

................................ 1986 6.40 8.10 7.25 6.21 5.15 5.95 6.86 7.09 7.67 6.84 5.61 

Noncurrent loans and leases plus 

other real estate owned to assets. 1990 2.63 1.73 1.88 2.49 3.34 3.72 1.75 1.49 1.49 2.88 2.23 

................................ 1988 2.45 2.06 1.84 1.59 3.64 2.38 1.08 1.24 1.68 7.05 2.92 

1986 2.09 2.42 1.98 1.68 2.36 1.62 1.06 1.52 2.38 4.07 3.13

································ 

Net charge-offs to loans and leases 1990 1.35 0.55 0.70 1.36 1.82 1.94 0.79 0.86 0.95 1.32 1.08 

................................ 1988 0.93 0.75 0.75 1.02 0.99 0.72 0.58 0.69 1.30 2.39 1.16 

................................ 1986 0.90 1.25 .0.88 0.85 0.81 0.58 0.52 0.60 2.03 1.72 1.20 

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, 

W111hington, Wyoming 

5 
Table IV. Third Quarter 1991 Bank Data (Ratios In %) 

ASSET SIZE DISTRIBUTION GEOGRAPHIC DISTRIBUTION 

EAST WEST LNI $100 Million Greater 

THIRD QUARTER Preliminary ALL than $100 to $1-10 than $10 Northea1t Southea1t Clll'ltral MidwNt SouthwNt WNt 

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

Number of bank, reporting........................ 12,072 8,967 2,735 322 48 1,013 1,937 2,649 2,905 2,120 1,448 

Net income (in rniHions) ............................ $4,264 $741 $1,214 $1,541 $769 $833 $867 $1,130 $647 $454 $334 

Percentage of bank, losing money ............. 11.4% 11.7% 9.3% 18.3% 25.0% 24.3% 14.3% 6.5% 5.3% 11.6% 19.3 

Percentage of bank• with earnings gains .... 57.7% 57.1% 59.2% 61.2% 64.6% 53.1% 57.9% 59.6% 59.1% 61.6% 48.7 

Performance Ratios (annualized) 

Yield on earning usata............................. 9.81% 9.80% 9.75% 9.92% 9.75% 10.15% 9.42% 9.62% 9.85% 9.02% 9.95 

Coat of funding earning uaeta .................. 5.58 5.24 5.20 5.29 6.12 6.25 5.19 5.37 5.30 5.05 5.01 

Net intareat margin .................................. 4.22 4.56 4.55 4.63 3.63 3.90 4.22 4.25 4.54 3.97 4.94 

Nonintereat income to earning uaeta ......... 2.06 1.00 1.28 2.36 2.53 2.58 1.52 1.57 2.10 1.85 2.08 

Nonintereat expense to earning aaaeta ....... 4.33 3.85 3.95 4.63 4.41 4.62 3.89 3.81 4.17 4.19 4.72 

Net operating income to aHets ................. 0.41 0.78 0.67 0.50 0.12 0.13 0.54 0.78 1.08 0.55 0.22 

Return on assets...................................... 0.51 0.84 0.73 0.60 0.23 0.26 0.68 0.82 1.14 0 .68 0.24 

Return on equity ...................................... 7.50 9.17 9.41 8.62 4.26 4.39 9.43 11.10 13.91 9.98 3.58 

Net charge-offs to loans and leases ........... 1.66 0.63 0.89 1.70 2.22 2.58 1.22 0.89 0.99 0.97 1.29 

Loan loss proviaion to net charge-offs ........ 106.01 124.26 132.73 121.67 90.12 80.96 117.23 127.00 117.44 103.36 181.88 

Growth Rates (year-to-year) 

Net interest income .................................. 7.1% 7.1% 7.1% 11.8% 13.5% 8.3% 3.8% 9.1% 12.2% 8.3% 3.8% 

Net income ............................................. 16.9 3.4 -9.6 40.8 2.8 N/M 20.2 -5.2 13.6 68.7 -73.9 

Net charge-off• ....................................... 40.8 9.4 26.8 19.9 92.4 64.9 26.0 35.1 11.1 -38.8 27.7 

Loan loss provision .................................. 7.5 9.2 26.4 -1.8 28.1 -14.7 3.2 19.6 11.1 -34.1 123.2 

PRIOR THIRD QUARTERS 

(The way it was ... ) 

Return on assets............................ 1990 0.43% 0.78% 0.81% 0.38% 0.20% -0.12% 0.58% 0.88% 1.06% 0.41% 0.96 

................................... 1988 0.78 0.73 0.70 0.68 0.94 0.97 1.04 1.06 1.05 -1.53 0.96 

................................... 1986 0.69 0.50 0.64 0.89 0.61 0.79 1.08 0.94 0.74 -0.25 0.46 

Net charge-offs to loans and leases 1990 1.15 0.60 0.81 1.46 1.19 1.46 0.95 0.67 0.92 1.52 1.03 

................................... 1988 0.97 0.83 0.86 0.90 1.12 0.87 0.52 0.58 1.11 2.32 1.28 

................................... 1986 1.01 1.43 1.11 0.97 0.84 0.59 0.58 0.61 2.48 2.17 1.32 

NIM - Not meaningful 

6 
SAVINGS BANK PERFORMANCE -THIRD QUARTER, 1991 

• BIF-lnsured Savings Banks Lose $344 Million in the Third Quarter 

• Troubled Loans Decline For Second Consecutive Quarter at New England Savings Banks 

• Four Institutions Fail During Quarter, Problem List Grows 

Savings banks insured by the Bank Insurance Fund lost 

$344 million in the third quarter of 1991, an improvement 

compared with the $506 million net loss in the previous 

quarter of 1991 and well below the record $1.2 billion 

loss reported in the final quarter of 1990. Noncurrent 

loans declined for the second consecutive quarter. Noncurrent loans totaled $9.4 billion at the end of the quarter, 

a $603 million reduction compared with the second 

quarter. The industry's average equity capital ratio has improved. As of September 30, 1991, the equity capitalto-assets ratio stood at 6.9 percent, up from 6. 7 percent 

as of June 30, 1991. 

FDIC resolutions of failing institutions contributed significantly to the industry-wide statistics showing lower 

losses, shrinking troubled assets and higher capital levels. 

The $603 million quarterly reduction in troubled loans is 

attributable to the failure of nine New England savings 

banks, including five institutions that failed in early October1. Together, these nine institutions reported $613 million in loans past-due at least 90 days or in nonaccrual 

status on their last (June 30, 1991 l Call report. Noncurrent loans held by the remaining institutions increased 

by $10 million during the quarter. Other real estate owned 

(OREO) declined $189 million in the quarter, following a 

diminishing rate of increase the prior quarter. The drop in 

OREO is attributable to the removal of $463 million in 

foreclosed property held by the failed New England institutions. 

After adjusting for the failures, troubled assets on the 

books of surviving New England savings banks registered 

a slight decrease, the second consecutive quarter they 

have declined. In aggregate, the savings banks in the 

Northeast outside of New England reported increasing 

levels of troubled assets and loan charge-offs, while 

bottom-line net losses declined. OREO increased $180 million (10.3 percent) and noncurrent loans increased $131 

million (2.5 percent) during the quarter. Institutions in the 

New England states held 38 cents in reserves for every 

dollar of noncurrent loans, up from 36 cents in June. 

Savings banks in the rest of the Northeast reported lower 

levels of reserve coverage; on average they held 24 cents 

in reserves for each dollar of troubled loans. The 15 

savings banks located outside of the Northeast were 

profitable in aggregate for the fourth consecutive quarter, 

with a return on assets ratio of 1 . 1 8 percent. The number 

of savings banks on the FDIC's •Problem list• increased 

to 76 from 58 during the quarter. 

Lower loan-loss provisions and higher extraordinary gains 

reduced earnings losses compared with the second quarter 

by $1 24 million. Funding costs declined at faster rates 

than asset yields, allowing the industry to maintain net interest income despite a shrinking asset base. Third-quarter 

net interest income amounted to 2.9 percent of earning 

assets, up from 2.6 percent in the third quarter of 1990. 

Higher BIF assessment rates increased third-quarter noninterest expense by approximately $50 million, or about 3 

percent. Profitability ratios improved for all size groups. 

Third quarter return on assets was - 0. 58 percent, a 

lower level of losses compared with the -0.83 percent in 

the previous quarter. One third of all BIF-insured savings 

banks reported net losses during the third quarter. 

Total assets, which have declined during every quarter 

since the third quarter of 1989, fell by $25.4 billion (nearly ten percent) in twelve-month period ended September 

30. Mortgage loans were $18.4 billion (11.4 percent) below the previous year. Loans secured by 1-4 family 

residences dropped by $9.7 billion (9.2 percent). Construction loans contracted at the highest rate, down 39 

percent since September 30, 1990. 

In the twelve-month period ended September 30, 1991, 

thirteen BIF-insured institutions with $14.8 billion in assets were resolved by the FDIC. Losses absorbed by the 

Bank Insurance Fund were estimated at $2.3 billion, or 

about 15.5 percent of assets held by the institutions when 

they failed. Deposits of $10.5 billion (about 1.4 million accounts) were transferred to other institutions. Most of 

these deposits ($8.5 billion), along with unimpaired assets 

from the resolved savings banks, were acquired by commercial banks. 

These resolution activities have had the effect of removing 

about $14 billion in assets, net losses of $1 50 million not 

carried forward, and $188 million in equity capital deficits 

from industry totals. The thirteen institutions that failed 

during the 12-month period reported $789 million in noncurrent loans and $584 million in other real estate owned 

before they failed. 

Lower interest rates will continue to help surviving institutions absorb losses from distressed assets. Additional insolvencies will occur in the Northeast where one of every 

three institutions is losing money and one of every six is 

on FDIC's •Problem List.• 

1 These five institutions failed after September 30 end did not file a complete third quarter Cell report. Three institutions in New Hampshire 

failed on 10-10-91: New Hampshire Savings Bank, Concord, NH; Amoskeag Bank, Manchester, NH; Dartmouth Bank, Manchester, NH. Iona 

Savings Bank, Tilton, NH, failed on 10-11-91 end Central Bank, Meriden, Connecticut, failed on 10-18-91. 

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

Return on assets ...................................... 

Equity capital to assets ............................. 

Noncurrent loans and leases plus 

other real estate owned to assets• • ........ 

Noncurrent RE loans to total RE loans• • ..... 

Asset growth rate .................................... 

Deposit growth rate .................................. 

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

Number of problem savings banks .............. 

Number of failed savings banks ................. 

1991 • 1990· 1990 1989 1988 1987 1986 

-0.43% -0.62% -0.96% -0.27% 0.44% 0.84% 1.08% 

6.88 7.01 6.64 7.06 7.44 7.69 7.41 

5.88 4.41 5.11 2.64 1.51 0.95 0.83 

5.78 4.79 5.31 3.14 1.67 1.01 1.02 

-9.68 -7.08 -7.46 -1.52 8.52 10.54 15.40 

-7.10 -4.97 -4.98 1.36 7.90 5.81 8.26 

445 475 469 489 492 484 472 

76 31 34 17 12 16 27 

10 7 10 1 0 2 0 

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

• • Excludes Federally-chartered Savings Banks before 1990. 

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

(dollar figures in millions) 

Number of savings banks reporting .................•.. 

CONDITION DATA 

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

Mortgage loans .............................................. 

1-4 family residential ................................... 

Construction and land development ............... 

Commercial and multi-family ........................ 

All other loans and leases ............................... 

LESS: Reserves for losses ............................ 

LESS: Other contra accounts ........................ 

Net loans and leases ......................................... 

Mortgage-backed securities ............................... 

Other real estate owned .................................... 

Goodwill .......................................................... 

All other assets ................................................ 

Total liabilities and capital ................................. 

Interest-bearing deposits ................................. 

Noninterest-bearing deposits ........................... 

Other borrowed funds .................................... 

Subordinated debt .......................................... 

Other liabilities ............................................... 

Equity capital ................................................. 

Loans and leases 30-89 days past-due ............... 

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

Other noncurrent assets ...............................•.... 

Direct and indirect investments in real estate ...... 

INCOME DATA Preliminary First Three Otrs 

1991 

Total interest income ..................... $15,510 

Total interest expense .................... 10,812 

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

Preliminary 3rd Otr 2nd Otr 3rd Otr %Change 

1991 1991 1990 90:3-91:3 

445 456 475 -6.3 

$237,296 $244,145 $262,727 -9.7 

142,649 149,010 161,069 -11.4 

96,106 99,694 105,842 -9.2 

5,957 6,954 9,696 -38.6 

40,586 42,362 45,531 -10.9 

17,825 18,997 22,726 -21.6 

2,825 2,972 2,834 -0.3 

630 738 989 -36.3 

157,019 164,297 179,972 -12.8 

21,585 22,417 26,406 -18.3 

4,597 4,786 2,526 82.0 

1,159 1,185 1,682 -31.1 

52,936 51,459 52,141 1.5 

237,296 244,145 262,727 -9.7 

191,996 197,348 207,118 -7.3 

6,149 6,405 6,179 -0.5 

19,511 20,667 27,273 -28.5 

523 654 690 -24.2 

2,788 2,731 3,061 -8.9 

16,329 16,340 18,405 -11.3 

5,136 5,598 5,456 -5.9 

9,360 9,963 9,054 3.4 

22 22 N/A N/A 

1,029 1,109 1,756 -41.4 

First 

Three Otrs Preliminary 3rd Otr 3rd Otr 

1990 %Change 1991 1990 % Change 

$18,582 -16.5 $5,055 $6,120 -17.4 

13,699 -21.1 3,452 4,513 -23.5 

4,699 4,884 -3.8 1,603 1,608 -0.3 

Provisions for loan losses ............... 1,701 2,221 -23.4 649 1,058 -38.7 

Total noninterest income ................ 876 981 -10.7 293 285 2.9 

Total noninterest expense .............. 4,498 4,669 -3.7 1,611 1,597 0.9 

Securities gains, net ...................... 147 24 507.3 48 29 66.8 

Applicable income taxes ................. 369 262 40.9 107 40 167.5 

Extraordinary gains, net ................. 79 21 275.6 78 -3 NIM 

Net income ................................. -767 -1,243 N/M -344 -776 NIM 

Net charge-offs ............................. 1,476 1,279 15.4 553 528 4.6 

N/A - Not available 

N/M - Not meaningful 

8 
Table Ill. First Three Quarters 1991 Savings Bank Data (Dollar figures In bl/lions, ratios In "1) 

ASSET SIZE DISTRIBUTION GEOGRAPHIC DISTRIBUTION All 

FIRST THREE QUARTERS Preliminary 

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 ...................... 445 130 255 60 329 101 15 

Total assets ...•..••..............•.•....••........................ $237.30 $6.95 $78.76 $151.59 $102.46 $123.41 $11.43 

Total deposits •................................................... $198.15 $6.21 $68.73 $123.21 $87.73 f103.01 $7.40 

Net income (in millions) ....................................... -767 -16 -228 -523 -564 -312 99 

Percentage of savings banks losing money •.••....... 33.93 34.62 32.65 38.33 39.21 21.78 0.00 

Percentage of savings banks with earnings gains .. 51.24 56.15 48.24 53.33 51.06 48.52 73.33 

Performance Ratio• (annualized) 

Yield on earning assets ....................................... 9.50 9.69 9.59 9.44 9.67 9.30 10.20 

Cost of funding earning assets ............................ 6.62 6.37 6.43 6.74 6.61 6.61 6.87 

Net interest margin ............................................. 2.88 3.33 3.17 2.71 3.06 2.69 3.33 

Noninterest income to earning assets ................... 

Noninterest expense to earning assets ................. 

0.80 

4.13 

0.57 

4.77 

0.69 

4.44 

0.88 

3.94 

0.84 

4.69 

0.64 

3.67 

2.22 

4.06 

Return on assets ................................................ -0.43 -0.31 -0.39 -0.46 -0.73 -0.34 1.15 

Return on equity ................................................. -6.12 -3.74 -4.95 -6.97 -10.04 -4.94 13.78 

Net charge-offs to loans and leases ..................... 1.22 0.90 1.09 1.30 1.61 0.96 0.27 

Loan loss provision to net charge-offs .................. 115.26 104.05 120.87 113.17 105.07 129.40 163.02 

Condition Ratio1 

Loss allowance to: 

Loans and leases ............................................. 1.77 1.07 1.53 1.93 2.00 1.65 0.94 

Noncurrent loans and leases ............................. 30.18 28.05 35.83 28.37 37.71 24.16 70.07 

Noncurrent loans and leases plus 

other real estate owned to assets ................... 5.88 3.91 4.85 6.51 6.16 5.99 2.27 

Noncurrent RE loans to total RE loans .................. 5.78 3.89 4.26 6.69 5.23 6.74 1.36 

Equity capital ratio ...•.......................................... 

Core capital (leverage) ratio ................................. 

Net loans and leases to deposits .......................... 

6.88 

6.23 

79.24 

8.02 

8.01 

75.99 

7.66 

7.68 

76.59 

6.43 

5.40 

80.89 

6.95 

6.93 

79.97 

6.61 

5.39 

76.67 

9.22 

9.12 

106.46 

Growth Rate1 (year-to-year) 

Assets ..........•..•......................•......................... -9.68 5.42 3.84 -3.84 -8.86 -10.97 -2.31 

Equity capital ...•................................................. -11.28 -2.25 -6.68 -11.82 -12.62 -13.09 20.73 

Net interest income ............................................ -3.78 7.19 3.55 0.15 -2.30 -6.89 14.81 

Net income ........................................................ N/M N/M N/M N/M N/M N/M 253.75 

Net charge-offs .................................................. 15.37 52.70 23.27 8.47 2.86 40.44 47.03 

Loan loss provision ............................................. -23.43 12.13 2.93 -19.84 -29.19 -13.68 -43.62 

BACKGROUND 

Savings Bank Tables I through IV present information on thrifts insured by the FDIC Bank Insurance Fund (BIF). In aggregate, the 445 institutions hold approximately 9 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 about $500 million, compared with just under $300 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 $11.4 billion in assets-less than 5 percent of the industry's assets-are located in states outside the 

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

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, New Hampshire, Rhode Island, Vermont 

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

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

N/M - not meaningful 

9 
Table IV. Third Quarter 1991 Savings Bank Data fRat/06 In "J 

All ASSET SIZE DISTRIBUTION GEOGRAPHIC DISTRIBUTION 

THIRD QUARTER Preliminary 

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 ...................... 445 130 255 60 329 101 15 

Net income fin millions) ....................................... -344 -3 -135 -206 -229 -149 34 

Percentage of savings banks losing money ........... 32.58 30.00 34.12 31.67 36.78 22.77 6.67 

Percentage of savings banks with earnings gains .. 54.38 56.92 52.94 55.00 55.62 50.50 53.33 

Performance Ratios (annualized) 

Yield on earning assets ....................................... 9.28 9.57 9.35 9.23 9.41 9.08 10.11 

Cost of funding earning assets ............................ 6.34 6.12 6.13 6.46 6.26 6.36 6.67 

Net interest margin ............................................. 2.94 3.45 3.22 2.77 3.15 2.72 3.44 

Noninterest income to earning assets ................... 0.54 0.41 0.50 0.56 0.60 0.37 1.78 

Noninterest expense to earning assets ................. 2.96 3.23 3.22 2.81 3.36 2.63 2.86 

Return on assets ................................................ -0.58 -0.18 -0.69 -0.54 -0.90 -0.49 1.18 

Return on equity......,.......................................... -8.38 -2.28 -8.88 -8.41 -12.66 -7.27 13.53 

Net charge-offs to loans and leases ..................... 1.38 0.98 1.22 1.48 1.73 1.20 0.07 

Loan loss provision to net charge-offs .................. 117.40 99.93 130.99 112.06 106.45 125.66 1103.49 

Growth Rates (year-to-year) 

Net interest income ............................................ -0.33 11.08 7.66 2.56 4.32 -5.86 14.92 

Net income ........................................................ NIM NIM NIM N/M NIM NIM NIM 

Net charge-offs .................................................. 4.60 7.05 -7.12 50.33 -19.52 73.03 -39.24 

Loan loss provision ............................................. -38.67 -16.63 -10.74 -39.83 -38.82 -37.36 -54.10 

NIM - not meaningful 

10 
Number of Commerclal and Savings Banks on FDIC's "Problem Ust" 

1985-1991 

Number of Banks 

2,000 

1575 

1484 1,500 

1140 

1,000 

500 

0 

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

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

1985-1991 $ BIiiions 

600 

500 486.9 

404.2 400 

300 

200 

100 

0 

121'85 12/86 12/87 12/88 12/89 12/90 3/91 6/91 9/91 

11 
FDIC 

FIRST CLASS Federal Deposit Insurance Corporation MAIL Washington, DC 20429 Postage & 

Fees Paid OFFICIAL BUSINESS FDIC Penalty for Private Use, $300 

Permit No. G36 

Attn: Chief Executive Officer 

NOTES TO USERS: 

COMPUTATION METHODOLOGY FOR PERFORMANCE AND CONDITION RATIOS 

The data on commercial banka and atate-chartered Hving• banks were obtained from Call report■ filed with the FDIC and Federal Reaerve Board. Data on 

Federally-chartered Hving• banka (16 inetitutiona aa of September 30, 1991) were obtained from Thrift Financial Report■ filed with the Office of Thrift Supervision. Certain adjuatment1 are made to the Thrift Financial Report, to provide cloaer conformance with Call report di1cloaure requirement•. 

All income figurea u1ed in calculating performance ratioa repreaent amount, for that period, annualized (multiplied by the number of period, in• year). 

All a11et and liability figurea u1ed in calculating performance ratio, repreaent average amount■ for the period (beginning-of-period amount plua end-ofperiod amount plu1 any period, in between, divided by the total number of periods). 

All a11et and liability figurN u1ed in calculating the condition ratioa repreaent amount, aa of the end of the quarter. 

DEFINITIONS 

•Problem• Banke - Federal regulator■ aHign to each financial inetitution a compoaite rating, baaed upon an evaluation of financial and operational criteria. 

The rating i1 baaed on a 1cale of 1 to 5 in ascending order of supervisory concern. •Problem• bank■ are thoae institutions with financial, operational, or 

managerial weaknea N that threaten their continued financial viability. Depending upon the degree of riak and auperviaory concern, they are rated either a 

•4• or ·s.-

Eamlng Aauta - all loana and other inveatmenta that earn interest, dividend or fee income. 

Yield on Earning Aauta-total interest, dividend and fee income earned on loans and investments as a percentage of average earning a11et1. 

Coat of Funding Earning Aauta -total intereat expense paid on depoaita and other borrowed money aa a percentage of average earning a11et1. 

Net lntarNt Margin-the difference between the yield on earning aaaeta and the coat of funding them, I.e., the profit margin a bank eama on ita loan• and 

inveatmenta. 

Return on Aauta -net income (including aecurities transaction■ and nonrecurring itema) aa • percentage of average total aaseta. The baaic yard1tick of 

bank profitability. 

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

Loan Commitment, and Letters of Credit - includes unuaed credit card commitment• and overdraft plans, reflecting Call report revi1iona effective 

March 31, 1990. 

Nat Charga-offa - total loan• and lea ea charged off (removed from balance aheet because of uncollectibility) during the quarter, la■■ amount■ recovered 

on loan, and lea,a■ previoualy charged off. 

Noncurrant L- & Le--the ,um of loan, pa1t-due 90 day, or more and loan, in nonaccrual 1tatu■. 

Other Real Eatata Owned - primarily forecloaed property. Direct and indirect inve1tmenta in real eatate venture■ are excluded where appropriate. 

Other noncurrant -ta-debt 1ecuritiea and other aBBeta (excluding loan,, leaaea and other real eatate owned) that are either peat-due at leaat 90 day, 

or in nonaccrual 1tatu1. Due to reporting differencea, only defaulted debt ecuritiea are included for Federal Saving■ Banke. 

Cora capital - common equity capital plu1 noncumulative perpetual preferred ,tock plu■ minority interest in consolidated 1ub1idiariea, lea, goodwill and 

other ineligible intangible aHet1. Eligible intangibles (including mortgage servicing rights) are limited to 100 percent of core capital for Hving1 bank,, to 50 

percent of core capital for 1tate-chertered commercial bank• that are not Federal Re1erve members, and to 25 percent for National bank,. 

Nat L- and Le--total loan, and leaaea lea, unearned income and the allowance for loans and leaee loBBea. 

Temporary lnvaatmenta -the ,um of intereat-bearing balancea due from depoeitory inetitutiona, federal fund, aold and 1ecuritiea purchaaed under agreement, to reaell, trading-account aBBet1 and inveatment 1ecuritiea with remaining maturitiea of one year or leas. 

Volatile UabilitlN-the 1um of large denomination time deposits, foreign office depoaita, federal fund■ purchaaed, 1ecuritiea 1old under agreement, to 

repurchaa1, and other borrowed money. 

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

Off/CB of Corporate Communications, 550 17th StrHt N. W., Washington, D.C. 20429; telephone (202) 898-6996.