The FDIC 

uarte r ly_____A_n_dr_ew_c_.H..,..o_ve_,J_r·..:....•c_h_air_m_an__ 

anking Profile 

Second Quarter, 1993 

COMMERCIAL BANKING PERFORMANCE - SECOND QUARTER, 1993 

• Commercial Banks Earn $10.4 Billion In Second Quarter 

• Core Earnings Set Quarterly Record 

• Strong Margins And Improved Asset Quality Boost Profits 

• Total Loans Grow By $44.2 Billion 

Insured commercial banks earned $10.4 billion in the 1993, loan-loss provisions were $4 billion less than in 

second quarter of 1993, the second-highest quarterly the same period of 1992. 

total ever reported, after the $10.9 billion earned in the Higher net interest income was another major previous quarter. Industry profits were almost a third contributor to increased core earnings. Although higher than the $7.8 billion reported a year earlier. Net commercial banks' average net interest margin op~rating income was a record $9.8 billion, up $1 .4 narrowed slightly for the second consecutive quarter •• b1lhon from the first quarter of 1993, and $2.6 billion from 4.50 percent to 4.47 percent -- it remained wider more than a year earlier. Unlike the first quarter, when than the 4.42 percent average of a year ago. one-time accounting adjustments and other Second-quarter net interest income of $34.8 billion nonrecurring gains contributed 23 percent of banks' represented an increase of $1.8 billion (5.5 percent) profits, extraordinary gains and gains from sales of 

over the second quarter of 1992, and was $211 million investment securities comprised only 6.2 percent of higher than in the first quarter of this year. Average second-quarter earnings. The annualized return on !unding costs fell to~ the tenth consecutive quarter, as average assets in the second quarter was 1.18 interest rates remained low and banks continued to percent, lower than the 1 .24 percent of the first shift toward shorter-term, lower-cost sources of funds. quarter, but well above the 0.93 percent average of a Time deposits at commercial banks have declined year ago. Net income for the first six months of 1993 during the past ten quarters by almost one-fourth was $21.2 billion, almost $5.6 billion more than in the· ($273 billion), and their proportion of total bank first half of 1992. Average ROA for the first half of liabilities has fallen from 34.5 percent at the end of 1993 was 1.21 percent. 1990 to 25 percent at midyear. During the same time, 

Chart A - Quarterly Net Income of FDIC-Insured lower-cost demand and savings deposits have risen 

Commercial Banks, 1989-1993 by $283 billion, from 39.8 percent of all liabilities to 47 

$ Billions percent. 

10.9 Chart B - Quarterly Net Interest Margins of 

10 : :I l4 FDIC-Insured Commercial Banks, 1985-1993 : 

' 

8.5 : 

' 

' 7.81 8.2 , Net Interest Margin (%) 

7.36.9 7.5 I I : . I . 6.2 ' ' Banks< S100 MIiiion - - 5 

:"' 5.4 5.5 ' ' 

~ 5 : - ■ 4.64.3 : ,' 3.7 : • ■ 3.0: " ,- ill ... 

~- . I . . . . . 4.5 

~-

/'

Ill . 2.0 : -~ .. I

~ 1111

,- ~ 0.9 : 1-1 -<>._6n : .. ' 0 "" : LJ □ Nat Operating Income 

■ Securities . . . . . . and Other Gains. Nat 4 -- -- FDIC ,r-.. -~ . . ~-- Division of Research 123412341234123412 •"' ~~ 1111"-

-~ ,,- --"' .. &Statistics 1989 1990 1991 1992 1993 Ill' 

Don Inscoe Banks > S100 Mllllon Lower loan-loss provisions were an important factor in (202) 898-3940 

the earnings improvement. Banks set aside $4.2 3.5 I I I I I I I l ~ Ross Waldrop 1234 1 23412341234123412341234123412 billion in the second quarter for future loan losses, (202) 898-3951 1985 1986 1987 1988 1989 1990 1991 1992 '93 

$2.1 billion less than a year ago, and $521 million less Led by reduced levels of troubled real estate assets than in the first quarter of 1993. This was the lowest 

total troubled assets declined by $7.3 billion in th~ quarterly loss provision since the $3.6 billion set aside second quarter. This was t-he fifth consecutive quarter in the first quarter of 1989. For the first six months of 

R8'!uests for copies of and s~bs~riptions to the FDIC Quarterly Banking Profile should be made through the FD/C's 

Office of Corporate Commumcat,ons, 550 17th Street, N. W. , Wa shington, D. C. 20429; telephone (202) 898-6996. 

For assistance contact: Sectin508@fdic.gov
that they have fallen. At the end of June, troubled 

assets represented 2.15 percent of total commercial 

bank assets, down from 2.40 percent at the end of the 

first quarter and 2.90 percent a year ago. This is the 

lowest proportion since the 2.14 percent registered at 

the end of 1988. Noncurrent loans and leases 

declined by $4. 7 biUion in the second quarter, and 

other real estate owned fell by $2.6 billion. Noncurrent 

real estate loans decreased by $2.2 billion, while 

noncurrent commercial and industrial loans shrank by 

$1.6 billion. 

Net loan charge-offs in the second quarter totaled $4.5 

billion, a slight increase from the first quarter, when 

banks charged-off $4.3 billion in bad loans, but 

otherwise the lowest quarterly total since banks 

charged-off $3.6 billion in the first quarter of 1989. 

Through the first six months of 1993, net charge-offs 

are below year-earlier levels for all major loan 

categories. 

Troubled assets have decreased in seven of the last 

eight quarters since peaking at $107.8 billion (3.19 

percent of total assets) at midyear 1991. During that 

time, they have declined by $31 billion, almost 29 

percent. Most of the reduction has been in noncurrent 

loans, which are $28.8 billion lower than two years 

ago. Banks' holdings of foreclosed properties, which 

began to decrease only in the fourth quarter of last 

year, are only $2.2 billion below the midyear 1991 

level. Banks in the West Region had the highest 

proportion of troubled assets at the end of the second 

quarter -- 2.97 percent -- ending the string of twelve 

consecutive quarters in which Northeast Region banks 

held this dubious distinction. 

Banks' reserves for loan losses shrank by $518 million 

in the second quarter, to $54.1 billion. However, the 

$4.7-billion reduction in noncurrent loans meant that 

their reserve coverage rose during the quarter to 99.8 

cents in reserves for every dollar of noncurrent loans. 

This is the highest level since noncurrent loan data 

first became available in 1982. Equity capital growth 

remained strong in the second quarter. Aided by $6 

billion in retained earnings, total equity capital of 

commercial banks increased by $8 billion, to $281.6 

billion, or 7.89 percent of total assets at midyear. 

Total assets of commercial banks grew by $55.9 

billion in the second quarter, the largest quarterly 

increase since the third quarter of 1991, when assets 

rose by $56.5 billion. A striking difference between the 

two periods is that the most recent increase was 

driven by loan growth of $44.2 billion, whereas loans 

shrank by $13.9 billion in the third quarter of 1991. 

Increased holdings of home mortgage loans 

accounted for $19.5 billion of the increase in lending. 

All of the main loan categories increased during the 

quarter; however, the $1.35-billion increase in 

commercial and industrial loans was due to increased 

lending to non-U.S. commercial borrowers. Total 

commercial and industrial loans are now $10.5 billion 

lower than a year ago. Bank holdings of U.S. Treasury 

securities declined in the second quarter by $2.4 

billion, while mortgage-backed securities increased by 

$11.6 billion. 

A total of 11 , 198 commercial banks reported financial 

results at the end of June, a net decrease of 132 

banks from the 11,330 that filed Call reports at the end 

of the first quarter, and 488 fewer than a year earlier. 

There were 15 failures of insured commercial banks in 

the second quarter, bringing the total for the first six 

months of 1993 to 22 failed banks. Nineteen new 

banks were chartered in the second quarter, while 

mergers absorbed 124 institutions. The number and 

assets of commercial banks on the FDIC's "Problem 

List" continued to shrink. At midyear, there were 580 

"problem" banks with combined assets of $325.9 

billion, a net reduction of 91 banks and $50.5 billion in 

total assets during the second quarter. 

Chart C - Commercial and Industrial Loan Growth Rates By State 

June 30, 1992 - June 30, 1993 

Midwest Central Northeast 

Colorado -3.1 

Hawaii -0.6 

Commercial and Industrial Loan Growth Rate: 

■ 5% and Greater 

D 0%to4.9% ,.,, 

D Less than 0% 2
REAL ESTATE LOAN PERFORMANCE AND OTHER REAL ESTATE OWNED, 

JUNE 30, 1993 

ASSET SIZE GEOGRAPHIC DISTRIBUTION 

LESS $1B $10B NORTH- SOUTH- MID- SOUTHALL THAN $100MM 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 DA VS PAST DUE 

All real estate loans 1.59% 1.45% 1.41 % 1.60% 1.75% 2.06% 1.27% 1.33% 1.12% 1.22% 1.73% 

Construction and development 2.35 1.62 2.37 2.77 2.13 2.79 1.52 2.04 2.56 0.97 3.01 

Commercial real estate 1.74 1.28 1.41 1.82 2.14 2.59 1.11 1.38 1.51 1.14 1.82 

Multifamily residential real estate 1.51 1.05 1.38 1.78 1.45 1.29 1.15 1.69 1.73 0.81 2.07 

1-4 Family residential 1.51 1.66 1.40 1.37 1.67 1.86 1.43 1.29 0.87 1.31 1.67 

Home equity lines of credit 0.84 1.51 0.84 0.78 0.84 1.09 0.61 0.75 0.59 1.32 0.71 

Commercial R/E loans not secured by real estate 1.75 1.16 1.13 1.68 1.87 2.29 0.63 1.70 0.63 0.50 2.01 

PERCENT OF LOANS NONCURRENT* 

All real estate loans 3.41 % 1.42% 1.88% 3.07% 5.46% 5.49% 2.02% 1.77% 1.50% 1.84% 4.40% 

Construction and development 11.26 1.90 4.81 9.58 18.39 16.37 4.85 7.70 3.62 3.30 16.13 

Commercial real estate 5.05 1.94 2.59 4.38 9.40 8.65 3.41 2.27 3.22 2.92 5.54 

Multifamily residential real estate 4.81 1.71 2.08 4.21 8.48 8.86 2.06 2.45 2.32 1.95 5.88 

1-4 Family residential 1.27 1.02 1.09 1.18 1.56 1.92 0.91 0.75 0.50 0.93 1.71 

Home equity lines of credit 0.68 1.10 0.73 0.67 0.64 1.02 0.52 0.41 0.34 0.60 0.54 

Commercial R/E loans not secured by real estate 6.12 3.26 1.58 3.96 7.44 11.58 2.61 2.16 4.12 0.76 4.09 

PERCENT OF LOANS CHARGED-OFF (NET, ANNUALIZED) 

All real estate loans 0.67% 0.12% 0.25% 0.55% 1.26% 1.36% 0.27% 0.24% 0.31 % 0.10% 0.75% 

Construction and development 2.82 0.15 0.78 1.86 5.33 5.13 0.93 1.50 0.62 0.18 3.44 

Commercial real estate 0.93 0.16 0.33 0.87 1.87 1.94 0.40 0.34 0.94 0.10 0.88 

Multifamily residential real estate 0.96 0.31 0.29 0.40 2.24 2.71 0.38 0.10 0.41 0.12 0.43 

1-4 Family residential 0.19 0.09 0.13 0.15 0.31 0.42 0.10 0.05 0.05 0.09 0.22 

Homeequitylinesofcredit 0.19 0.19 0.22 0.17 0.19 0.24 0.16 0.05 0.03 0.23 0.25 

Commercial R/E loans not secured by real estate 1.88 1.05 1.04 1.50 2.13 3.70 0.15 3.42 -0.16 1.01 0.40 

TOTAL LOANS OUTSTANDING($ BILLIONS) 

All real estate loans $888.4 $100.2 $219.9 $263 .8 $304.5 $261.7 $180.3 $153 .5 $60.8 $61.5 $170.6 

Construction and development 70.2 5.9 14.9 22.8 26.6 20.9 14.4 10.6 3.1 4.4 16.8 

Commercial real estate 262.4 27.2 72.9 88.1 74.1 73.9 55 .6 47.4 15.4 19.1 50.9 

Multifamily residential real estate 28.3 2.3 7.5 9.4 9.1 7.7 5.3 5.5 1.9 1.8 6.0 

1-4 Family residential 410.2 51.3 104.2 113.9 140.7 111.3 89.2 72.2 31.6 33 .0 72.9 

Home equity lines of credit 74.5 2.8 13 .8 27.1 30.8 27.3 12.4 12.2 2.4 0.9 19.2 

Commercial R/E loans not secured by real estate 18.7 0.4 1.4 4.2 12.7 6.5 3.0 2.1 0.5 0.8 5.7 

OTHER REAL ESTATE OWNED($ BILLIONS) 

All real estate loans $22.6 $1.6 $3.7 $5.5 $11.7 $11.2 $2.7 $1.7 $0 .8 $1.5 $4 .8 

Construction and development 5.3 0.2 0.9 2.0 2.1 2.2 0.8 0.3 0.2 0.3 1.5 

Commercial real estate 11.6 0.7 1.7 2.6 6.6 5.7 1.4 1.0 0.5 0.8 2.3 

Multifamily residential real estate 1.5 0.1 0.2 0.3 1.0 1.0 0.1 0.1 0.1 0.1 0.2 

1-4 Family residential 2.7 0.5 0.8 0.5 0.9 1.1 0.4 0.2 0.1 0.2 0.7 

Home equity lines of credit 0.3 0.1 0.1 0.0 0.1 0.0 0.0 0.0 0.1 0.1 0.1 

Other real estate owned in foreign offices 1.1 0.0 0.0 0.0 1.1 1.1 0.0 0.0 0.0 0.0 0.0 

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

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

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

1993* 1992* 1992 1991 1990 1989 1988 

Return on assets ........ .... ..... ........ .. 1.21 % 0.93% 0.96% 0.54% 0.48% 0.49% 0.82% 

Return on equity ................... ........ 15.64 13.29 13.27 8.05 7.55 7.78 13.30 

Equity capital to assets ...... ..... .... ... 7.89 7.22 7.51 6.75 6.45 6.21 6.28 

Noncurrent loans and leases plus 

other real estate owned to assets .. 2.15 2.90 2.54 3.02 2.94 2.26 2.14 

Net charge-offs to loans ....... .......... 0.87 1.21 1.29 1.61 1.44 1.16 1.00 

Asset growth rate ... .. .. ... ....... ...... .. 3.81 1.80 2.19 1.21 2.73 5.37 4.36 

Net operating income growth .......... 30.01 56.30 92.55 - 0.62 2.56 -38.53 1554.74 

Percentage of unprofitable banks ..... 4.67 6.63 6.75 11.59 13.43 12.50 14.65 

Number of institutions .......... ...... ... . 11,198 11,686 11,462 11 ,921 12,343 12,707 13,139 

Number of problem banks ..... ..... .. ... 580 956 787 997 1,012 1,092 1,394 

Assets of problem banks (billions) .... $325 .9 $494.4 $408.2 $528.0 $341.6 $187.9 $304.8 

Number of failed/assisted banks ...... 22 55 100 108 159 206 221 

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

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

(dollar figures in millions) 

Preliminary 

2nd Qtr 1st Qtr 2nd Otr %Change 

1993 1993 1992 92:2-93:2 

Number of banks reporting .. ..... .... ... ..... ........ . 11,198 11,330 11,686 -4.2 

Total employees (full-time equivalent) ....... .... .. . 1,463,578 1,467,838 1,479,392 -1.1 

CONDITION DA TA 

Total assets ..... ..... ... ... .. .......... .... .... .. .... ....... $3,569,251 $3,513,409 $3,438,273 3.8 

Real estate loans. ........... .. .... ...... .... .. ... ... . 888,355 868,423 858,450 3.5 

Commercial & industrial loans. ....... .......... .. 535,148 533,798 545,702 -1 .9 

Loans to individuals.... ........ .... ........ .... ... ... 390,018 381,820 378,086 3 .2 

Farm loans......... .................................... . 35,716 33,162 35,938 -0.6 

Other loans and leases . . . . . . . . . . . . . . . .. . . . . . . . . . . .. 218,094 205,889 214,334 1.8 

Total loans and leases ... .. .. ...... .......... .. ..... 2,067,332 2,023,092 2,032,510 1.7 

LESS: Reserve for losses . . . . . . . .. . . . ... . ... . . .. . .. 54,092 54,610 55,315 -2.2 

Net loans and leases . . . . .. .. . . . . . . . .. .. . .. . ... . . . .. . . . 2,013,239 1,968,483 1,977,194 1.8 

Temporary investments.. ... ....... ........ .. ...... .. . 565,202 555,747 507,282 11.4 

Securities over 1 year ..... ...... ... ... .. ....... ....... 578,566 580,316 553,785 4 .5 

All other assets....... ........ ....... ........... ...... ... 412,244 408,863 400,012 3.1 

Total liabilities and capital. ................ ..... ... ..... 3,569,251 3,513,409 3,438,273 3.8 

Noninterest-bearing deposits ... .......... ......... .. 526,210 490,540 486,535 8.2 

Interest-bearing deposits. .. .. .. ..... ...... ........... 2,154, 156 2,164,985 2,170,164 -0.7 

Other borrowed funds... ...... ..... ............ ..... .. 446,082 430,432 395,182 12.9 

Subordinated debt ........ .... ......... ............... .. 36,954 34,446 27,576 34.0 

All other liabilities..... ....... ... ........ ......... ... .... 124,263 119,379 110,463 12.5 

Equity capital ........... ...... ..... .......... ..... ... .. .. 281,586 273,628 248,353 13.4 

Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,734 7,196 5,597 38.2 

Loans and leases 30-89 days past due........ .. .. 29,349 34,126 34,109 -14.0 

Noncurrent loans and leases . . . . . . . . . . . . . . . . . . . . . . . . . . 54,182 58,878 71,900 -24.6 

Restructured loans and leases... ....... .... .. ... .. ... 11,216 11,209 10,706 4.8 

Other real estate owned.. ......................... ... .. 22,564 25,176 27,771 -18.8 

Loan commitments and letters of credit .. ........ . 1,512,914 1,473,902 1,402,375 7.9 

Domestic office assets .................................. 3,137,475 3,093,692 3,030,437 3 .5 

Foreign office assets ... ........ .................... ...... 431,775 419,717 407,836 5.9 

Domestic office deposits . . . . . . . . . . . .. . . . .. . .. . . . .. . . .. . 2,368,005 2,351,086 2,353,131 0.6 

Foreign office deposits. ..... .. ........ .......... ........ 312,362 304,439 303,567 2.9 

Earning assets .. .... ........ .. ....... ................ ... ... 3,157,007 3,104,546 3,038,261 3.9 

Volatile liabilities . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . 969,445 955,208 959,207 1.1 

Preliminary Preliminary 

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

INCOME DATA 1993 1992 %Change 1993 1992 92:2-93:2 

Total interest income .... ....... ....... $121,819 $130,033 -6.3 $60,845 $64,595 -5.8 

Total interest expense .... .. ....... .... 52,455 65,180 -19.5 26,000 31,575 -17.7 

Net interest income .... ..... ......... 69,364 64,852 7.0 34,845 33,019 5.5 

Provision for loan losses ... .... ..... .. 8,959 12,990 -31.0 4,208 6,346 -33.7 

Total noninterest income .. ..... .... .. 36,237 32,192 12.6 18,620 16,510 12.8 

Total noninterest expense .. ......... . 69,558 63,704 9 .2 34,687 32,700 6.1 

Securities gains (losses) .............. 1,721 1,937 -11 .2 745 817 -8.8 

Applicable income taxes ... ........ .. . 9,502 6,921 37 .3 5,022 3,563 41.0 

Extraordinary gains, net .............. 1,883 234 703.7 112 104 7.4 

Net income ......... .... .. .. ....... .. ... 21,185 15,601 35 .8 10,405 7,842 32.7 

Net charge-offs .... .. ................ .... 8,854 12,044 -26.5 4,530 6,054 -25.2 

Cash dividends on capital stock .... 8,687 5,782 50.2 4,432 3,012 47.1 

Net operating income ..... .... .... .. 18,094 13,917 30.0 9,765 7,119 37.2 

4 
Table Ill. First Half 1993 Commercial 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 ....... ..... ... 11,198 8,089 2,736 319 54 895 1,870 2,454 2,744 1,988 1,247 

Total assets .......... ........................... $3,569 .3 $340.8 $667.1 $1,010.6 $1,550.8 $1 ,348.4 $568.4 $587.0 $239.1 $286.3 $540.0 

Total deposits ........ ..... .... ....... ..... ..... 2,680.4 299 .6 569.3 756 .3 1,055 .2 919.3 439.3 452.5 191 .9 242.1 435.3 

Net income (in millions) ..................... 21,185 2,127 4,064 6,433 8 ,560 7,192 3,418 3,760 1,701 2,224 2,890 

Percentage of banks losing money .... 4.7% 4 .9% 4.1 % 5 .0% 3.7% 8.8% 5 .0% 2.7% 2 .0% 3.4% 13.1 % 

Percentage of banks with earnings gains 65 .8 62 .5 73.7 77.7 85.2 76.9 71 .1 67.8 59.6 62.1 65.3 

Performance Ratios (annualized) 

Yield on earning assets ...... .. .............. 7 .89% 7 .78% 7.77% 7.75% 8.07% 8.44% 7 .44% 7.61% 7.64% 7.09% 7.90° 

Cost of funding earning assets ..... .. .. ... 3.40 3 .06 2.96 2.85 4 .05 4.33 2 .90 3.07 3 .05 2 .66 2.57 

Net interest margin ............. ............... 4.49 4.71 4 .82 4 .90 4 .02 4.11 4 .54 4 .54 4 .59 4.44 5.34 

Noninterest income to earning assets ... 2 .35 1. 11 1.40 2.61 2.91 2.92 1.68 1.81 2 .46 1.80 2.48 

Noninterest expense to earning assets . 4.51 3.82 4 .00 4.76 4 .74 4.81 3 .97 3.96 4 .31 4.28 5.16 

Net operating income to assets .. ...... .. . 1.04 1.13 1.12 1.20 0.87 0 .81 1.16 1.23 1.38 1.17 1.02 

Return on assets ... .. ..................... ..... 1 .21 1.25 1.23 1.31 1.13 1.09 1.23 1.31 1.44 1.59 1.08 

Return on equity .................. .. .. ...... ... 15.64 12.93 14.52 16.27 16.64 15.57 15.77 16.28 16.47 19.96 12.56 

Net charge-offs to loans and leases ..... 0 .87 0 .29 0.48 0 .94 1 .11 1.36 0 .42 0 .51 0 .57 0 .24 0.96 

Loan loss provision to net charge-offs .. 101 .19 138.03 132.35 114.19 85.71 92.52 127.18 134.17 125.27 52.17 98.63 

Condition Ratios 

Loss allowance to: 

Loans and leases ... .. ... ... ............. .. 2 .62% 1.78% 1.92% 2.72% 3.02% 3.24% 1.98% 1.94% 1.99% 2 .05% 3.03°1/o 

Noncurrent loans and leases .......... 99.83 117.17 108.92 121 .71 86.59 87.57 121 .95 126.72 132.67 134.53 94.25 

Noncurrent loans and leases plus 

other real estate to assets .. .. .. .. ..... 2 .15 1.27 1.58 1.91 2 .75 2 .90 1 .45 1.20 1.20 1.23 2.97 

Equity capital ratio .......................... .. 7 .89 9.80 8 .64 8 .21 6 .94 7 .14 7.94 8 . 14 8 .94 8 .24 8.77 

Core capital (leverage} ratio ......... ....... 

Net loans and leases to deposits .... .. ... 75.11 58.92 66.23 79.11 81 .63 79.45 75.58 75.87 70.39 54.67 78.14 

Growth Rates (year-to-year) 

Assets ............ ... ....... .. ... .... ....... ... ... . 3 .8% 3.9% 6.7% 9 .3% 9 .1% 3 .4% 9 .0% 3 .8% 2.7% 5.3% -0.5o/c0 

Equity capital ..... ....... ..... .......... .. .... .. . 13.4 6.5 11.6 17.9 25 .3 15.0 12.9 9 .1 7 .4 18.0 15.9 

Net interest income ............. .. .... ... ..... 7.0 5.3 8 .8 11 .3 14.9 7.2 7 .9 5.6 5.5 6 .7 7.6 

Net income............ .. .. ............ .. ..... .. .. 35.8 17.4 21.2 32.8 65 .7 49.7 25.6 22 .3 12.8 49.8 43.9 

Noncurrent loans and leases plus 

other real estate owned ....... ......... - 23.0 -16.0 - 10.0 -19.1 -21 .7 -24.2 -23.1 -22.4 - 16.8 -37.8 - 16.8 

Net charge-offs ....... ...... .................... -26.5 - 43.3 -16.9 -28.8 -21.2 -25.5 -43.1 -31.4 -21.4 -66.1 -6.9 

Loan loss provision ............................ -31.0 -36.0 -17.1 -26.3 -35.5 -30.0 -37.9 -22.2 -20.8 -81 .7 -28.6 

PRIOR FIRST HALVES 

(The way it was . . . ) 

Return on assets ........ .... ......... 1992 0.93% 1.11 % 1.04% 1.01 % 0.77% 0.77% 1.05% 1.10% 1.30% 1.10% 0.79°1/o 

........................... ... 1990 0.70 0.80 0 .91 0.64 0.61 0 .41 0 .76 0.86 1.07 0.55 1.10 

1988 0.69 0.72 0 .78 0 .69 0.64 0.96 0 .99 1.09 1.06 -2.08 0.77 ······························ 

Equity capital ratio .. ...... ..... ..... 1992 7.22 9.38 8.17 7.48 6.00 6.43 7.66 7 .75 8.55 7 .36 7.53 

.. .. ... ........... ............ 1990 6.43 9.08 7.75 6.52 4 .99 5.66 7.16 7 .04 7.95 6.61 6.35 

... ........ ...... .. ........... 1988 6 .15 8.78 7 .35 6.20 4 .58 5.67 7.01 6.76 7.53 5.41 5.80 

Noncurrent loans and leases plus 

other real estate owned to assets. 1992 2 .90 1.57 2 .00 2.73 3.82 3 .95 2.05 1.60 1.48 2.08 3.55 

......... ... .. ................ 1990 2 .46 1.73 1.84 2 .18 3 .18 3 .34 1.58 1.38 1.45 3.02 2.31 

....... ....................... 1988 2.39 2.07 1.81 1.72 3 .36 2.33 1.07 1.21 1.75 6.26 2.99 

Net charge-offs to loans and leases .. 1992 1.21 0 .45 0 .64 1.39 1.53 1.85 0.78 0 .75 0 .74 0 .73 1.05 

..... ........... .. .. ... ....... 1990 1.47 0.55 0.67 1.36 2 .13 2.19 0.71 0 .97 0.97 1.28 1. 11 

..... ........................ . 1988 1.00 0 .75 0 .74 1.16 1.06 0.65 0.62 0 .75 1.40 3.40 1.09 

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 1993 Commercial Bank Data (Dollar figures in billions, ratios in%) 

ASSET SIZE DISTRIBUTION GEOGRAPHIC DISTRIBUTION 

Less $100 Million Greater EAST WEST 

SECOND QUARTER Preliminary 

(The way it is . . . ) 

ALL 

BANKS 

than $100 

Million 

to 

$1 Billion 

$1-10 

Billion 

than $10 

Billion 

Northeast 

Region 

Southeast 

Region 

Central 

Region 

Midwest 

Region 

Southwest 

Region 

West 

Region 

Number of banks reporting ............... 11,198 8,089 2,736 319 54 895 1,870 2,454 2,744 1,988 1,247 

Total assets ................................ .... $3,569.3 $340.8 $667.1 $1,010.6 $1,550.8 $1 ,348.4 $568.4 $587.0 $239.1 $286.3 $540.0 

Total deposits ............................... .. 2,680.4 299.6 569.3 756 .3 1,055.2 919.3 439.3 452.5 191 .9 242.1 435.3 

Net income (in millions) .................... 10,405 1,038 1,991 3,342 4,033 3,431 1,819 1,907 886 902 1,459 

Percentage of banks losing money .... 5.4% 5.7% 4 .4% 5.6% 3.7% 8.7% 5.6% 2.9% 3.0% 4.8% 13.6% 

Percentage of banks with earnings gains 60.1 56.5 68.6 75.9 85.2 68.4 64.8 63.1 55 .1 55.0 60.7 

Performance Ratios (annualized) 

Yield on earning assets .. .. ........ ..... ..... 7.81% 7.79% 7.77% 7.67% 7.92% 8.31% 7.40% 7.54% 7.66% 7.03% 7.80% 

Cost of funding earning assets ........... 3.34 3.02 2.91 2.78 3.98 4.25 2.87 3.01 3.01 2 .61 2.48 

Net interest margin ...................... ..... 4.47 4.76 4 .85 4 .89 3.95 4.06 4.53 4.53 4.65 4.42 5.32 

Noninterest income to earning assets .. 2.39 1.14 1.44 2.65 2 .95 3.00 1.69 1.86 2.51 1.87 2.43 

Noninterest expense to earning assets 4.45 3.86 4.05 4.79 4.55 4 .72 3.90 3.94 4.36 4.28 5.08 

Net operating income to assets .... ... .... 1 .11 1.15 1.13 1.26 0 .99 0.92 1.23 1.29 1.46 1.23 1.04 

Return on assets ............................... 1.18 1.22 1.20 1.35 1.05 1.03 1.29 1.32 1.51 1.27 1.09 

Return on equity ............................. .. 15.05 12.49 14.01 16.54 15.27 14.54 16.43 16.24 16.93 15.54 12.48 

Net charge-offs to loans and leases ..... 0 .89 0 .34 0 .54 0 .93 1.13 1.39 0.45 0.50 0 .56 0.29 0 .98 

Loan loss provision to net charge-offs . 92.89 125.59 120.15 103.48 79.19 89.26 106.41 121.46 111 .78 8.13 89.06 

Growth Rates (year-to-year) 

Net interest income ...... ...... ..... .......... 5.5% 4.8% 7.9% 10.8% 7.8% 6.1% 7.6% 5.1% 5.2% 6 .6% 2 .7°1⁄4, 

Net income .' ...................... ........ ...... . 32.7 13.7 17.2 37.0 55.5 46.1 24.5 20.5 19.3 21. 1 51.7 

Net charge-offs ........... ....... ......... ...... -25.2 -40.4 -13.6 -28.5 -23.6 -25.1 -34.1 -32.5 -25.3 -56.7 -7.5 

Loan loss provision ........................... -33.7 -38.2 -17.6 -32.5 -37.4 -28.4 -37.4 -30.9 -30.1 -95.9 -38.6 

PRIOR SECOND QUARTERS 

(The way it was . . . ) 

Return on assets .. ........ ... .. .... .. 1992 0 .93% 1.11 % 1.05% 1.03% 0.74% 0.74% 1.12% 1.13% 1.27% 1.10% 0.74°1⁄4, 

............................. 1990 0.62 0.77 0 .89 0 .58 0 .49 0 .31 0.75 0.86 0.96 0.58 0.92 

............................. 1988 0 .71 0.67 0.75 0 .67 0 .74 0.97 0.96 1.06 1.08 -1.79 0.73 

Net charge-offs to loans and 

leases 

.. ........................... 1992 1.22 0.50 0 .70 1.39 1.49 1 .87 0.72 0.75 0.77 0.71 1.07 

····························· 1990 1.63 0.65 0 .76 1.31 2.53 2 .45 0.73 0.84 1.03 1.45 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 

6 
SAVINGS BANK PERFORMANCE - SECOND QUARTER, 1993 

• BIF-lnsured Savings Banks Earn $414 Million 

• Mortgage Loans and Mortgage-Backed Securities Increase 

• Capital Protection Improves While Troubled Assets Decline 

• One Institution Fails, Problem List Continues to Shrink 

The 408 savings banks insured by the FDIC Bank Insurance Fund (BIF) earned $414 million in the second quarter 

of 1993.1 The industry now has enjoyed 6 consecutive 

profitable quarters following 3 years of losses. Core earnings were unchanged compared with the previous quarter 

as gains in net interest income and falling loan-loss provisions were offset by higher noninterest expenses. Net income after extraordinary items was $103 million below 

the amount earned in the first quarter, when one-time accounting adjustments and other nonrecurring gains contributed $101 million to net income. As a result, the annualized return on assets for the quarter averaged 0.82 percent, compared to the 1 .01 percent reported for the previous quarter. Average ROA for the first half of 1993 was 

0.93 percent. 

Favorable interest-rate conditions continued to sustain 

earnings throughout most of the industry. Net interest 

margins stood at just over 4 percent. This was the highest 

level since savings banks began reporting quarterly earnings in 1985. Interest margins increased moderately 

despite a narrowing of the wide spread between shorterterm and longer-term interest rates. The industry's funding 

costs are being reduced as interest-bearing deposits are replaced with noninterest-bearing deposits, low-cost borrowings and higher equity capital levels. 

Notwithstanding the favorable earnings picture, 38 institutions - 9 percent of the industry -lost money in the 

second quarter, up from only 17 unprofitable savings 

banks during the first quarter. Most of the unprofitable 

savings banks are headquartered in the six New England 

states, where one of every ten institutions lost money. 

Nearly 7 percent of the institutions elsewhere in the Northeast were unprofitable, while all of the 14 institutions outside the Northeast made money in the quarter. 

Total assets held by BIF-member thrifts increased $1 .2 billion in the quarter, following 4 years of industry shrinkage. 2 Mortgage-backed securities increased $1 .6 billion, 

outstripping growth in home mortgage loans, which increased $524 million. Most of the asset growth was 

achieved by institutions headquartered in the New England 

states, where savings bank assets increased $762 million. 

Savings banks continued to improve their asset quality. 

The industry's troubled assets shrank $936 million in the 

quarter. The sharpest decrease occurred in the six New 

England states, where troubled assets fell by $540 million 

(14.4 percent). 3 Elsewhere in the Northeast, troubled assets contracted $371 million (7.7 percent). Nationwide, 

troubled-asset levels have declined 8 consecutive quarters. 

At the end of the second quarter, troubled ·assets comprised 3.8 percent of total assets, down from 4.3 percent 

the previous quarter and 5.2 percent one year ago. 

Net charge-off rates were below one percent of loans for 

the second consecutive quarter and reserve coverage of 

noncurrent loans continued to improve. The industry held 

50 cents in reserves for each dollar of troubled loans at 

the end of the second quarter -the ninth consecutive 

quarter in which coverage ratios have improved. The 14 

institutions outside of the Northeast continued to have the 

highest coverage ratios - $1 .1 0 in reserves for each dollar 

of troubled loans. Institutions in the New England states 

have coverage levels twice as high as the average elsewhere in the Northeast (70 cents versus 36 cents). 

Retained earnings, minimal asset growth and new capital 

issues have all combined to bolster capital ratios. Equity 

capital was up by $ 541 million in the quarter. Savings 

banks' average equity capital ratio was 8.5 percent at 

quarter's end, the highest level since 1962. The strongest 

improvement in capital ratios occurred in the institutions in 

the Northeast outside of the New England states, aided in 

part by new capital issues. 

The first savings bank failure in 1 993 took place in the 

second quarter, a substantial turnaround following 22 failures during 1992. The number and total assets of institutions on the FDIC's "Problem List" continued to plummet 

from the record levels reported one year ago. As of June 

30, 1993, there were 60 "problem" savings banks holding 

$37 .1 billion in assets. Problem savings banks accounted 

for 18 percent of the industry's assets, a significant contrast to June 30, 1992, when 88 "problem" savings 

banks held almost one-third of the assets in the industry. 

The FDIC's resolution of the most-troubled institutions, the 

benefits of favorable interest rates, and stabilizing real 

estate markets in the Northeast have all contributed to the 

industry's continuing recovery. 

1 BIF-insured savings banks account for less than 10 percent of all deposits insured by the FDIC Bank Insurance Fund. This analysis does 

not include institutions insured primarily by the FDIC Savings Association Insurance Fund (SAIF). 

2 The acquisition of Montclair Savings Bank, Montclair, NJ by Collective Federal Savings Bank of Egg Harbor, NJ on April 1, 1993, 

reduced BIF-insured savings bank assets, mortgage loans and deposits by $584 million, $428 million and $524 million, respectively. 

3 The decrease in troubled assets was aided in part by FDIC's resolution of New England Savings Bank, New London, Connecticut, which 

closed on May 21, 1993. New England Savings Bank reported $195 million in troubled assets on its final March 31, 1993 Call report. 

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

1993* 1992* 1992 1991 1990 1989 1988 

Return on assets .......... ............................ 0.93% 0.38% 0 .65% -0.56% -0.98% -0.28% 0.45% 

Equity capital to assets ................ ... .......... 8.48 7.29 7.95 6.66 6.61 7.06 7.44 

Noncurrent loans and leases plus 

other real estate owned to assets** ........ 3.84 5.24 4 .25 5.48 5.60 2.64 1.51 

Noncurrent RE loans to total RE loans** ..... 3 .01 4.89 3.95 5.64 5 .32 3.14 1.67 

Asset growth rate ..... .. ... .......................... -12.01 -5.12 -9.48 -8.42 -7.46 -1.52 8.54 

Deposit growth rate ...... .. .. .. ...................... -12.46 -3.78 -9.14 -5.69 -4.97 1.34 7.88 

Number of institutions .. .. .......................... 408 430 414 441 469 489 492 

Number of problem savings banks .............. 60 88 76 74 34 17 12 

Assets of problem savings banks (billions) .. $37.1 $73.0 $56.3 $81 .8 $67.2 $47.6 $47.4 

Number of failed savings banks .... ..... .... .... 1 11 22 19 10 1 0 

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

• • Excludes Federally-chartered Savings Banks before 1990. 

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

(dollar figures in millions) 

Preliminary 

2nd Otr 1st Qtr 2nd Otr % Change 

1993 1993 1992 92:2-93:2 

Number of savings banks reporting ..................... 408 410 430 -5.1 

Total employees (full-time equivalent) ................. 61,505 61,084 67,914 -9.4 

CONDITION DA TA 

Total assets ...................... .. ..... ..... ..... .......... ..... $203,845 $202,674 $231,671 -12.0 

Mortgage loans ............................................... 115,586 115,062 134,501 -14.1 

1 - 4 family residential .... .. .............................. 82,893 82,188 93,526 -11.4 

Construction and land development ................ 2,679 2,762 4,038 -33.6 

Commercial and multi-family ........... .............. 30,014 30,112 36,938 -18.7 

All other loans and leases .... ............................ 12,523 12,791 14,613 -14.3 

LESS: Reserves for losses ............................. 2,326 2,292 2,972 -21.7 

LESS: Other contra accounts ......................... 376 360 478 -21.4 

Net loans and leases ....................... ................ 125,407 125,200 145,663 -13.9 

Mortgage-backed securities ... .. .. .. .. ................... 19,206 17,610 20,462 -6.1 

Other real estate owned ... .. .. .... ....................... 3,243 3,752 4,817 -32.7 

Goodwill .. .......................................... ... ......... 343 352 803 -57.3 

All other assets ......... .. .... ... ... ... ...... ................. 55,646 55,759 59,925 -7.1 

Total liabilities and capital .. .. .... ........ .................. 203,845 202,674 231,671 -12.0 

Interest-bearing deposits .... .. ............................ 163,969 165,589 189,002 -13.2 

Noninterest-bearing deposits ...... ...................... 7,769 6,604 7,181 8.2 

Other borrowed funds ..................................... 12,945 11,887 15,877 -18.5 

Subordinated debt ... .... ..... ........................ ... .... 76 77 256 -70.3 

Other liabilities .. .. ..... .. ..................... .... ............ 1,792 1,765 2,470 -27.5 

Equity capital .................................................. 17,294 16,753 16,886 2.4 

Loans and leases 30-89 days past due .. .............. 2,623 3,147 4,019 -34.7 

Noncurrent loans and leases .... .. ............. ............ 4,606 5,033 7,330 -37.2 

Other noncurrent assets .................................... . 12 13 25 -50.2 

Direct and indirect investments in real estate ..... .. 427 460 709 -39.7 

Preliminary Preliminary 

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

INCOME DATA 1993 1992 % Change 1993 1992 92:2-93:2 

Total interest income .. .. ..... ... ......... $7,164 $9,026 -20.6 $3,563 $4,495 -20.7 

Total interest expense.................... 3,398 5,283 -35.7 1,670 2,556 -34.7 

Net interest income .............. .. ..... 3,766 3,743 0 .6 1,893 1,939 -2.4 

Provisions for losses ...................... 475 725 -34.5 222 385 -42.3 

Total noninterest income .... ............ 713 686 4 .0 352 376 -6.2 

Total no_ninterest expense .............. 2,824 2,990 -5.6 1,441 1,525 -5.5 

Securities gains (losses) ................. 129 170 -23.9 56 59 -4.1 

Applicable income taxes .. ..... .......... 492 464 5.9 243 245 -0.7 

Extraordinary gains, net ... .............. 123 18 598.9 19 2 876.7 

Net income... ....... .. ..................... 940 437 115.1 414 221 87.6 

Net charge-offs .... ......... .. .............. 532 843 -36.9 267 439 -39.2 

8 
Table Ill. First Half 1993 Savings Bank Data (Dollar figures in billions, ratios in %) 

All ASSET SIZE DISTRIBUTION GEOGRAPHIC DISTRIBUTION

BIF-lnsured Less $100 Million Greater 

FIRST HALF Preliminary Savings New Other Rest than $100 to than 

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

Number of savings banks reporting ...................... 408 120 241 47 307 87 14 

Total assets ....................................................... $203 .8 $6.5 $75.6 $121.7 $99.5 $91 .8 $12.6 

Total deposits ..................................... ............... 171 .7 5.8 65.2 100.8 85.3 78.5 8.0 

Net income (in millions)....................................... 940 39 324 577 410 392 139 

Percentage of savings banks losing money ........... 6.9% 5.8% 6.6% 10.6% 7.5% 5.7% 0 .0°1/o 

Percentage of savings banks with earnings gains .. 83 .8 85.0 84.6 76.6 85.0 80.5 78.6 

Performance Ratios (annualized) 

Yield on earning assets ....................................... 7.63% 7 .92% 7.52% 7.68% 7.60% 7.51 % 8.85'3⁄40 

Cost of funding earning assets .. ... .. ......... .... .... .. .. 3.62 3.57 3.53 3 .68 3 .55 3.62 4.22 

Net interest margin .. .... .. .. ........... ...... ....... ..... ..... . 4 .01 4 .35 3 .99 4.01 4.05 3.89 4.62 

Noninterest income to earning assets ................ .. . 0.76 0 .77 0 .59 0.87 0.73 0.63 2.02 

Non interest expense to earning assets ... ...... .... ... . 3.01 3.16 3 .01 2 .99 3.31 2.65 3 .26 

Return on assets ................................................ 0 .93 1.18 0.86 0.96 0.83 0.85 2.33 

Return on equity................................................. 11 .24 13.30 10.06 11 .89 10.47 10.58 18.50 

Net charge-offs to loans and leases ... ... .. .. ....... ... . 0.84 0.43 0.46 1.10 0.72 1.07 0.16 

Loan loss provision to net charge-offs .................. 89.33 91.78 124.27 80.15 90.86 83.01 346.26 

Condition Ratios 

Loss allowance to: 

Loans and leases .... .. .... ... .. ..... ..... .. ... ............... 1.83% 1.42% 1.61 % 1.99% 1.88% 1.84% 1.29'3⁄40 

Noncurrent loans and leases ...... ... .. ..... .... .. ... .... 50.50 51.53 63.30 45.78 69.81 36.46 110.21 

Noncurrent loans and leases plus 

other real estate owned to assets ... ... ............. 3 .84 3.05 3.04 4.46 3.28 5.02 1.35 

Noncurrent RE loans to total RE loans .................. 3.01 2.75 2.50 3.40 2.61 3.89 1.1 8 

Equity capital ratio .... .... .... ... ..... .... .............. ........ 8.48 9.46 8.68 8.31 8.09 8.33 12.68 

Core capital (leverage) ratio .... .. ........... .. ...... .. ...... 8.27 9.04 8.59 8.02 7.92 8.07 12.46 

Net loans and leases to deposits ... ... ........... ....... .. 73.02 74.77 71 .64 73.81 74.11 69.43 96.78 

Growth Rates (year-to-year) 

Assets .............................................................. -12.0% 2.6% 2.9% -0.6% - 4.7% -20.8% 10.7% 

Equity capital .......................................... ........... 2.4 12.7 11 .6 16.2 7.9 -7.3 36.0 

Net interest income ............................................ 0.6 11 .5 11 .6 10.2 5.0 -6.4 23.3 

Net income ........................................................ 11 5. 1 173.4 91.9 31.5 260.7 60.8 73.4 

Net charge-offs ................. ... ...... .... ...... ...... ........ -36.9 -58.8 -40.2 -39.6 -48.9 -22.9 -35.3 

Loan loss provision ............................................. -34.5 -45.6 -28.6 -1.5 -45.6 -23.4 2.6 

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

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

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

9 
Table IV. Second Quarter 1993 Savings Bank Data (Dollar figures in billions, ratios in %) 

All ASSET SIZE DISTRIBUTION GEOGRAPHIC DISTRIBUTION 

BIF-lnsured Less $100 Million Greater 

SECOND QUARTER New Other Rest Preliminary Savings than $100 to than 

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

Number of savings banks reporting ...................... 408 120 241 47 307 87 14 

Total assets ....................................................... $203.8 $6.5 $75.6 $121.7 $99.5 $91.8 $12.6 

Total deposits .................................................... 171.7 5.8 65.2 100.8 85.3 78.5 8.0 

Net income (in millions) ....................................... 414 22 121 271 156 186 72 

Percentage of savings banks losing money ........... 9.3% 10.8% 8.7% 8.5% 10.4% 6.9% 0.0% 

Percentage of savings banks with earnings gains .. 73.5 72.5 74.7 70.2 73.9 73.6 64.3 

Performance Ratios (annualized) 

Yield on earning assets ....................................... 7.60% 7.88% 7.53% 7.63% 7.57% 7.51% 8 .66% 

Cost of funding earning assets ............................ 3.56 3.53 3.50 3.60 3.49 3.58 4.05 

Net interest margin ............................................. 4.04 4.35 4.03 4.03 4.08 3.93 4.61 

Noninterest income to earning assets ............... .... 0.75 1.10 0.61 0.82 0.74 0.56 2.31 

Noninterest expense to earning assets ................. 3.08 3.21 3.15 3.02 3.40 2.70 3.27 

Return on assets ................................................ 0.82 1.31 0.65 0.90 0.63 0.81 2.35 

Return on equity................................................. 9.75 14.45 7.45 10.97 7.85 9.94 18.51 

Net charge-offs to loans and leases ..................... 0.84 0.49 0.52 1.07 0.76 1.05 0 .09 

Loan loss provision to net charge-offs .................. 83.23 71.59 125.72 70.56 93.11 70.52 475.52 

Growth Rates (year-to-year) 

Net interest income ..................................... ....... -2.4 8.3 7.6 6.9 2.5 -9.8 21.6 

Net income .............................. .......................... 87.6 184.6 47.7 16.9 151.5 61.0 67.2 

Net charge-offs ........................... ....................... -39.2 -57.7 -33.8 -16.5 -45.9 -31.4 -68.2 

Loan loss provision ........... .................. ...... ....... ... -42.3 -56.1 -21.9 -19.7 -36.1 -48.6 -26.0 

Spread Between Short-Term and Long-Term Yields 

30-Year Treasury Bond Versus 3-Month Treasury Bill 

Yield 

10% 

Yield on 30-Year T easury Bond 

9 

8 

7 Spread 

6 

5 

Yield on 3-Month Treasury Bill 4 

3 

2 

1989 1W0 1W0 1W0 1W0 1W1 1W1 1W1 1W1 1W2 1W2 1W2 1W2 1W3 1W3 

40 10 20 30 40 10 20 30 40 10 20 30 40 10 20 

Quarterly Average Yield: 

1989 1990 1991 1992 1992 1992 1992 1993 1993 

4Q 4Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 30-Year 

Treasury Bond 7.93 8.55 7.85 7.80 7.90 7.44 7.53 7.08 6.86 

3-Month 

Treasury Bill 7.65 6.99 4.54 3.91 3.68 3.08 3.07 2.96 2.97 

Spread 0.28 1.56 3.31 3.89 4.22 4.36 4.46 4.12 3.89 

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

1986-1993 

Number of Banks 

1,575 D Savings Banks 

1,500 

I Commercial Banks 

1,000 

500 

0 

12/86 12/87 12/88 12/89 12/90 12/91 3/92 6/92 9/92 12/92 3/93 6/93 

Number of Problem Institutions: 

Savings Banks 27 16 12 17 34 74 70 88 84 76 72 60 

Commercial Banks 1,457 1,559 1,394 1,092 1,012 1,016 981 956 909 787 671 580 

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

1986-1993 

$ Billions 

700 ,--------------------------------

D Savings Banks 609.8 607.4 

600 

I Commercial Banks 

500 

400 

300 

200 

100 

0 

12/86 12/87 12/88 12/89 12/90 12/91 3/92 6/92 9/92 12/92 3/93 6/93 

Assets of Problem Institutions: 

Savings Banks 49.7 29.3 47.4 47.6 67.2 81 .8 72.0 73.0 70.4 56.3 50.2 37.1 

Commercial Banks 285.8 329.2 304.8 187.9 341.6 528.0 535.4 494.5 487.9 408.2 377.4 325.9 

11 
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 Federallychartered savings banks were obtained from Thrift Financial Reports filed w ith 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 periods in a year) . 

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

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

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

expense amounts and performance ratios are adjusted to account for ·poolings of interest" and "purchase acquisitions" beginning with the fourth quarter, 1991 publication. 

DEFINITIONS 

"Problem• Banks - 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, operational, or managerial weaknesses 

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

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

Net Operating Income - income excluding discretionary transactions such as gains (or losses) on the sale of investment securities and extraordinary items. Beginning with the first quarter 1992 publication, income taxes subtracted from operating income have been adjusted to exclude the portion applicable to securities gains (or 

losses) . 

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

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

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

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

profitability . 

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

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

1990. 

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

and leases previously charged off. 

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

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

Other Noncurrent Assets - debt securities and other assets (excluding loans, leases and other real estate owned) that are either past due at least 90 days or in nonaccrual status . Due to reporting differences , only defaulted debt securities are included for Federal Savings Banks . 

Core Capital- common equity capital plus noncumulative perpetual preferred stock plus minority interest in consolidated subsidiaries, less goodwill and other ineligible intangible assets . Eligible intangibles (including mortgage servicing rights) are limited to 100 percent of core capital for savings banks, to 50 percent of core capital for state-chartered commercial banks that are not Federal Reserve members, and to 25 percent for National banks. 

Net 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 less . 

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

and other borrowed money. 

FDIC 

Federal Deposit Insurance Corporation 

Washington, DC 20429-9990 

OFFICIAL BUSINESS 

Penalty for Private Use, $300 

BULK RATE 

MAIL 

Postage & 

Fees Paid 

FDIC 

Permit No. G36 

Attn: Chief Executive Officer