The FDIC 

uarterlY--------Wi_llia_mT_ay_lo_r,C_ha_irm_an 

anking Profile 

Fourth Quarter, 1991 

FDIC 

Division of Research 

& Statistics 

Don Inscoe 

(202) 898-3940 

Ross Waldrop 

(202) 898-3951 

COMMERCIAL BANKING PERFORMANCE - FOURTH QUARTER, 1991 

• Commercial Banks Earn $18.6 Billion in 1991 

• Fourth-Quarter Earnings Total $3.68 Billion 

• Loan Portfolios Shrink for Fourth Consecutive Quarter 

• Banks Charge-Off a Record $9.4 Billion in Fourth Quarter 

• Asset-Quality Problems Recede in Northeast 

Insured commercial banks earned $18.6 billion in 

1991, up from $16.1 billion in 1990. The 

improvement in net income was a result of 

higher net interest income and increased gains 

from sales of investment securities. Net income 

before securities and extraordinary gains was 

actually $184 million lower in 1991 than in the 

previous year. The average return on assets for 

the full year was 0.56 percent, and the average 

return on equity was 8.32 percent. Over 46 

percent of the banks, representing 37 percent of 

banking industry assets, reported returns on 

assets greater than one percent in 1991. In 

contrast, 10.8 percent of the banks, representing 

21 percent of industry assets, reported net 

losses for the year. In recent years, the 

high-profitability segment of the industry has 

grown, both in the share of banks and of banking 

industry assets. The number of unprofitable 

banks has fallen; however, the share of industry 

assets held by these institutions has grown. 

Chart A - Quarterly Net Income of 

FDIC-Insured Banks 

1987 - 1991 

□ N~t Operating )ncome 

■ Securities and Other Gains - B . . D First Republic Effect 

- 12 ....... _._...._..__. ........_._...._..__.................................__._..._.................... 12341234123412341234 

1987 1988 1989 1990 1991 

In the fourth quarter, banks earned $3.68 billion, 

an increase of $2.8 billion from the fourth quarter 

of 1990. The average return on assets was 0.43 

percent, while the average return on equity was 

6.39 percent. All asset-size groups of banks 

posted improved returns on assets and equity 

compared to the fourth quarter of 1990. Higher 

gains from sales of investment securities, lower 

provisions for future loan losses and increased 

net interest income all contributed to the 

year-to-year improvement in quarterly earnings. 

Net income totals for both the fourth quarter and 

full year were the highest since the record 

amounts earned by commercial banks in 1988. 

Banks realized $2.96 billion in gains from sales 

of investment securities in 1991 , accounting for 

almost 16 percent of commercial bank earnings. 

These gains totaled $1.4 billion in the fourth 

quarter alone, almost 40 percent of banks' 

quarterly net income. Provisions for future loan 

losses in the fourth quarter were $1.6 billion 

below the amount set aside a year earlier, while 

net charge-offs were $596 million higher than in 

the fourth quarter of 1990. The largest reductions 

in loss provisions occurred in the Northeast 

Region, where provisions were $2 billion lower 

than in the fourth quarter of 1990. The 

improvements in the Northeast and elsewhere 

offset an $875-million increase in loan-loss 

provisioning by banks in the West Region. For 

the full year, loan-loss provisions totaled $33.9 

billion. This amount was second only to the 

$37.5 billion in loan-loss provisions taken in 

1987, when large banks added $20.7 billion to 

their reserves for future losses on loans to 

developing countries. 

For assistance contact: Section508@fdic.gov
Banks' funding costs continued to decline more 

rapidly than their asset yields in the fourth 

quarter, as net interest margins improved to their 

highest levels since the fourth quarter of 1988. 

Net interest income was $2.1 billion higher than 

in the fourth quarter of 1990. Noninterest 

revenues were $1.1 billion above the level of a 

year ago, but noninterest expenses were $2.5 

billion higher. About one-quarter of the increase 

in noninterest expenses represented costs 

associated with higher deposit insurance 

premiums. 

Chart B - Quarterly Net Interest Margins of 

FDIC-Insured Banks 

Net Interest Margin (%) 1984 - 1991 

5 

i- ~ I ll I 11 111 ill -~ Banks< 100 Million 4.56°/4 

--- 1111 • 111 .. i-' 4.5 . .. .. . .. .. . .. ... . . . 

"

\' , -.. ~ 

.. . . . 4 '1111 -~,-' l '

' 

iillllll 

-~ ~Iii ._; !.II --- ,.._,.._,.._ 

3.5 

Banks> $100 Million ~ 

12341234123412341234 1 23412341234 

1984 1985 1986 1987 1988 1989 1990 1991 

' 

Loans and leases outstanding at commercial 

banks shrank throughout the year, while overall 

asset growth averaged only 1.2 percent. This 

was the lowest asset growth rate since 1948, 

when banking industry assets declined by 0.4 

percent. The banking industry's loan portfolio fell 

by $58.8 billion, or 2.8 percent, during 1991. 

Total loans and leases declined for the fourth 

consecutive quarter, falling by $9.7 billion in the 

final quarter of the year. Most of the shrinkage 

was in commercial and industrial loans, which 

declined by $56.1 billion in 1991. Ten years ago, 

these loans accounted for 40 percent of all loans 

at commercial banks; they now represent only 27 

percent of all loans. Total assets of commercial 

banks declined by $3 billion in the fourth quarter. 

U.S. Treasury securities and mortgage-backed 

securities, which increased by $26.8 billion in the 

quarter, were the only asset categories that grew 

significantly. 

Equity capital increased by $1.8 billion in the 

fourth quarter to $232.2 billion, or 6.77 percent of 

total assets. For the full year, equity increased by 

$13.5 billion. Retained earnings contributed $4.3 

billion to equity in 1991, as banks paid dividends 

of $14.3 billion out of $18.6 billion in earnings. 

Total loan-loss reserves declined by $561 million 

in 1991, but at year-end, commercial banks held 

72 cents in reserves for every dollar of 

noncurrent loans, up from 71 cents at the end of 

1990. 

Commercial banks charged-off $9.4 billion in the 

fourth quarter, the highest quarterly amount ever 

charged-off. Noncurrent loans and leases fell by 

$4.36 billion in the fourth quarter, while other real 

estate owned rose by $1.5 billion. Troubled 

assets declined as a proportion of total assets for 

the second straight quarter, but remained higher 

than in any period prior to 1991. 

Chart C - Noncurrent Loan Rates at 

%of Loans Year-end, 1982-1991 

6 .---------;.::.-:.-:.:_-----

5 

4 

2 

Total Loans 

•includes loans to foreign governments, depository institutions and 

lease receivables. 

Banks in the West Region were the only group 

that had increases in their proportion of troubled 

assets and in their loan-loss provisioning in the 

fourth quarter. Noncurrent loans at West Region 

banks increased by $262 million during the 

quarter, and other real estate owned rose by 

$549 million. Net charge-offs of loans and leases 

were $1.68 billion in the fourth quarter, the 

highest quarterly amount ever for West Region 

banks. 

Chart D -Annual Net Loan Charge-off Rates, 

%of 1982 - 1991 Loans 

3.0 r-----------------

2.5 

2.0 

1.5 

1.0 

• Includes loans to foreign governments, depository institutions and 

lease receivables. 

2 
Chart E - Structural Changes Among 

FDIC-Insured Commercial Banks 

1980 -1991 Number of Banks 

700.-------------------

600 

,,'\ 

I \ 500 New Charters I \ I \ , 

400 I • - _ _, , 

300 

,,,,~-

200 ,' Bank Mergers • • • • • 

100, ·········~ 

••....••••• •· Failed Banks ... 0 • 

1~1~1~1~1~1~1~1~1~1~1~1~ 

Many of the largest commercial banks continue 

to experience earnings problems. High loan-loss 

provisioning and increased overhead costs 

(possibly related to restructurings) combined to 

hold down large-bank earnings. Banks with more 

than $10 billion in assets enjoyed the greatest 

improvement in net interest margins in the fourth 

quarter, but they would have registered almost 

no net income absent gains from sales of 

investment securities. More than half of the 49 

banks in this size group had lower earnings than 

a year ago, and one out of every four reported a 

net loss in the fourth quarter. 

The number of commercial banks fell below 

12,000 in 1991, as the industry shrank by 420 

institutions. There were 448 mergers during the 

year, while 108 banks failed or received 

assistance to avert failure. One hundred and six 

new bank charters were issued in 1991, the 

lowest total since 1968. The number of full-time 

equivalent employees at commercial banks fell 

to 1.49 million in the fourth quarter, the lowest 

level since 1981. During 1991, the number of 

employees declined by 31,000 . 

The combination of lower levels of noncurrent 

loans, increased equity capital, and stable 

reserves could lead to lower loan-loss 

provisioning and improved earnings at 

commercial banks in 1992. Overhead expense 

control should improve, but net interest margins 

may narrow as average asset yields decline. It is 

unlikely that gains from sales of investment 

securities will contribute as much to earnings in 

1992 as they did in 1991. 

Chart F - Troubled Real Estate Asset Rates By State 

December 31, 1991 

Midwest Central 

South Dakota 

2.31 

Nebraska 

2.07 

Kal'laas 

6.17 

Troubled Real Estate Asset Rate: 

D Less Than 4% • Noncurrent real estate loans plus 

D Between 4% and 8% other real estate owned as a percent 

■ 8% or Higher of total real estate loans plus OREO. 

3 
DELINQUENCY, NONCURRENT AND NET CHARGE-OFF RATES FOR SELECTED LOAN CATEGORIES 

DECEMBER 31, 1991 

ASSET SIZE GEOGRAPHIC DISTRIBUTION 

LESS NORTH- SOUTH- MID- SOUTHALL THAN $100MM $1B T0$10B 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 2.45 2.12 2.04 2.50 2.82 3.13 1.97 1.99 1.73 2.10 2.53 

Construction & development 4.54 2.35 3.15 4.91 5.12 5.56 2.69 3.94 1.80 2.49 5.45 

Commercial real estate 2.71 1.91 2.01 2.57 4.00 3.83 2.01 2.11 2.20 1.82 2.81 

Multifamily residential real estate 2.97 1.95 2.11 2.82 4.23 3.79 2.08 2.52 2.07 2.00 3.47 

1-4 Family residential 2.00 2.37 2.03 1.98 1.84 2.44 1.94 1.76 1.60 2.27 1.72 

Home equity lines of credit 0.95 1.72 1.09 1.04 0.68 1.36 0.88 0.75 1.18 1.72 0.46 

Commercial R/E loans not secured by real estate 2.89 2.29 2.72 2.57 3.12 3.73 2.27 1.73 2.05 0.71 2.97 

Highly leveraged transactions (HLTs) 0.42 N/M 0.25 0.24 0.47 0.39 0.14 0.52 5.11 0.03 0.16 

Loans to foreign governments and institutions 0.12 N/M 0.00 0.00 0.13 0.13 0.00 0.00 N/M 0.00 0.11 

PERCENT OF LOANS NONCURRENT* 

All real estate loans 4.60 1.85 2.45 4.46 7.35 7.80 3.03 2.15 1.94 3.28 4.31 

Construction & development 13.90 3.16 5.93 12.10 20.34 22.63 7.66 6.46 4.08 5.40 13.12 

Commercial real estate 5.81 2.40 3.29 5.40 10.54 9.91 4.27 3.06 3.49 4.59 5.01 

Multifamily residential real estate 5.64 2.68 2.78 5.09 9.70 10.03 3.31 3.73 2.85 4.31 4.17 

1-4 Family residential 1.65 1.39 1.45 1.74 1.87 2.75 1.33 0.93 0.86 1.76 1.33 

Home equity lines of credit 0.75 1.17 0.81 0.72 0.70 1.27 0.60 0.36 0.45 1.32 0.33 

Commercial R/E loans not secured by real estate 7.64 3.97 5.81 5.49 9.29 11.88 4.42 2.13 2.98 1.48 7.15 

Highly leveraged transactions (HLTs) 10.65 N/M 7 .11 9.37 11.03 11.31 7.61 7.99 9.77 7.97 13.41 

Loans to foreign governments and institutions 12.33 N/M 18.76 11.73 12.31 12.78 1.76 20.39 N/M 5.04 8.27 

PERCENT OF LOANS CHARGED OFF (NET) 

All real estate loans 0.98 0.26 0.45 1.02 1.54 1.58 0.92 0.47 0.52 0.94 0.66 

Construction & development 3.02 0.45 1.43 3.12 4.38 4.52 3.03 1.43 1.27 1.97 2.13 

Commercial real estate 1.24 0.40 0.62 1.18 2.21 1.89 1.07 0.88 1.05 1 .41 0.75 

Multifamily residential real estate 2.01 0.51 0.56 1.58 3.75 3.87 2.78 0.59 1.32 1.65 0.34 

1-4 Family residential 0.20 0.18 0.18 0.28 0.14 0.28 0.22 0.09 0.13 0.39 0.10 

Home equity lines of credit 0.14 0.27 0.11 0.15 0.10 0.22 0.11 0.05 0.07 0.52 0.07 

Commercial R/E loans not secured by real estate 4.65 4.86 6.68 3.67 5.10 4.91 3.84 3.08 2.93 2.17 6.39 

Highly leveraged transactions (HLTs) 2.66 N/M 0.54 2.69 3.12 2.83 1.42 2.98 1.96 3.03 2.38 

Loans to foreign governments and institutions 13.38 N/M 7.40 8.01 11 .70 14.95 -0.20 1.17 N/M 5.50 11.74 

TOTAL LOANS OUTSTANDING($ BILLIONS) 

All real estate loans 850.7 96.7 216.1 259.8 278.1 266.6 160.4 141.4 51.3 50.8 179.0 

Construction & development 102.7 6.0 18.4 35.6 42.7 35.1 18.2 12.6 3.8 4.2 28.4 

Commercial real estate 249.6 25.7 70.7 89.0 64.2 72.3 51.8 43.3 14.4 18.1 49.4 

Multifamily residential real estate 23.9 2.0 6.9 7.6 7.3 7.3 4.0 4.2 1.6 1.4 5.3 

1-4 Family residential 359.8 50.2 99.9 97.7 111 .9 100.9 71.7 65.6 23.9 24.4 73.0 

Home equity lines of credit 70.2 3.1 14.6 27.2 25.4 26.8 11.4 10.7 2.3 0.6 18.4 

Commercial R/E loans not secured by real estate 23.0 1.2 3.0 5.6 13.2 9.3 2.3 3.5 0.8 0.9 6.1 

Highly leveraged transactions (HL Ts) 55.5 0.0 0.6 11.5 43.4 33.7 4.4 7.4 0.9 2.5 6.6 

Loans to foreign governments and institutions 26.3 0.0 0.2 1.2 24.9 20.6 0.3 1.4 0.0 0.3 3.7 

• 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 

4 
I 

6.20 

Table I. Selected Indicators, FDIC-Insured Commercial Banks 

1991 1990 1989 1988 1987 1986 

Return on assets ............................... 0.56% 0.49% 0.49% 0.82% 0.12% 0.63% 

Return on equity ............................... 8.32 7.61 7.78 13.30 2.00 9.94 

Equity capital to assets ..................... 6.77 6.46 6.21 6.28 6.04 6.19 

Noncurrent loans and leases plus 

other real estate owned to assets .... 2.99 2.90 2.26 2.14 2.46 1.95 

Net charge-offs to loans .................... 1.60 1.44 1.16 1.00 0.92 0.99 

Asset growth rate ............................. 1.22 2.73 5.37 4 .36 2.01 7.71 

Net operating income growth ............. -1 .22 3.72 -38.85 1905.16 -91.04 -20.65 

Percentage of unprofitable banks ........ 10.80 13.40 12.50 14.65 17.66 19.79 

Number of institutions ....................... 11,920 12,340 12,707 13,139 13,696 14,200 

Number of problem banks .................. 997 1,012 1,092 1,394 1,559 1,457 

Number of failed/assisted banks ......... 108 159 206 221 201 144 

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

(dollar figures in millions) 

Preliminary

4th Otr 3rd Otr 4th Otr 

1991 1991 1990 

Number of banks reporting ................ .. .............. 11,920 12,072 12,340 

Total employees (full-time equivalent) ................ . 1,486,159 1,491,206 1,517,344 

CONDITION DA TA 

Total assets ..................................................... $3,430,145 $3,433,138 $3,388,943 

Real estate loans......................................... 850,757 846,766 829,588 

Commercial & industrial loans....................... 558,957 572,212 615,091 

Loans to individuals..................................... 391,162 386,136 402,783 

Farm loans.................................. ................ 34,983 35,952 33,324 

Other loans and leases............... .................. 214,632 219,140 228,519 

Total loans and leases.................................. 2,050,491 2,060,206 2,109,306 

LESS: Reserve for losses.............................. 54,953 54,221 55,514 

Net loans and leases....................................... 1,995,537 2,005,985 2,053,792 

Temporary investments ................. ... .. ............ 500,990 509,351 451,393 

Securities over 1 year......................... ............ 514,421 490,802 450,299 

All other assets........ ....................... .. ............. 419,198 427,000 433,460 

Total liabilities and capital .................. .. .... .......... 3,430,145 3,433,138 3,388,943 

Noninterest-bearing deposits ............. ............. . 480,226 464,524 488,520 

Interest-bearing deposits ............... .. ............... . 2,207,214 2,201,299 2,161,504 

Other borrowed funds .. ................................ ... 379,073 397,825 384,879 

Subordinated debt .......................... .. ............. . 24,863 24,349 23,821 

All other liabilities .......................................... . 106,532 114,680 111,454 

Equity capital ............................... ..... ........... .. 232,237 230,462 218,765 

Goodwill ......................................................... . 4,506 4,594 4,062 

Loans and leases 30-89 days past-due .............. . 41,811 39,754 48,012 

Noncurrent loans and leases .............. .............. .. 76,131 80,489 78,133 

Restructured loans and leases ........................... . 9,788 9,528 8,804 

Other real estate owned .................................. .. 26,389 24,885 20,011 

Loan commitments and letters of credit.. ........... . 1,370,847 1,345,546 1,306,358 

Foreign office assets ........................................ . 397,419 404,993 389,627 

Domestic office deposits .................... .. ............ . 2,382,810 2,363,933 2,356,579 

Foreign office deposits ..................................... . 304,630 301,889 293,445 

Earning assets ................................................. . 3,010,947 3,006,138 2,955,483 

Volatile liabilities.............................................. . 986,342 1,025,678 1,055,220 

INCOME DATA Preliminary Preliminary Full Year Full Year 4th Otr 4th Otr 

1991 1990 %Change 1991 1990 

Total interest income ..................... $289,218 $320,389 -9.7 $71,879 $81,268 

Total interest expense ... ................. 167,284 204,914 -18.4 39,869 51,352 

Net interest income ..................... 121,933 115,475 5.6 32,010 29,916 

Provision for loan losses ................. 33,899 32,074 5.7 10,134 11,732 

Total noninterest income ................ 59,676 55,063 8.4 15,816 14,710 

Total noninterest expense ............... 124,482 115,689 7.6 33,810 31,352 

Applicable income taxes ................. 8,404 7,767 8.2 1,663 1,079 

Net operating income ................... 14,823 15,007 -1.2 2,219 462 

Securities gains, net ....... ................ 2,958 481 514.5 1,439 256 

Extraordinary gains, net .................. 787 647 21.5 25 189 

Net income ................................. 18,568 16,136 15.1 3,683 907 

Net charge-offs .. .. ......................... 32,567 29,661 9.8 9,379 8,783 

Net additions to capital stock .......... 1,041 2,180 -52.2 17 231 

Cash dividends on capital stock ...... 14,312 13,862 3.3 4,207 4,267 

5 

1985 

0.70% 

11 .31 

1.87 

0.84 

8.86 

6.30 

17.09 

14,404 

1,098 

118 

%Change 

90:4-91 :4 

-3.4 

-2.1 

1.2 

2.5 

-9.1 

-2.9 

5.0 

-6.1 

-2.8 

-1.0 

-2.8 

11.0 

14.2 

-3.3 

1.2 

-1.7 

2.1 

-1.5 

4.4 

-4.4 

6.2 

10.9 

-12.9 

-2.6 

11.2 

31.9 

4.9 

2.0 

1.1 

3.8 

1.9 

-6.5 

%Change 

-11.5 

-22.4 

7.0 

-13.6 

7.5 

7.8 

54.1 

380.4 

461.8 

-86.6 

306.3 

6.8 

-92.8 

-1.4 
Table Ill. Full Year 1991 Bank Data (Dollar figures in billions, ratios in%) 

ASSET SIZE DISTRIBUTION GEOGRAPHIC DISTRIBUTION 

EAST WEST LeH $100 Million Greater 

FULL YEAR Preliminary ALL than $100 to $1-10 than t10 Northeaat Southeast Central Midweat Southweat Weat 

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

Number of banks reporting .. ............... 11,920 8,797 2,755 319 49 994 1,924 2,633 2,881 2,103 1,385 

Total assets ...................................... $3,430.15 $353.76 $673.94 $1,050.23 $1,352.22 $1,285.51 $514.54 $567. 75 $233.07 $270.14 $559.14 

Total deposits ... ...................... .......... 2,687.44 313.95 583.62 810.42 979.45 933.28 418.92 451.69 192.75 236.92 453.87 

Net income (in millions) ..................... 18,568 2,716 5,090 5,886 4,877 3,729 3,195 4,939 2,482 1,753 2,471 

Percentage of banks losing money ...... 10.8% 11.3% 8.3% 17.2% 24.5% 26.1 % 14.1% 6.1 % 4.2% 10.5% 18.3% 

Percentage of banks with earnings gains . 63.2% 62.5% 65.1 % 67.1 % 57.1 % 57.2% 60.5% 63.8% 65.1 % 71.0% 54.1% 

Performance Ratios 

Yield on earning assets ...................... 9.91 % 9.75% 9.74% 9.87% 10.07% 10.33% 9.57% 9.59% 9.77% 9.10%10.04 

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

Net interest margin ............................ 4.18 4 .47 4.49 4.52 3.66 3.81 4.24 4 .16 4.43 3 .97 4.95 

Noninterest income to earning assets... 2.04 1.02 1.28 2.30 2.52 2.52 1.52 1.53 2.12 1.67 2.13 

Noninterest expense to earning assets . 4.26 3.88 3 .88 4.49 4 .39 4.47 3.98 3.69 4.14 4.24 4.73 

Net operating income to assets ........... 0.45 0.72 0 .71 0.47 0 .23 0.15 0.48 0.85 1.05 0.49 0.41 

Return on assets ........................ .. ..... 0 .56 0.79 0.78 0.58 0 .37 0.30 0.64 0.90 1.10 0 .66 0.45 

Return on equity ............................... 8 .32 8 .62 10.05 8.52 6.79 5.04 8.83 12.39 13.66 9.75 6.69 

Net charge-offs to loans and leases ..... 1.60 0.66 0 .93 1.70 2 .03 2.36 1.22 0.88 1.05 1.25 1.31 

Loan loss provision to net charge-offs .. 104.09 119.12 117.90 119.90 89.85 88.79 118.13 116.15 108.10 85.09 145.28 

Condition Ratios 

Loss allowance to: 

Loans and leases ............................ 2.68% 1.74% 1.82% 2.73% 3.27% 3 .40% 2.00% 1.83% 2.00% 2.48% 2.83 

Noncurrent loans and leases............. 72.18 89.43 78.73 83.10 63.80 63.17 83.14 87.03 109.30 87.52 75.11 

Noncurrent loans and leases plus 

other real estate owned to assets ..... 2.99 1.62 2.06 2.81 3.95 4.13 2.21 1.63 1.51 2.39 3.36 

Equity capital ratio ............................ 6.77 9.12 7.81 6 .97 5.48 6.07 7 .25 7 .34 8.15 6.88 6.74 

Core capital (leverage) ratio ................ 6.51 9.11 7.70 6.68 5.15 5.84 6.90 7.21 8.06 6.71 6.31 

Net loans and leases to deposits ......... 74.25 57.41 66.51 77.80 81 .34 78.96 73.09 73.31 64.78 50.89 82.81 

Growth Rates (year-to-year) 

Assets ................. .... ... ..................... 1.2% 5.8% 6.0% 6.7% 3.6% -0.4% 1.3% 3 .0% 0 .8% 0 .9% 3.4% 

Equity capital ... ................................. 6.2 5.5 8 .6 12.8 7.1 6.9 4 .6 7 .3 6 .6 6 .6 4 .5 

Net interest income ........................... 5.6 7.5 8 .1 11 .5 10.0 4.0 3 .7 9.0 8.4 8.6 4.9 

Net income...... ................... .............. 15.1 16.3 3.5 36.0 -20.4 983.3 5.4 11.9 13.3 44.8 -50.0 

Noncurrent loans and leases plus 

other real estate owned ................... 4 .5 5.1 19.5 14.0 14.6 -5.3 10.2 6.5 7.0 -11.1 50.8 

Net charge-offs ................................. 9.8 1.6 30.9 25.0 12.6 7.6 35.1 -0.3 7.2 -9.6 17.3 

Loan loss provision ..... ............... ... ..... 5.7 -4.4 16.4 0 .1 35.9 -8.1 3.3 10.1 2.7 -15.7 67.5 

PRIOR FULL YEARS 

(The way it was .. . ) 

Return on assets ..................... 1990 0.49% 0 .70% 0.77% 0.37% 0.39% 0.03% 0.62% 0.83% 1.01 % 0.47% 0.94 

.............................. 1988 0.82 0.64 0.75 0.79 0.95 0.98 0.98 1.07 0.90 -0.73 0.83 

.............................. 1986 0.63 0.46 0.66 0.76 0.57 0.78 1.02 0.88 0.73 -0.39 0.34 

Equity capital ratio .................. 1990 6.46 8.98 7.68 6.34 5.26 5.65 7.02 7.05 7.70 6.51 6.67 

.............................. 1988 6 .28 8 .73 7.23 6.15 5.10 5.93 6.93 6.75 7.44 5.65 5.90 

.............................. 1986 6.19 8 .35 6.97 5.95 5.14 5.81 6.57 6.79 7.12 6.39 5.67 

Noncurrent loans and leases plus 

other real estate owned to assets. 1990 2.90 1.69 1.92 2.80 3.77 4.35 2 .03 1.58 1.42 2.71 2.30 

.............................. 1988 2.14 1.92 1.72 1.53 2.96 2.35 1.02 1.15 1.52 4.55 2.66 

.............................. 1986 1.95 2.24 1.89 1.44 2 .30 1.55 0 .96 1.30 2.01 4.10 2.98 

Net charge-off• to loans and leases ..... 1990 1.44 0.71 0.84 1.38 1.91 2.05 0.90 0.90 1.00 1.39 1.16 

.............................. 1988 1.00 0.88 0.78 1.06 1.08 0.82 0.63 0.73 1.33 2.39 1.27 

.............................. 1986 0.99 1.57 1.08 0.79 0.92 0.62 0.62 0.70 2.14 2.12 1.25 

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 

6 
Table IV. Fourth Quarter 1991 Bank Data (Ratios in%) 

ASSET SIZE DISTRIBUTION GEOGRAPHIC DISTRIBUTION 

less $100 Million Greater EAST WEST 

FOURTH 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 

Weat 

Region 

Number of banks reporting ................... 11,920 8,797 2,755 319 49 994 1,924 2,633 2,881 2,103 1,385 

Net income (in millions) ....................... 3,683 593 1,244 1,300 546 666 521 1,343 548 419 186 

Percentage of banks losing money ........ 16.7% 17.9% 12.2% 20.1 % 32.6% 28.2% 21 .8% 10.1 % 12.8% 16.1 % 23.2% 

Percentage of banks with earnings gains. 69.3% 68.3% 62.3% 64.6% 49.0% 64.2% 61.6% 69.2% 67.0% 62.7% 62.6% 

Performance Ratios (annualized) 

Yield on earning assets ... .................. ... 9.61% 9 .48% 9 .39% 9 .59% 9.76% 10.16% 9.17% 9.32% 9.16% 8.75% 9 .65 

Cost of funding earning assets ...... ...... . 5.33 4.92 4.84 4.92 6.02 6.21 4.88 5.03 4.79 4 .60 4.65 

Net interest margin ............................. 4.28 4.56 4.55 4.67 3 .74 3 .96 4.30 4.30 4 .37 4.15 5.00 

Noninterest income to earning assets .. .. 2.11 1 . 11 1.39 2.40 2 .54 2.55 1.60 1.56 2.11 1.70 2.39 

Noninterest expense to earning assets ... 4.52 4.13 4 .00 4.83 4.65 4.73 4.33 3 .79 4 .30 4.57 5 .04 

Net operating income to assets .......... ... 0.26 0.56 0.60 0.28 0.00 0.03 0 .10 0 .85 0 .87 0.31 0.07 

Return on assets ....... .... ..... ..... ........... . 0.43 0 .68 0 .74 0 .50 0 .16 0.21 0.40 0.95 0 .95 0 .62 0 .13 

Return on equity ................................. 6.39 7.37 9.51 7.20 2.96 3.46 5.59 12.98 11 .62 9.08 1.99 

Net charge-offs to loans and leases ...... . 1.84 0 .96 1.29 2.00 2 .17 2 .39 1.78 1.10 1.1 7 1.52 1 .75 

Loan loss provision to net charge-offs ... 108.04 107.90 107.74 114.36 103.60 97.10 105.13 101.71 106.43 78.63 151.93 

Growth Rates (year-to-year) 

Net interest income ..................... .... .... 7.0 8.0 7.2 14.6 6.6 9.9 5.1 10.3 5.0 3.7 2.9 

Net income ...... ............... ........... ... ..... 306.3 85.2 48 .6 N/M N/M N/M 11.5 33.8 12.7 196.6 -76.0 

Net charge-offs ... ........ ........... .. ..... .. .... 6.8 -10.2 13.5 14.2 22.1 -4.1 42.1 12.3 0 .7 -8.0 22.9 

Loan loss provision .... ............. .. ....... ... -13.6 - 18.1 -10.8 -17.5 10.2 -31.7 -7.4 -12.2 -9.0 -28.2 51.9 

PRIOR FOURTH QUARTERS 

(The way it was . . . ) 

Return on assets .. ...................... 1990 0.11 % 0.31 % 0.45% 0 .00% - 0 .03 % -0.61 % 0 .37% 0.74% 0 .87% 0 .21 % 0 .58 

································ 1988 

··· ········· ······· ·· ····· ······ 1986 

0.79 

0.48 

0.30 

-0.14 

0 .54 

0 .27 

0.78 

0 .72 

1.08 

0 .62 

1 .04 

0 .76 

0.87 

0.85 

1.04 

0 .72 

0.42 

0.59 

-0.72 

-1.31 

0 .79 

0 .37 

Net charge-offs to loans and lesses 1990 1.68 1.19 1.26 1.78 1.90 2.33 1.24 1.00 1.16 1.62 1.42 

································ 1988 ....................... ......... 1986 

1.23 

1.30 

1.33 

2.51 

1.00 

1. 71 

1 .16 

0.95 

1.36 

1.01 

1 . 11 

0.75 

0 .77 

0.92 

0.85 

0.99 

1.42 

2.53 

2.52 

3.47 

1.61 

1.40 

N/M - Not meaningful 

7 
SAVINGS BANK PERFORMANCE - FOURTH QUARTER 1991 

• BIF-lnsured Savings Banks Lose $ 1. 2 Billion in 1991 

• FDIC Resolution of Failed Institutions Contributes To Lower Losses Compared With 

Previous Year 

• Fourth-Quarter Losses Total $423 Million 

• Nine Institutions Fail During Quarter, Nineteen Fail During Year 

Savings banks insured by the Bank Insurance Fund (BIF) 

lost $423 million in the fourth quarter of 1991, a substantial improvement over the $1 .4 billion net loss reported in 

the final quarter of 1990. Full-year 1991 losses of $1 .2 

billion also represented an improvement from the $2.6 billion net loss in 1990. FDIC resolutions of failing institutions contributed significantly to these improvements by 

removing the worst performers. 

Noncurrent loans-those either past due at least 90 days 

or in nonaccrual status -totaled $9.1 billion at the end of 

the fourth quarter, $806 million lower than one year ago. 

Other real estate owned - primarily repossessed properties 

- continued to climb, increasing $1 .4 billion during the 

year. 

The fourth-quarter reduction of $283 million in noncurrent 

loans was attributable to the failure of nine New England 

savings banks during the quarter. 1 Together, these institutions reported $453 million in noncurrent loans and $578 

million in other real estate owned on their final Call report. 

After adjusting for the removal of failed institutions, noncurrent loans increased by $134 million at savings banks 

in the New England states in the fourth quarter and other 

real estate owned increased $541 million. Noncurrent 

loans held by savings banks in the Northeast outside of 

New England increased by $33 million (0.6 percent) during 

the quarter while other real estate owned in these institutions increased by $301 million (15.5 percent). 

Reserve coverage of noncurrent loans has improved as the 

amount of such loans in the industry has fallen. At yearend 1991, BIF-insured savings banks held 33 cents in 

reserve against each dollar of noncurrent loans, up from 

30 cents at the end of the third quarter. Year-end reserve 

coverage stood at 43 cents for BIF-insured savings banks 

in New England and 26 cents for institutions elsewhere in 

the Northeast. The industry's aggregate equity capital 

ratio stood at 6. 74 percent of assets at year-end, down 

slightly from the 6.87 percent at the end of the previous 

quarter, but up from the 6.62 percent at year-end 1990. 

Troubled assets, including other real estate owned, constituted 5.86 percent of total assets, marginally lower 

than the prior quarter but above the 5.13 percent reported 

at the end of 1990. Troubled-asset ratios improved during 

the quarter in the New England institutions while they 

deteriorated in savings banks headquartered elsewhere in 

the Northeast. On average, troubled assets comprised 

5.65 percent of total assets held by the New England 

savings banks compared with 6.39 percent in the other 

Northeast institutions. 

The industry's net interest margins continued to improve 

as lower interest rates reduced funding costs faster than 

asset yields. Aggregate net interest margins have improved in five consecutive quarters, increasing to 3.05 

percent of average earning assets as of December 31, 

1991. Noninterest expenses declined both during the 

quarter and for the full year, benefiting from the removal 

of distressed assets from the system. Higher BIF assessment rates added approximately $50 million to the industry's fourth quarter 1991 noninterest expense compared 

with the final quarter of 1990. 

The percentage of unprofitable institutions has improved 

significantly: three of every ten institutions lost money in 

the most recent fourth quarter, compared with nearly 50 

percent the previous fourth quarter. Thirty-four percent of 

the savings banks in New England are still losing money, 

compared to twenty percent of those elsewhere in the 

Northeast. Only one of the 15 savings banks headquartered outside the Northeast lost money in the fourth 

quarter. BIF-insured savings banks outside the Northeast 

were profitable as a group, with an average fourth quarter 

return-on-assets of 1 . 1 8 percent. 

During 1991, nineteen BIF-insured institutions with $19.5 

billion in assets failed. Deposits of nearly $1 6 billion (in 

1.9 million deposit accounts) were transferred to other 

FDIC-insured institutions. FDIC receiverships retained assets with a book value of $6. 7 billion2 - about 34 percent 

of the assets in these institutions when they were closed. 

Losses absorbed by the Bank Insurance Fund were 

estimated at $3.4 billion, 17.4 percent of the assets 

reported by these institutions before they failed. 

Eighteen of the nineteen failed savings banks were headquartered in the New England states - seven in Massachusetts, five each in Connecticut and New Hampshire, and 

one in Maine. The largest savings bank to fail during 1991 

(Goldome, Buffalo, New York) held assets with a book 

value of $9.1 billion at closure. 

Lower funding costs will continue to bolster interest 

margins and limit losses in the Northeast. The viability of 

many unprofitable savings banks depends on recovery 

values of distressed real estate assets. At year-end, noncurrent loans plus other real estate owned equaled 7 3 percent of the industry's combined capital and loan-loss 

reserves. 

1 Five of these institutions with $3.3 billion in total assets did not submit their September 30, 1991 Call report before they failed in the fourth 

quarter of 1991 . 2 In some resolution transactions, additional assets of failed institutions can be "put backw to the FDIC. 

8 
Table I. Selected Indicators, Savings Banks Insured by the FDIC Bank Insurance Fund (BIF) 

1991 1990 1989 1988 1987 1986 1985 

Return on assets ..................................... -0.50% -0.98% -0.27% 0.44% 0.84% 1.08% 0.77% 

Equity capital to assets ...................... ...... 6.74 6.62 7.06 7.44 7.69 7.41 5.67 

Noncurrent loans and leases plus 

other real estate owned to assets• ......... 5.86 5.13 2.64 1.51 0.95 0.83 N/A 

Noncurrent RE loans to total RE loans• ...... 5.65 5.31 3.14 1.67 1.01 1.02 N/A 

Asset growth rate ................................... -8.34 -7.47 -1.52 8.52 10.54 15.40 14.74 

Deposit growth rate ................................. -5.67 -4.98 1.36 7.90 5.81 8.26 11.70 

Number of institutions ............................. 441 469 489 492 484 472 392 

Number of problem savings banks ............. 72 34 17 12 16 27 42 

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

• Excludes Federally-chartered Savings Banks before 1990. 

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

(dollar figures in millions) 

Preliminary 

4th Otr 3rd Otr 4th Otr %Change 

1991 1991 1990 90:4-91:4 

Number of savings banks reporting .................... 441 445 469 -6.0 

Total employees (full-time equivalent) ................ 68,210 67,653 76,148 -10.4 

CONDITION DA TA 

Total assets ..................................................... $237,387 $237,273 $258,991 -8.3 

Mortgage loans .............................................. 141,898 142,640 158,920 -10.7 

1-4 family residential ................................... 96,744 96,101 105,041 -7.9 

Construction and land development ............... 5,207 5,956 8,771 -40.6 

Commercial and multi-family ........................ 39,947 40,583 45,107 -11.4 

All other loans and leases ............................... 17,167 17,812 21,502 -20.2 

LESS: Reserves for losses ............................ 3,007 2,827 3,188 -5.7 

LESS: Other contra accounts ........................ 603 630 900 -33.0 

Net loans and leases ......................................... 155,455 156,994 176,333 -11.8 

Mortgage-backed securities ............................... 20,698 21,588 26,311 -21.3 

Other real estate owned .................................... 4,853 4,601 3,412 42.3 

Goodwill .......................................................... 1,155 1,159 1,626 -29.0 

All other assets ................................................ 55,225 52,931 51,309 7.6 

Total liabilities and capital ................................. 237,387 237,273 258,991 -8.3 

Interest-bearing deposits ................................. 193,734 192,130 206,241 -6.1 

Noninterest-bearing deposits ........................... 6,832 6,015 6,389 6.9 

Other borrowed funds .................................... 17,644 19,511 25,348 -30.4 

Subordinated debt .................................. ........ 517 523 683 -24.4 

Other liabilities ............................................... 2,670 2,788 3,192 -16.4 

Equity capital ........................................... ...... 15,990 16,306 17,139 -6.7 

loans and leases 30-89 days past-due ............... 5,203 5,144 5,986 -13.1 

Noncurrent loans and leases .............................. 9,065 9,348 9,871 -8.2 

Other noncurrent assets .................................... 28 22 N/A N/A 

Direct investments in real estate ........................ 932 1,028 1,707 -45.4 

INCOME DATA Preliminary Preliminary 

Full Year Full Year 4th Otr 4th Otr 

1991 1990 %Change 1991 1990 %Change 

Total interest income ..................... $20,205 $24,520 -17.6 $4,899 $6,032 -18.8 

Total interest expense .................... 13,890 18,085 -23.2 3,240 4,466 -27.5 

Net interest income ..................... 6,315 6,436 -1.9 1,659 1,566 6.0 

Provisions for losses ...................... 2,482 3,563 -30.3 783 1,369 -42.9 

Total noninterest income ................ 1,246 1,255 -0.8 380 282 34.8 

Total noninterest expense .............. 6,165 6,511 -5.3 1,751 1,883 -7.0 

Securities gains, net ...................... 291 -26 N/M 151 -50 N/M 

Applicable income taxes ................. 456 191 139.2 84 -71 N/M 

Extraordinary gains, net ................. 80 11 619.1 4 -10 N/M 

Net income ................................. -1,172 -2,589 N/M -423 -1,392 N/M 

Net charge-offs ............................. 2,094 2,204 -5.0 621 949 -34.5 

N/A - Not available 

N/M - Not meaningful 

9 
Table Ill. Full Year 1991 Savings Bank Data (Dollar figures in billions, ratios in%) 

All ASSET SIZE DISTRIBUTION GEOGRAPHIC DISTRIBUTION 

FULL YEAR 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 ...................... 441 130 253 58 326 100 15 

Total assets ....................................................... $237.39 $6.99 $79.19 $151.20 $105.02 $121.01 $11.36 

Total deposits .................................................... 

Net income (in millions) ....................................... 

$200.57 

-1,172 

$6.27 

-22 

$69.15 

-202 

$125.14 

-948 

$90.93 

-664 

$102.35 

-640 

$7.29 

132 

Percentage of savings banks losing money ........... 33.33 36.15 30.04 41.38 38.96 20.00 0.00 

Percentage of savings banks with earnings gains .. 64.17 63.08 65.22 62.07 63.80 63.00 80.00 

Performance Ratios 

Yield on earning assets ....................................... 9.34% 9.65% 9.50% 9.24% 9.42% 9.20% 10.12% 

Cost of funding earning assets ............................ 6.42 6.23 6.26 6.51 6.31 6.49 6.73 

Net interest margin ............................................. 2.92 3.42 3.24 2.73 3.11 2.71 3.40 

Noninterest income to earning assets ................... 1.15 0.74 0.98 1.26 1 .22 0.92 2.96 

Noninterest expense to earning assets .............. ... 5.70 6.43 5.95 5.53 6.35 5.18 5.43 

Return on assets ................................................ -0.50 -0.32 -0.26 -0.63 -0.65 -0.53 1.16 

Return on equity ................................................. -7.09 -3.90 -3.29 -9.64 -9.01 -7.83 13.50 

Net charge-offs to loans and leases ..................... 1.31 1.02 1.15 1.41 1.65 1. 11 0.26 

loan loss provision to net charge-offs .................. 118.57 105.54 116.56 119.87 105.92 134.88 159.16 

Condition Ratios 

loss allowance to: 

loans and leases ............................................. 1.90% 1.24% 1.58% 2.11 % 2.07% 1.85% 0.96% 

Noncurrent loans and leases ............................. 33. 17 34.96 39.41 31.17 43.41 26.03 68.21 

Noncurrent loans and leases plus 

other real estate owned to assets ................... 5.86 3.84 4.71 6 .56 5.65 6.39 2.22 

Noncurrent RE loans to total RE loans .................. 5.65 3.59 4.01 6.62 4.65 7.01 1.41 

Equity capital ratio .............................................. 6.74 7.92 7.66 6.20 6.85 6.37 9.56 

Core capital (leverage) ratio ................................. 6.04 7.88 7.53 5.18 6.69 5.17 9.46 

Net loans and leases to deposits .......................... 77.51 74.82 75.29 78.87 78.17 74.83 106.88 

Growth Rates (year-to-year) 

Assets .............................................................. -8.34% 5.91% 5.23% -1 .86% -5.19% -11.60% 0.26% 

Equity capital ..................................................... -6.70 -0.29 -2.36 -10.15 -1.05 -14.10 21.65 

Net interest income ............................................ -1.89 10.26 6.65 3.96 1.15 -6.42 17.13 

Net income ........................................................ NIM N/M N/M N/M N/M N/M 119.77 

Net charge-offs .................................................. -5.00 8.99 5.19 -1.23 -20.15 27.50 15.18 

loan loss provision ............................................. -30.33 -19.88 -13.91 -12.88 -43.32 -7.79 -27.22 

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

ASSET SIZE DISTRIBUTION GEOGRAPHIC DISTRIBUTION All 

BIF-lnsured less $100 Million Greater New Other Rest FOURTH QUARTER Preliminary Savings than $100 to than 

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

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

Net income fin millions) ....................................... -423 -5 9 -428 -134 -323 34 

Percentage of savings banks losing money ........... 30.16 30.77 27.67 39.66 34.36 20.00 6.67 

Percentage of savings banks with earnings gains .. 68.71 63.85 72.33 63.79 68.41 70.00 66.67 

Performance Ratios (annualized) 

Yield on earning assets ....................................... 9.01% 9.42% 9.19% 8.89% 9.06% 8.88% 9.88% 

Cost of funding earning assets ............................ 5.96 5.78 5.82 6.04 5.81 6.05 6.30 

Net interest margin ............................................. 3.05 3.64 3.37 2.85 3.25 2.83 3.58 

Noninterest income to earning assets ................... 0.70 0.36 0.58 0.79 0.79 0.55 1.47 

Noninterest expense to earning assets ................. 3.24 3.29 3.12 3.30 3.56 3.01 2.74 

Return on assets ................................................ -0.72 -0.27 0.05 -1.14 -0.52 -1.06 1.18 

Return on equity ................................................. -10.49 -3.38 0.61 -17.95 -7.44 -16.41 12.61 

Net charge-offs to loans and leases ..................... 1.59 0.99 1.30 1.77 1.82 1.51 0.22 

loan loss provision to net charge-offs .................. 125.93 141.41 105.74 133.48 105.57 147.78 144.52 

Growth Rates (year-to-year) 

Net interest income ............................................ 5.95% 19.27% 14.60% 11.47% 11.43% -0.21 % 19.15% 

Net income ........................................................ N/M NIM NIM N/M N/M N/M 10.12 

Net charge-offs .................................................. -34.54 -43.70 -32.25 -6.44 -51.86 7.66 -38.62 

loan loss provision ............................................. -42.85 -48.75 -48.05 -7.87 -64.53 5.79 N/M 

Geographic Distnbut1on: New England - Connecticut, Mame, Massachusetts, New Hampshire, Rhode Island, Vermont N/M - not meaningful 

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

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

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

Number of Banks 1985-1991 

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

1,575 

1,484 1,500 1,406 

1,140 1,109 

1,046 1,044 1,081 1,069 1,033 

1,000 

500 

0 ----------------------------------- 12/85 12/86 12/87 12/88 12/89 12/90 3/91 6/91 9/91 12/91 

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

$ Billions 1985-1991 

700 

611 .1 

600 

500 486.9 

408.8 399.7 404.2 

400 

358.5 352.2 335.5 

300 

237.8 235.5 

200 

100 

0 ......._ _...__________......,____......._____.....__..._.____...._ 

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

11 
NOTES TO USERS: 

COMPUTATION METHODOLOGY FOR PERFORMANCE AND CONDITION RATIOS 

The data on commercial bank• and atate-chartered savings banka were obtained from Call reports filed with the FDIC and Federal Reaerve Board. Data on 

Federally-chartered aeving• banks ( 1 5 inatitution• as of December 31 , 1991 ) were obtained from Thrift Financial Report• filed with the Office of Thrift Supervision. Certain adjuatment• are made to the Thrift Financial Reports to provide cloaer conformance with Call report diacloaure requirement•. 

All income figurn u1ed in calculating performance ratio• represent amount• for that period, annualized (multiplied by the number of period• in• year). 

All a11et and liability figurn u1ed in calculating performance ratios repreaent average amount• for the period (beginning-of-period amount plus end-ofperiod amount plus any periods in between, divided by the total number of period1). 

All aeset and liability figurn used in calculating the condition ratio• repreaent amounts aa of the end of the quarter. Current quarter and year-ago quarter 

income and expense amount• and performance ratios are adjusted to account for "pooling of intereat• mergers beginning with the fourth quarter, 1991 publication. 

DEFINITIONS 

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

The rating ia baaed on II scale of 1 to 5 in ascending order of supervisory concern. "Problem" banks are those inatitution• with financial, operational, or 

managerial we kneaaea that threaten their continued financial viability. Depending upon the degree of ri1k end auperviaory concern, th•y •• rated either a 

•4•or·s.· 

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

Yield on Earning AsHta -total intereat, dividend and fee income earned on loans and investments as a percentage of •verage earning -aeta . 

Coat of Funding Earning A88ata -total interest expense paid on deposits and othllf borrowed money ea a percentage of average earning a11et1. 

Nat lntareat Margin -the difference between the yield on ming assets and the coat of funding them, i.e., the profit margin a bank earns on ita loans and 

investments. 

Return on Aaaeta-net income (including securitiea traneactions and nonrecurring items) as a percentage of average total aHets. The basic yardstick of 

bank profitability. 

Ratum on Equity - net income ae a percentage of av Mage total equity capital. 

Loan Commitment■ and Letters of Credit-includes unused credit card commitments and overdraft plans, reflecting Call report revisions effective 

March 31, 1990. 

Nat Charge-offs -total loans and leaaea charged off (removed from balance sheet because of uncollectibility) during the quarter, lees amount• recovered 

on loans and leases previously charged off. 

Noncurrent Loan■ & Le•e• -the 1um of loans peat-due 90 days or more and loans in nonaccrual status. 

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

Other noncurrent aaaeta -debt securities and other assets (excluding loans, leases and other real estate owned) that are either peat-due at least 90 days 

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

Core capital-common equity capital plus noncumulative perpetual prefllfred stock plus minority interest in consolidated aubaidiaries, IH• goodwill and 

other ineligible intangible assets. Eligible intangibles (including mortgage servicing rights) re limited to 100 percent of core capital for tavings banks, to 50 

percent of core capital for state-chartered commercial banks that ere not Federal Reaerve members, and to 25 percent for National banks. 

Net loan■ and laaaaa -total loan• and leHe& less unearned income and the allowance for loans and lease losses. 

Temporary lnveatmanta -the sum of interest-bearing balances due from depository institutions, federal funds sold and aecurities purchased under agreementa to reaeU , trading-account &Hats and inveatment securities with remaining maturities of one year or lesa. 

Volatile Uabilitiaa -the aum of large denomination time deposits, foreign office deposits, federal funds purchased, aecuritin sold under agreements to 

repurchase, and other borrowed money. 

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

Off,ce of Corporate Communications, 550 17th StrMt N. W., Washington, D.C. 20429; t8'ephone (202) 898-6996. 

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