Third Quarter, 1990 

FDIC 

Division of Research 

& Statistics 

Don Inscoe 

(202) 898-3940 

Ross Waldrop 

(202) 898-3951 

The FDIC 

uarter1Y-_______L_._W_ill_iam_Se_id_m_a_n,_C_ha_ir..;...m...;....an 

anking Profile 

COMMERCIAL BANKING PERFORMANCE -THIRD QUARTER, 1990 

• Banks Earn $3. 75 Billion In Third Quarter 

• Eastern Banks Face Continued Real Estate Worries 

• Northeastern Banks Report Aggregate Loss for Quarter 

• Western Banks Continue to Outperform Rest of U.S. 

• Asset Growth Remains Dependent on Real Estate 

Under continuing pressure from troubled domestic 

assets, commercial banks earned $3.75 billion in the 

third quarter of 1990, a decline of 29 percent from 

their $5.3 billion profit in the second quarter. This 

result is a substantial improvement from the $770 

million net loss experienced in the third quarter of 

1989. The average annualized return on assets for 

the quarter is 0.45 percent. For the first nine months 

of 1990, bank earnings totalled $15.4 billion, 13 

percent higher than.earnings in the first three quarters 

of last year. The improvement over 1989 is 

attributable to the large additions to reserves for 

losses on loans to developing countries (LDCs) made 

by money-center banks in the second half of last 

year. Absent last year's LDC loan-loss provisioning, 

industry earnings would show a year-to-year decline. 

Chart A - Quarterly Net Income or 

FDIC-Insured Banks 

1986 - September 30, 1990 

$ Bllllona 

8 

3.8 

4 

. . : ·: . . . . . . . . . . : : (4) 

ii) Se9urities and Ot~er Gains . . 

~ Net Operating Income 

(8) oi1 Fir~ Republic Eff~ct 

(12) .__.___.__..___.._....._...._____..___........_.__..__.___.__..___.._....._...._____~ 

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

1986 1987 1988 1989 1990 

Banks set aside $8.3 billion in provisions for future 

loan losses in the third quarter, $1 .9 billion more than 

in the second quarter. This amount was $4.4 billion 

below the provision in last year's third quarter, when 

banks added $7.7 billion to their reserves for LDC 

loans. Net loan charge-offs of $6.1 billion were $2.5 

billion lower than in the previous quarter, but $1 .2 

billion higher than twelve months ago. Net loan 

losses continue to run ahead of last year's pace. The 

$30.5 billion in net loan charge-offs that banks have 

taken in the four quarters ended September 30 is the 

largest amount of any four-quarter period. 

Chart B - Quarterly Net Interest 

Margins, 1983 - September 30, 1990 

Net Interest Margin (%) 

5 ,..,....~T"T""T""T-r"iC-.-T""T"-r-r"-r-r~~T"T""T""T-r"iC-.-T""T"-r-r",-, 

4.5 

4 

3 5- 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 

1983 1984 1985 1986 1987 1988 1989 1990 

Retained earnings contributed $740 million to banks' 

net worth in the third quarter. Cash dividends paid by 

banks in the third quarter amounted to 80 percent of 

industry net income, so the industry's equity capital 

ratio increased by · only two basis points. Banks' 

. lending margins were largely unchanged, either from 

the previous quarter, or from a year earlier. Both 

interest income and interest expense were slightly 

below the levels of a year ago. 

Total assets of commercial banks increased by $20 

billion during the third quarter. Bank's real estate 

loans grew by $15.4 billion, their holdings of 

mortgage-backed securities increased by $12 billion, 

and their inventory of foreclosed properties grew by 

$2.3 billion. Together, these three categories of real 

For assistance contact: Section508@fdic.gov
estate assets increased by $29. 7 billion in the third 

quarter, $9.7 billion more than the growth in total 

assets. Banks' total real estate assets now 

constitute 30.6 percent of total commercial bank 

assets; as recently as the end of 1984, they were 

only 18.8 percent of total assets. 

Asset quality indicators continue to decline for the 

banking industry, reflecting the problems of real 

estate and commercial loans at banks in many 

eastern states. The proportion of troubled loans in 

banks' loan portfolios continues to rise, despite the 

high level of loan charge-offs. At the end of 

September, noncurrent loans and leases plus other 

real estate owned totalled $89.6 billion, $14.2 billion 

higher than twelve months earlier. Their share of 

total assets - 2.65 percent - is the highest level 

reached since banks began reporting the data in 

1982. In contrast, loss reserves at commercial 

banks ended the third quarter slightly below the 

level of a year ago. Reserve coverage of noncurrent 

loans has decreased in each of the past three 

quarters. Currently, banks have 73 cents in 

reserves for each dollar of noncurrent loans, down 

from 83 cents a year ago. 

Banks in the Northeast Region are experiencing the 

greatest asset-quality difficulties. Noncurrent loans 

and leases increased by 10 percent during the third 

quarter, while foreclosed real estate has grown to 

more than three times the amount of a year ago. 

The erosion in loan quality has been greatest in real 

estate loans, but losses on commercial and 

consumer loans have also risen from the levels of a 

year ago. The Region's banks registered a net loss 

for the third time in the last five quarters. 

Banks in the Southeast Region have not had the 

same degree of asset-quality deterioration, but are 

following a similar trend. They have the 

second-highest growth rate for problem assets, 

after Northeast Region banks. Central Region 

banks have also shown signs of weakness in their 

real estate loans. Southwest Region banks continue 

to recover from past asset quality difficulties, 

reporting an aggregate net profit for the third 

consecutive quarter. Banks in the West Region are 

still turning in strong performance indicators. 

The number of commercial banks on the FDIC's 

"Problem List" fell only slightly in the third quarter, to 

1,006 from 1,014 at the end of June. Thirty-five 

banks failed in the third quarter, compared to 63 in 

the second quarter. At the present pace, the 

number of commercial bank failures for the full year 

will be below 200 for the first time since 1986. 

Bank earnings are unlikely to show improvement in 

the fourth quarter, as the growth in problem assets 

points to more credit losses, concentrated among 

larger banking companies in the eastern U.S. 

Losses from commercial real estate loans, LDC 

loans and loans to highly-leveraged commercial 

borrowers (HLTs) are likely to increase. The 

relatively low level of reserves in relation to problem 

assets means that another round of loan-loss 

provisioning probably will prove necessary. There is 

little prospect of a near-term improvement in the 

Northeast as the national economy slows, and there 

are signs that banks in other areas east of the 

Mississippi River are feeling the pinch from 

worsening asset quality. 

Chart C - Troubled Real Estate Asser Rates by State 

September 30, 1990 

Midwest Central Northeast 

10.99 

13.75 

J 

I 14.66 12.66 8.68 

Troubled Real Estate Asset Rate: 

□ Less Than 4% * Noncurrent Real Estate Loans Plus

• 

□ Between 4% and 8% Other Real Estate Owned As A Percent

8% or Higher Of Total Real Estate Loans Plus OREO. 

2 
Table I. Selected Indicators, FDIC-Insured Commercial Banks 

1900• 1989· 1989 1988 1987 1986 1985 

Return on assets .... ...... .. . ..... .• . ..•• 0.62% 0.57% 0.49% 0.82% 0.12% 0.63% 0.70% 

Return on equity .... ... . . . ....... .. .... . .. 9.70 9.02 7.79 13.30 2.00 9.94 11 .31 

Equity capital to assets .. . . . . . .......... .. . 6.45 6.34 6.21 6.28 6.04 6.20 6.20 

Primary capital ratio ........ . ........ . . . . .. 7.93 8.03 7.92 7.84 7.70 7.22 6.91 

Noncurrent loans and leases plus 

other real estate to assets . .. .. .. ....... . . 2.65 2.34 2.28 2.14 2.46 1.94 1.87 

Net charge-offs to loans ....... ..... . .. ..... 1.36 0.00 1.16 1.00 0.92 0.98 0.84 

Asset growth rate .. .. . . ........ .. . . • . . .... 4.00 4.15 5.37 4.36 2.01 7.71 8.86 

Net operating income growth . . ... . .. .. . .... 15.04 -26.74 -38.80 1005.16 -91.04 -20.65 6.30 

Percentage of unprofitable banks ........... . 11 .15 10.81 12.37 14.65 17.66 19.79 17.09 

Number of problem banks . . .. ..... . .•..... . 1,006 1,151 1,092 1,394 1,559 1,457 1,098 

Number of failed/assisted banks . ......... . .. 134 162 206 221 201 144 118 

*Through September 30; ratios annualized where appropriate 

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

(dollar figures in millions) 

Preliminary 

3rd Qtr 2nd Otr 3rd Otr %Change 

1900 1900 1989 89:3-00:3 

Number of banks reporting .. ... . .. ..... . ... . ... .. ....... .. ...... . 12,399 12,502 12,825 -3.3 

Total employees (full-time equivalent) . .. . . ... .. ... . . . ..... .. .. . .. . . . 1,516,379 1,532,706 1,527,928 -0.8 

CONDITION DATA 

Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . • . . . . . . . . . $3,381,202 $3,361,005 $3,223,245 4.9 

Real estate loans ..... .. ... . ..... ... .. . ........ . . ... . .. . .. . . 819,742 004,328 743,605 10.2 

Commercial & industrial loans . . ............ . ....... . ... . .. . . . 620,654 621,257 616,723 0.6 

Loans to individuals . .. ..... .. ...... . ... . ...... •• ••...... .. .. 399,858 391,914 388,125 3.0 

Farm loans ...... . .. . .... .... ... ... ..... . .... •••.... .. . .. .. 33,639 32,314 31,799 5.8 

Other loans and leases ........ . ............. . . .••.. . . . . . . . .. 231 ,029 231,544 244,435 -5.5 

Total loans and leases . .... .. . .. .. . . .. .. . ..... . ............. . 2,104,921 2,081,357 2,024,688 4.0 

LESS: Reserve for losses ........... . ......... . . . ........ .. . . 52,342 50,160 52,911 -1.1 

Net loans and leases ............. .. . ... . . .. . . . . . . .. . .. ....... . 2,052,579 2,031,197 1,971,777 4.1 

Temporary investments .. .... ..... . .. .. . .... . . . ... .. .......... . 466,897 486,333 464,712 0.5 

Securities over 1 year .......... . . ... .. ... ... .. ... . . . . ... . .... . 449,270 434,318 400,221 12.3 

All other assets .. . .... . ............••... . ...... .. . . .... . ..... 412,457 409,158 386,535 6.7 

Total liabilities and capital ... . .........•.. . ... .. . . •.. .. ....... . ... 3,381 ,202 3,361,005 3,223,245 4.9 

Noninterest-bearing deposits .........• . . . ..... . . • ........ . ... . .. 440,880 450,331 441,792 -0.2 

Interest-bearing deposits .... .. . .... . • . .. .. ..... . ............... 2,160,849 2,138,187 2,025,402 6.7 

Other borrowed funds ....... . . . .. .. ... . ....... . ..... . ...... . . . 421,069 420,719 424,344 -0.8 

Subordinated debt ... . .. ....... ... .. . . . . ...... .. ........... . . . 19,139 19,733 18,936 1.1 

All other liabilities .. .. . . .. .. .. .. . . . • .. . .. . . .. . .. ... ... .. .. .. .. 121,073 115,604 108,572 11.5 

Equity capital . ........ . ...........•...... . ....• . ............. 218,192 216,230 204,198 6.8 

Primary capital .. . .... . .............•... .. . . . . ........ . ....... . . 270,201 266,297 260,564 3.7 

Noncurrent loans and leases . . . . ...... .. ..••... .. • . ..... . . . ... . ... 71,595 66,303 63,428 12.9 

Other real estate owned ....... . ........... •....• . ........... .. .. 17,955 15,615 11,007 50.8 

Loan commitments and letters of credit' ... . .... .. . . . . .. .. . ....... . . 1,296,301 1,291,092 ' 

Domestic office assets ................ . . . .. ... . .. . .. .......... . . 2,964,416 2,941,150 2,812,158 5.4 

Foreign office assets .......... . .. .. . . ... ... . .. . . ............ ... . 416,786 419,856 411,087 1.4 

Domestic office deposits . ...... . ....• . .... . .......... . ..... .. .... 2,272,285 2,258,457 2,143,757 6.0 

Foreign office deposits .. . .. .. .. . .... . .. . . . ...... . ... .. ........ . . 329,444 330,061 323,438 1.9 

Earning assets .. . ........• .. •....• .. .. . .... .. .... .. . . . .. .• . .... 2,968,746 2,951 ,847 2,836,709 4.6 

Volatile liabilities .. ......... •... . .•........... .. .. .. .....•... . .. 1,135,006 1,140,683 1,145,644 -0.8 

Preliminary Preliminary 

INCOME DATA First Three Qtrs. First Three Qtrs. 3rd Qtr 3rd Qtr 

1900 1989 %Change 1900 1989 %Change 

Total interest income .. . .• . . . . . ••........ .. $240,085 $235,640 1.9 $80,533 $80,899 -0.4 

Total interest expense ... . ... . .. ... .. .... . . 154,152 151,753 1.6 51,293 52,897 -3.0 

Net interest income . . .... . ........... . . . 85,932 63,887 2.4 29,240 28,002 4.4 

Provision for loan losses ... .. .. . . •• ..... . . . 20,319 20,655 -1.6 8,250 12,740 -35.3 

Total noninterest income ..... .. ....... . . .. . 40,572 37,267 8.9 13,634 12,805 6.5 

Total noninterest expense .... . ...... . . ... .• 84,645 79,612 6.3 28,816 27,122 6.2 

Applicable income taxes . . .. . .... .. .. .... . . 6,006 8,078 -15.8 2,180 2,154 1.2 

Net operating income ..... .. ... .. ... . ... . 14,735 12,809 15.0 3,628 -1,211 NIM 

Securities gains, net ....... . •• ........ .. . .. 235 523 -55.0 73 310 -76.5 

Extraordinary gains, net .... . .. .... . .. . . ... . 443 200 52.8 53 131 -59.4 

Net income . . .. . .. . . . .... ....... ...... . 15,413 13,621 13.2 3,754 -770 NIM 

Net charge-offs . . ............ . ........... . 21,083 13,286 58.7 6,138 4,862 26.3 

Net additions to capital stock ... ......... . . . 819 270 202.9 -12 -49 N/M 

Cash dividends on capital stock .. . .. . ...... . 9,633 10,026 -3.9 3,014 3,391 -11.1 

'See Notes to Users, p.6 

NIM - not meaningful 

3 
Table Ill. First Three Quarters 1990 Bank Data (Dollar figures in billions, ratios in %) 

Asset Size Distribution Geographic Distribution 

EAST WEST Less $100 Million Greater 

than $100 to $1-10 than $10 Northeast Southeast Central Midwest Southwest West 

All Banks Million $1 Billion Billion Billion Region Region Region Region Region Region 

FIRST THREE QUARTERS Preliminary 

(The way it is . .. ) 

Number of banks reporting . . . . ... .. ..... 12,399 9,367 2,653 331 48 1,075 1,960 2,746 2,961 2,193 1,464 

Total assets .... . .. . . . . . .... . .. ....... $3,381.20 $359.37 $638.06 $1,037.44 $1,346.34 $1,326.12 $498.96 $544.20 $216.17 $263.28 $532.47 

Total deposits . ... .... . .. . .. . .. ... . .... 2,601.73 318.10 548.15 783.45 952.03 953.97 390.10 433.53 176.50 222.25 425.37 

Net income /in millions) . . . .. .... ...... . ... 15,413 2,222 4,035 4,163 4,993 2,342 2,611 3,455 1,706 1,122 4,177 

Percentage of banks losing money .. . . . . . 11 .1% 12.1% 7.2% 15.1% 20.8% 21 .6% 12.6% 4.5% 5.0% 17.0% 17.5% 

Percentage of banks with earnings gains . . 53.0% 52.7% 55.1% 44.7% 56.3% 39.7% 55.6% 55.8% 51 .8% 55.0% 53.5% 

Perfonnance Ratios (annualized) 

Yield on earning assets ..... . .. . ..... .. . 11.02% 10.41% 10.61% 10.67% 11 .67% 11 .68% 10.55% 10.41% 10.56% 10.09% 11 .11% 

Cost of funding earning assets ... .. ..... . 7.08 5.95 6.10 6.44 8.39 8.22 6.38 6.50 6.27 6.38 6.16 

Net interest margin . . . . . . . . . . . . . . . . . . . . 3.94 4.46 4.51 4.23 3.29 3.46 4.17 3.91 4.29 3.71 4.95 

Net noninterest expense to earning assets . 2.02 2.75 2.56 1.99 1.58 1.75 2.29 2.06 1.91 2.32 2.32 

Net operating cash flow to assets ...... .. 1.69 1.56 1.76 1.98 1.46 1.50 1.67 1.64 2.13 1.18 2.28 

Net operating income to assets . ......... 0.59 0.81 0.86 0.54 0.45 0.21 0.69 0.87 1.06 0.54 1.03 

Return on assets . . .. . .. . . . .. ... . .. . .. . 0.62 0.84 0.87 0.55 0.50 0.24 0.71 0.87 1.07 0.58 1.07 

Return on equity ....... . ....... . ... . .. 9.70 9.20 11 .27 8.41 10.12 4.30 10.02 12.37 13.59 8.87 16.63 

Net charge-offs to loans and leases ...... . 1.36 0.55 0.77 1.33 1.83 1.94 0.78 0.86 0.95 1.49 1.07 

Loan loss provision to net charge-offs .. . .. 96.37 132.76 116.83 138.75 65.38 91 .37 150.26 95.14 111 .61 71.39 91 .75 

Condition Ratios 

Loss allowance to: 

Loans and leases ...... ... . .. ... . ... . 2.49% 1.68% 1.64% 2.22% 3.27% 3.37% 1.63% 1.62% 1.86% 2.65% 2.18% 

Noncurrent loans and leases . . ... . .... . 73.11 80.76 74.19 74.39 71.41 66.14 78.89 81.88 97.82 75.51 86.63 

Noncurrent loans and leases plus 

other real estate to assets . . ... . . . . .. . . 2.65 1.73 1.87 2.49 3.38 3.73 1.75 1.49 1.49 2.89 2.34 

Equity capital ratio ... .. . . ..... . ... . ... . 6.45 9.19 7.80 6.55 5.01 5.57 7.18 7.10 8.04 6.70 6.55 

Primary capital ratio ........ .... .... . .. . 7.93 10.04 8.70 7.78 7.14 7.67 8.05 8.03 9.01 7.84 7.97 

Net loans and leases to deposits . .. . .. . . . 78.89 59.41 70.54 84.11 85.92 83.79 79.31 75.49 69.57 54.63 87.55 

Growth Rates (year-to-yea,j 

Assets .. .... . ... . ..... . ............. . 4.9% 7.6% 9.9% 8.1% 8.4% 4.1% 7.0% 3.8% 3.4% 2.9% 7.8% 

Equity capital . . . ...... . ... . ...... . .... 6.8 5.1 10.7 7.9 11.7 1.6 8.6 6.2 7.1 17.1 12.8 

Net interest income ...... . . . ........... 2.4 5.6 8.0 6.8 3.8 -0.5 6.8 2.5 0.3 6.2 3.8 

Net income .... ... .. . ........... . ..... 13.2 -0.1 -2.4 -31.4 330.8 141.3 -19.0 -13.1 -0.1 795.8 15.5 

Noncurrent loans and leases plus 

other real estate owned .... . ........ . . 18.9 2.9 23.5 53.8 18.5 40.8 50.2 16.6 5.3 -37.5 1.8 

Net charge-offs . . . . .. . ..... . .. . ...... . . 58.7 1.1 44.4 48.8 93.0 116.0 67.9 36.5 -12.4 -7.5 12.4 

Loan loss provision .. . .. .. .. ... . ...... . -1.6 3.8 28.8 60.3 -32.2 --6.9 86.8 15.4 -0.4 -48.2 -4.5 

PRIOR FIRST THREE QUARTERS 

(The way it was . . . ) 

Return on assets . . ... .. . . . ....... 1989 0.57% 0.89% 0.93% 0.84% 0.08% 0.10% 0.95% 1.04% 1.12% 0.07% 1.00% 

. ............... .1987 0.02 0.67 0.73 0.59 -1 .04 -0.39 0.99 0.44 0.66 -0.47 -0.16 

................. 1985 0.76 0.89 0.92 0.89 0.52 0.80 1.12 0.85 0.85 0.63 0.40 

Equity capital ratio ... . .. .. .... . .. 1989 6.34 9.15 7.60 6.38 4.80 5.70 7.07 6.94 7.77 5.88 6.25 

..... . .. . . . ...... 1987 6.13 8.77 7.48 6.26 4.34 5.42 7.05 6.79 7.62 6.45 5.63 

....... . ......... 1985 6.32 8.76 7.30 6.04 4.90 5.66 6.91 6.96 7.68 7.17 5.61 

Noncurrent loans and leases plus 

other real estate to assets . . . . . .. 1989 2.34 1.91 1.76 1.78 3.24 2.75 1.24 1.33 1.46 4.76 2.48 

.. . ... . . . .... . ... 1987 2.07 2.27 2.00 1.87 3.53 2.52 1.14 1.39 2.04 5.49 3.55 

. . . . ...... .. . . . . .1985 2.17 2.19 1.77 1.66 2.55 1.83 1.10 1.62 2.45 2.83 3.07 

Net charge-offs to loans and leases .1989 0.90 0.64 0.63 0.91 1.08 0.93 0.50 0.66 1.11 1.52 1.06 

..... .... . . ...... 1987 0.80 1.02 0.82 0.76 0.79 0.58 0.53 0.54 1.43 1.93 1.00 

...... . .......... 1985 0.71 1.02 0.68 0.61 0.71 0.43 0.48 0.58 1.38 1.15 1.07 

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 

4 
Table IV. Third Quarter 1990 Bank Data (Dollar figures in billions, ratios in %) 

Asset Size Distribution Geographic Distribution 

Less $100 Million Greater EAST WEST 

than $100 to $1-10 than $10 Northeast Southeast Central Midwest Southwest West 

All Banks Million $1 Billion Billion Billion Region Region Region Region Region Region 

PRELIMINARY THIRD QUARTER 

(The way it is ... ) 

Number of banks reporting .. . .. .. .. ... . . 12,399 9,367 2,653 331 48 1,075 1,960 2,746 2,961 2,193 1,464 

Net income (in millions) . . ... ........ . . . . 3,754 721 1,283 1,034 715 -363 753 1,194 583 339 1,267 

Percentage of banks losing money ....... 11.6% 12.2% 8.3% 18.4% 25.0% 23.4% 13.7% 5.3% 5.8% 15.6% 17.2% 

Percentage of banks with earnings gains .. 55.5% 54.5% 59.9% 47.1% 58.3% 43.0% 56.9% 56.8% 54.3% 58.0% 58.9% 

Perfonnance Ratios (annualized) 

Yield on earning assets . . ........ . ... .. . 10.91% 10.48% 10.74% 10.68% 11 .29% 11 .29% 10.53% 10.50% 10.57% 10.19% 11.21% 

Cost of funding earning assets . . ... .. . .. . 6.95 5.97 6.17 6.46 8.00 7.86 6.38 6.51 6.28 6.35 6.24 

Net interest margin ............ . ....... 3.96 4.50 4.57 4.23 3.28 3.44 4.16 3.99 4.29 3.85 4.96 

Net noninterest expense to earning assets . 2.06 2.81 2.59 1.99 1.62 1.76 2.32 2.05 1.91 2.49 2.40 

Net operating cash flow to assets . . ...... 1.67 1.54 1.79 1.97 1.42 1.45 1.64 1.73 2.14 1.16 2.23 

Net operating income to assets . .. . . ... .. 0.43 0.76 0.80 0.39 0.20 -0.13 0.59 0.88 1.03 0.50 0.94 

Return on assets ..... . .. . ...... . ... . .. 0.45 0.81 0.81 0.40 0.21 -0.11 0.61 0.88 1.05 0.52 0.95 

Return on equity . . . . . . . . . . . . . . . . . . . . . . 6.92 8.81 10.45 6.12 4.25 -1.96 8.45 12.51 13.12 7.74 14.75 

Net charge-offs to loans and leases . ... . . . 1.18 0.61 1.03 1.41 1.19 1.46 0.93 0.66 0.93 2.03 1.01 

Loan loss provision to net charge-offs ..... 134.39 129.61 106.09 148.26 133.12 156.65 143.58 143.11 117.11 59.28 107.71 

Growth Rates (year-to-year) 

Net interest income . . . .. ......... . ..... 4.4% 7.7% 11.2% 6.5% 7.3% -0.3% 9.1% 6.2% 1.0% 11 .9% 6.5% 

Net income ..... . .... .. . .. ...... ..... . N/M 2.0 2.3 -46.7 N/M N/M -26.5 -3.3 0.7 N/M 19.9 

Net charge-offs ........................ 26.3 4.1 66.4 35.4 24.8 50.5 72.9 8.5 -35.4 11 .6 1.9 .. Loan loss prov1s1on . . . . . . . . . . . . . . . . . . . . -35.3 5.1 33.7 44.7 -62.1 -48.5 99.3 1.2 1.8 -54.6 -14.1 

PRIOR THIRD QUARTERS 

(The way it was ... ) 

Return on assets . . . ......... . .. .. 1989 -0.10% 0.83% 0.81% 0.81% -1.60% -1.41% 0.89% 0.95% 1.08% -0.24% 0.86% 

. ................ 1987 0.79 0.63 0.75 0.82 0.85 0.94 1.05 0.92 0.99 -0.47 0.76 

... . ............ . 1985 0.77 0.86 0.90 0.90 0.58 0.80 1.13 0.86 0.83 0.55 0.54 

Net charge-offs to loans and leases .1989 0.97 0.71 0.74 1.05 1.08 0.99 0.58 0.64 1.47 1.73 1.10 

.. . .............. 1987 0.83 1.06 0.88 0.76 0.76 0.58 0.57 0.61 1.44 2.18 0.96 

. . .......... . .... 1985 0.82 1.19 0.83 0.80 0.80 0.49 0.53 0.63 1.59 1.37 1.29 

N/M • not meaningful 

5 
FDIC FIRST CLASS

MAIL 

Federal Deposit Insurance Corporation 

Washington, DC 20429 

OFFICIAL BUSINESS 

Penalty for Private Use, $300 

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Fees Paid 

FDIC 

Permit No. G36 

Attn: Chief Executive Officer 

NOTES TO USERS 

COMPUTATION METHODOLOGY FOR PERFORMANCE AND CONDITION RATIOS 

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. 

DEFINITIONS 

"Problem" Banks-Federal regulators assign to each financial institution a uniform 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 " 4" or "5". 

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

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. 

Net Noninterest Expense-total non interest expense, excluding the expense of providing for loan losses, less total non interest income. A measure of banks' overhead 

costs. 

Net Operating Income-income after taxes and before gains (or losses) from securities transactions and from nonrecurring items. The profit earned on banks' regu lar 

banking business. 

Net Operating Cash Flow-pre-tax net operating income before the provision for loan and lease losses; a measurement of banks' cash flow, net of interest and overhead 

expenses, from regular operations. Previously referred to as "adjusted net operating income". 

Return on Assets-net income (including securities transactions 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. 

Primary Capital-total equity capital plus the allowance for loan and lease losses plus minority interests in consolidated subsidiaries plus qualifying mandatory convertible debt (cannot exceed 20 percent of total primary capital), less intangible assets except purchased mortgage servicing rights. 

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

Temporary Investments-the sum of interest-bearing balances due from depository institutions, federal funds sold and resold, 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, and other borrowed money. 

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

Corporate Communications, 550 17th Street N.W., Washington, D.C. 20429; telephone (202) 898-6996.