List of Tables and Figures

Page

Table 1.1 Bank Failures by State, 19801994 14

Table 1.2 Assets of Failed Banks at the Quarter before Failure, by State, 

19801994 17

Table 1.3 Bank Failures and Growth Rates of Real Personal Income, by State, 

19801994 20

Table 1.4 Bank Failures and Growth Rates of Real Personal Income, by State 

Recession Quartile 21

Table 1.5 Selected Financial Ratios 30

Table 1.6 Failure Rates, Newly Chartered and Existing Banks 32

Table 1.7 Failure Rates of Converted Mutual Savings Banks and Other Banks, 

Northeastern States 33

Table 1.8 Results of Bank Forbearance Programs 48

Table 1.9 Number of Bank Examiners, Federal and State Banking Agencies, 

19791994 57

Table 1.10 Mean Examination Interval, by Initial Composite CAMELRating 58

Table 1.11 Failing Banks with CAMEL Ratings of 1 or 2, Two Years before 

Failure, 19801994 60

Table 1.12 Asset Growth Rates, Dividend Payments, and Capital Injections,

All Banks with CAMEL Ratings of 4 and 5, 19801994 63

Table 1.13 Probability of Failure, Banks in the Highest Loans-to-Assets Quintile 73

Table 1.14 Probability of Failure for Low-Risk Banks (Banks Not in the 

Highest Loans-to-Assets Quintile) 73

Table 3.1 Production of New Office Space, 31 Major Markets, 19751994 145

Table 3.2 Major Loan Categories of U.S. Commercial Banks as a Percentage 

of Total Assets, 1980 and 1990 152

Table 3.3 Real Estate Loan Portfolio Quality, U.S., 19841994 153

Table 3A.1 Major Tax Law Provisions Affecting Returns on Commercial 

Real Estate Investment 163

Table 3A.2 Hypothetical Investment Illustrating the Economic Effects of Major 

Tax Legislation on Commercial Real Estate Investment 164

Table 4.1 Selected Statistics, FSLIC-Insured Savings and Loans, 19801989 168

Table 4.2 S&L Failures, 19801988 169

Table 4.3 Number of Newly Chartered FSLIC-Insured S&Ls, 19801986 178

Table 5.1a Average Financial Ratios for Eight Money-Center Banks, 19741989 196

x History of the EightiesLessons for the Future
Table 5.1b Aggregate Financial Data for Eight Money-Center Banks, 19741989 197

Table 5.2 Long-Term Debt Ratings of U.S. Money-Center Banks, 19771989 202

Table 6.1 Number, Total Assets, and Average Assets of Selected Types of 

Financial Institutions, Selected Years, 19001975 214

Table 6.2 Composition of Assets of Mutual Savings Banks, Selected Years, 

19001980 215

Table 6.3 Percentage Distribution of Assets and Liabilities of Mutual Savings 

Banks, by State, Year-end 1975 216

Table 6.4 Failed and Assisted Savings Banks, 19811985 226

Table 6.5 FDIC Net Worth Certificate Program 229

Table 6A.1 BIF-Insured Savings Banks That Failed, 19861994 234

Table 7.1 Growth in Assets and Domestic C&I Lending at the Ten Largest U.S.

Banks, 19761981 237

Table 7.2 Average Returns and Equity Ratios at the Ten Largest U.S. Banks, 

19771981 239

Table 7A.1 Continental Illinois National Bank and Trust: Consolidated 

Statement of Condition, 19771983 255

Table 7A.2 Continental Illinois National Bank and Trust: Consolidated 

Statement of Income, 19771983 256

Table 7A.3 Continental Illinois National Bank and Trust: 

Financial Ratios, 19771983 257

Table 8.1 Gross Income per Acre and Return on Farmland Investment, 

U.S. and Iowa, 19701990 268

Table 8.2 Farm Loans and Bank Assets, Agricultural Banks versus All 

Banks, 19791990 279

Table 8.3 Total Deposit Insurance Fund Losses and Average Loss per 

Bank, 19801990 280

Table 8.4a CAMEL Ratings for All Agricultural Banks, 19811990 283

Table 8.4b CAMEL 4- and 5-Rated Institutions, Agricultural Banks versus 

Small Non-Agricultural Banks, 19811990 284

Table 8.5 Median ROA, ROE, and Equity Ratios, Agricultural Banks versus 

Small Non-Agricultural Banks, 19791990 286

Table 8.6a Equity and Reserves to Assets of Agricultural Banks, 19791990 288

Table 8.6b Equity and Reserves to Assets of Small Non-Agricultural Banks, 

19791990 289

Table 9.1 Construction Permits in the Southwest, 19801994 302

Table 9.2 Large Southwestern Bank Failures, 19801994 323

List of Tables and Figures

History of the EightiesLessons for the Future xi
Table 9.3a CAMEL Ratings for All Southwestern Banks, 19811990 327

Table 9.3b CAMEL 4- and 5-Rated Institutions, Southwestern Banks versus 

Banks in Rest of U.S., 19811990 328

Table 9.4 CAMEL Ratings for All U.S. Banks, 19811990 329

Table 9.5 Median ROA, ROE, and Equity Ratios, Southwestern Banks 

versus Banks in Rest of U.S., 19791990 330

Table 9.6a Equity and Reserves to Assets of Southwestern Banks, 19781990 331

Table 9.6b Equity and Reserves to Assets of Nonsouthwestern Banks, 19781990 332

Table 10.1 Nonresidential and Residential Construction, Northeast Region, 

19801994 340

Table 10.2 CAMEL Ratings for All Northeastern Banks, 19811994 363

Table 10.3 CAMEL 4- and 5-Rated Institutions, Northeastern Banks versus 

Banks in Rest of U.S., 19811994 364

Table 10.4 Median ROA, ROE, and Equity Ratios, Northeastern Banks 

versus Banks in Rest of U.S., 19801994 365

Table 10.5 Equity and Reserves to Assets, Northeastern Banks, 19801990 366

Table 10.6 Equity and Reserves to Assets, Nonnortheastern Banks, 19801990 367

Table 10.7 Bank Failures, 19801994 369

Table 10.8 FDIC Bank-Failure Resolution Costs, 19901994 369

Table 10.9 Large Northeastern Bank Failures in the 1990s 373

Table 11.1 Three Economic Growth Measures, California and U.S., 19801994 381

Table 11.2 Office Real Estate Market Trends, Los Angeles County and 

San Francisco, 19801994 389

Table 11.3 Recession-Related Employment Losses in California and 

Los Angeles County 394

Table 11.4 Median Return on Assets for U.S. and California Banking Industries, 

19801994 398

Table 11.5 Ten Largest Depository Institutions in California,

December 31, 1979 400

Table 11.6 Market Share of Total Domestic Deposits, by Type of Depository 

Institution in California, 19841992 400

Table 11.7a CAMEL Ratings for All California Banks, 19811994 403

Table 11.7b CAMEL 4- and 5-Rated Institutions, California Banks versus 

Banks in Rest of U.S., 19811994 404

Table 11.8a Equity and Reserves to Assets, California Banks, 19801994 405

Table 11.8b Equity and Reserves to Assets, U.S. Banks, 19801994 406

An Examination of the Banking Crises of the 1980s and Early 1990s Volume I

xii History of the EightiesLessons for the Future
Table 11.9 Median Return on Assets for California Banking Groups and U.S., 

19901994 408

Table 11.10 Bank Failures in California by Region, 19901994 411

Table 12.1 Mean Examination Interval for Commercial Banks, by CAMEL

Rating, 19791994 429

Table 12.2 Mean Examination Interval for Commercial Banks, by 

Regulatory Agency, 19801994 430

Table 12.3 Failing Banks with CAMEL Ratings of 1 or 2 Two Years 

before Failure, 19801994 434

Table 12.4 Asset Growth Rates, Dividend Payments, and Capital Injections, 

All Banks with CAMEL Ratings of 4 or 5, 19801994 440

Table 12.5 FDIC Formal Enforcement Actions by Examination 

Rating, 19801995 443

Table 12.6 FDIC Formal Enforcement Actions by Type, 19801995 444

Table 12.7 FDIC-Supervised Problem Banks, 19801994 445

Table 12.8 FDIC Problem Banks That Received Formal Enforcement Actions, 

19801994 446

Table 12.9 Percentage of FDIC Problem Banks That Received Formal 

Enforcement Actions, by CAMEL Rating, 19801994 446

Table 12.10 Federal Reserve Formal Enforcement Actions by Examination 

Rating, 19801995 447

Table 12.11 Federal Reserve Formal Enforcement Actions by Type, 19801995 447

Table 12.12 Federal Reserve-Supervised Problem Banks, 19801994 448

Table 12.13 Federal Reserve-Supervised Problem Banks That Received Formal 

Enforcement Actions, 19801994 449

Table 12.14 Percentage of Federal Reserve-Supervised Problem Banks 

That Received Formal Enforcement Actions, by CAMEL

Rating, 19801994 449

Table 12.15 Estimated Number of Failed Banks That Would Have Been 

Closed Earlier under FDICIA Rules, 19801992 455

Table 12.16 Estimated Number of Failed Banks That Would Have Been 

Closed Earlier under FDICIA Rules, by Bank 

Charter Class, 19801992 456

Table 12.17 Estimated Number of Failed Banks That Would Have Been 

Closed Earlier under FDICIA Rules in the Six States 

with the Greatest Number of Closings, 19801992 457

List of Tables and Figures

History of the EightiesLessons for the Future xiii
Table 12.18 Changes in Total Equity Capital for Failed Banks That 

Would Have Been Closed Earlier under FDICIA

Rules, 19801992 458

Table 12.19 Estimated Number of Problem Banks That Survived but 

Might Have Been Closed under FDICIA Rules, 19801992 460

Table 12.20 Timing of FDIC Enforcement Actions against FDIC Problem 

Banks That Failed and Would Have Been Closed Earlier 

under FDICIA Rules, 19801992 462

Table 12.21 Timing of FDIC Enforcement Actions against FDIC Problem 

Banks That Survived but Might Have Been Closed 

under FDICIA Rules, 19801992 462

Table 13.1 Ratio Measures of Bank Performance 490

Table 13.2 Probability of Failure When a Bank Appears in the 

Highest-Risk Category 493

Table 13.3 Probability of Failure When a Bank Appears in the Highestand Second-Highest Risk Categories 494

Table 13.4 Probability of Failure in Low-Risk Banks 495

Table 13.5 Hypothetical GMS Score Computation Example 497

Table 13.6 Bank Failures by GMS Score Ranking and Failure Year 499

Table 13.7 Comparisons of Exam Ratings as Assigned in 1985 and 1987 500

Table 13.8 Relationship between GMS Weightings and Logit Estimations of 

CAMEL Downgrades 503

Table 13.9 Hypothetical Loan Portfolios for Bank A: Loan Shares Not Weighted 505

Table 13.10 Hypothetical Loan Portfolios for Bank A: Loan Shares Weighted 505

Table 13.11 Loan Portfolios Concentration Index 506

Table 13.12 12/1988 CAMEL Logit 507

Table 13.13 Comparisons of Exam Ratings as Assigned in 1985 and 1987 

Portfolio Concentration Model 508

Table 13A.1 Comparison of Different Factors in Predicting Bank Failures 

Four and Five Years Forward, 1980 515

Table 13A.2 Comparison of Different Factors in Predicting Bank Failures 

Four and Five Years Forward, 1982 516

Table 13A.3 Comparison of Different Factors in Predicting Bank Failures 

Four and Five Years Forward, 1984 517

Table 13A.4 Comparison of Different Factors in Predicting Bank Failures 

Four and Five Years Forward, 1986 518

An Examination of the Banking Crises of the 1980s and Early 1990s Volume I

xiv History of the EightiesLessons for the Future
Table 13A.5 Comparison of Different Factors in Predicting Bank Failures 

Four and Five Years Forward, 1988 519

Table 13A.6 Table of PeerGroup Characteristics 520

Figure 1.1 Number of Bank Failures, 19341995 3

Figure 1.2 Bank Performance Ratios, 19731994 6

Figure 1.3 Bank Price-Earnings Ratios as a Percentage of S&P 500 

Price-Earnings Ratios, 19641995 7

Figure 1.4 Price-to-Book Value per Share, 19821995 9

Figure 1.5 Farm Prices, Exports, Income, Debt, and Real Estate Value, 19751994 22

Figure 1.6 Changes in Gross State Product and Gross Domestic Product, 19801994 23

Figure 1.7 Ratio of Gross Loans to Total Assets, Failed and Nonfailed Banks, 

19801994 28

Figure 1.8 Ratio of Commercial Real Estate Loans to Total Assets, Failed and 

Nonfailed Banks, 19801994 29

Figure 1.9 Composite CAMEL Ratings Two Years before Failure for 

Banks Failing between 1980 and 1994 59

Figure 1.10 Median Asset Growth Rates of CAMEL 4-Rated Banks 

before and after Regulatory Intervention 65

Figure 1.11 Dividend Rates and Capital Infusions of CAMEL4-Rated 

Banks before and after Regulatory Intervention 67

Figure 1.12 Bank Condition Ratios for Failed and Nonfailed Banks, 19821986 70

Figure 1.13 Bank Risk Ratios for Failed and Nonfailed Banks, 19821986 71

Figure 2.1 Newly Chartered Banks: United States, Texas, California, and 

Florida, 19801994 108

Figure 3.1 Total Nonresidential Construction Put in Place, 19701994 142

Figure 3.2 Office Vacancy Rates in Major Texas Cities, 19801994 143

Figure 3.3 Commercial Real Estate Cycles in Selected States, 19801994 144

Figure 3.4 Nonresidential Construction Put in Place, 19751994 145

Figure 3.5 Office and Total Employment Growth, 19761994 146

Figure 3.6 Office Market Conditions, 19801994 147

Figure 3.7 Retail Market Conditions, 19801994 147

Figure 3.8 Industrial Market Conditions, 19771994 149

List of Tables and Figures

History of the EightiesLessons for the Future xv
Figure 3.9 Real Estate Portfolio of U.S. Banks as a Percentage of Total 

Assets, 1980 and 1990 152

Figure 3.10 Commercial Real Estate Loans as a Percentage of Total Assets, 

Failed and Nonfailed Banks, 19801990 159

Figure 3.11 Commercial Real Estate Loans as a Percentage of Total Real 

Estate Loans, Failed and Nonfailed Banks, 19801994 160

Figure 3.12 Nonperforming Real Estate Assets as a Percentage of Total 

Nonperforming Assets, Failed and Nonfailed Banks, 19801994 161

Figure 3.13 Real Estate Charge-Offs as a Percentage of Total Charge-Offs, 

Failed and Nonfailed Banks, 19841994 162

Figure 4.1 Percentage of S&LAssets in Mortgage Loans, 19781986 179

Figure 5.1 U.S. Crude-Oil Refiner Acquisition Cost, 19701988 193

Figure 5.2 Monthly Commodity and Consumer Prices, 19701994 194

Figure 5.3 Total Latin American Debt Outstanding, 19701989 194

Figure 5.4 Total Outstanding LDC Loans by the Largest U.S. Banks, 19771989 195

Figure 5.5 U.S. Commercial Paper Outstanding, 19731989 198

Figure 5.6 German Mark and Japanese Yen U.S. Dollar Exchange Rates, 19711994 200

Figure 5.7 Share Price of Money-Center Banks and Regional Banks 

versus S&P 500, 19701995 201

Figure 5.8 Monthly Treasury Bill Rate (3-Month), 19701994 205

Figure 5.9 Return on Assets, U.S. Banking Industry, 19701994 209

Figure 6.1 Monthly Treasury Bill Rate (3-Month), 19771983 221

Figure 7.1 Continental Illinois Corporation: Average Weekly 

Share Price, 19811984 238

Figure 8.1 Index of Prices Received by Farmers for All Crops, 19701989 261

Figure 8.2 Farmland Value per Acre, U.S. and Iowa, 19701990 266

Figure 8.3 Farm Debt, 19701990 267

Figure 8.4 Lender Shares of Farm Real Estate Debt, 19751988 275

Figure 8.5 Lender Shares of Farm Non-Real Estate Debt, 19751988 276

Figure 8.6 Agricultural Bank Failures versus All Bank Failures, 19801990 277

Figure 8.7 Number of Agricultural Bank Failures and Percentage of Failed

Agricultural Bank Assets in U.S., 19771993 278

Figure 8.8 Comparison of Selected Factors in Predicting Agricultural Bank

Failures Four and Five Years Forward, 1980 281

Figure 8.9 Comparison of Selected Factors in Predicting Agricultural Bank 

Failures Four and Five Years Forward, 1982 282

An Examination of the Banking Crises of the 1980s and Early 1990s Volume I

xvi History of the EightiesLessons for the Future
Figure 8.10 Agricultural Banks versus Small Non-Agricultural Banks:

Nonperforming Loans As a Percentage of All Loans, 19821990 285

Figure 8.11 Agricultural Banks versus Small Non-Agricultural Banks:

Percentage of Institutions with Negative Net Income, 19801990 287

Figure 9.1 Domestic Crude-Oil Refiner Acquisition Cost versus 

Average Number of Rotary Rigs, 19721988 293

Figure 9.2 Changes in Southwest Gross Product versus Changes in U.S. Gross 

Domestic Product, 19801994 294

Figure 9.3 Domestic Crude-Oil Refiner Acquisition Cost versus Gross 

Domestic Product, 19701988 301

Figure 9.4 Office Vacancy Rates, Southwestern Cities versus U.S., 19801994 303

Figure 9.5 Median Home Resale Prices, Houston versus U.S., 19801990 307

Figure 9.6 Newly Issued Building Permits (Residential), Houston versus 

U.S., 19801990 308

Figure 9.7 Housing Starts, Houston versus U.S., 19761995 309

Figure 9.8 Newly Chartered Banks, Southwest versus U.S., 19741994 313

Figure 9.9 Asset Growth Rates, Southwest versus U.S., 19751994 316

Figure 9.10 Median Commercial and Industrial Loans, Southwest 

versus U.S., 19741994 316

Figure 9.11 Median Total Real Estate Loans, Southwest versus U.S., 19741994 317

Figure 9.12 Median Commercial Real Estate Loans, Southwest versus U.S., 19801994 318

Figure 9.13 Median Gross Loans and Leases, Southwest versus U.S., 19761994 318

Figure 9.14 Median Total Nonperforming Assets, Southwest versus U.S., 

19821994 319

Figure 9.15 Median Net Charge-Offs on Loans and Leases, Southwest versus 

U.S., 19761994 319

Figure 9.16 Bank Failures, Southwest versus U.S., 19801994 320

Figure 9.17 Commercial Real Estate Lending in Houston, Dallas, and 

Oklahoma City, Failed versus Nonfailed Banks, 19741994 322

Figure 9.18 Nonperforming Loans as a Percentage of All Loans, Southwest 

versus Rest of U.S., 19821990 333

Figure 9.19 Percentage of Banks with Negative Net Incomes, Southwest versus 

Rest of U.S., 19781990 333

Figure 9.20 Comparison of Selected Factors in Predicting Southwest Bank 

Failures Four and Five Years Forward, 1982, 1984 and 1986 334

Figure 10.1 Changes in Northeast Gross Product versus Changes in U.S. 

Gross Domestic Product, 19801994 339

List of Tables and Figures

History of the EightiesLessons for the Future xvii
Figure 10.2 Office Vacancy Rates in Boston, 19801994 341

Figure 10.3 Rent Indices, Boston and Hartford versus U.S., 19801995 342

Figure 10.4 Median Home Resale Prices, Boston versus U.S., 19821995 344

Figure 10.5 Office Vacancy Rates in New York City, 19801994 346

Figure 10.6 Rent Indices, New York City and Long Island versus U.S., 

19801995 347

Figure 10.7 Asset Growth Rates, Northeast versus U.S., 19751994 349

Figure 10.8 Median Gross Loans and Leases, Northeast versus U.S., 19761994 350

Figure 10.9 Median Total Real Estate Loans, Northeast versus U.S., 19741994 350

Figure 10.10 Median Commercial and Industrial Loans, Northeast versus U.S., 

19741994 351

Figure 10.11 Median Residential Real Estate Loans, Northeast versus U.S., 19741994 352

Figure 10.12 Median Commercial Real Estate Loans, Northeast versus U.S., 19801994 353

Figure 10.13 Median Total Nonperforming Assets, Northeast versus U.S., 

19821994 353

Figure 10.14 Median Net Charge-Offs on Loans and Leases, Northeast versus 

U.S., 19761994 354

Figure 10.15 Northeast Bank Failures, 19801994 362

Figure 10.16 Nonperforming Loans as a Percentage of All Loans, Northeast 

versus Rest of U.S., 19821990 368

Figure 10.17 Percentage of Banks with Negative Net Income, Northeast versus 

Rest of U.S., 19801994 368

Figure 10.18 Comparison of Selected Factors in Predicting Northeastern Bank 

Failures Four and Five Years Forward, 1986 371

Figure 10.19 Comparison of Selected Factors in Predicting Northeastern 

Bank Failures Four and Five Years Forward, 1988 372

Figure 11.1 Changes in California Gross State Product versus Changes in U.S. 

Gross Domestic Product, 19801994 380

Figure 11.2 Defense-Related Manufacturing Sector, FY 19801994 383

Figure 11.3 The California Construction Sector, 19801994 384

Figure 11.4 New Housing Permits, Multifamily versus Single Family, 

California, 19781994 386

Figure 11.5 Median Home Prices, California (Selected Markets) and 

U.S., 19801994 386

Figure 11.6 Commercial Office Vacancy Rates, California (Selected Markets) 

and U.S., 19801994 388

An Examination of the Banking Crises of the 1980s and Early 1990s Volume I

xviii History of the EightiesLessons for the Future
Figure 11.7 Japanese Investment in U.S. Real Estate, 19851994 390

Figure 11.8 Newly Chartered Banks in California, 19801994 402

Figure 11.9 California Bank Failures, 19801995 410

Figure 11.10 Median Total Loans and Leases, Southern California versus 

the Rest of California and U.S., 19801994 414

Figure 11.11 Median Total Real Estate Loans, Southern California versus 

the Rest of California and U.S., 19801994 414

Figure 11.12 Median Total Commercial Real Estate Loans, Southern California 

versus the Rest of California and U.S., 19801994 415

Figure 11.13 Median Total Commercial and Industrial Loans, Southern California

versus the Rest of California and U.S., 19801994 415

Figure 11.14 Median Nonperforming Assets, Southern California versus the 

Rest of California and U.S., 19821994 416

Figure 11.15 Median Net Charge-Offs on Loans and Leases, Southern 

California versus the Rest of California and U.S., 19801994 416

Figure 11.16 Median Commercial Real Estate Loans, California Banking 

Groups versus the U.S., 19801994 417

Figure 12.1 Field Examination Staffs of the Federal and State Banking 

Agencies, and Total Number of Problem Banks, 19791994 427

Figure 12.2 Total Number of Examinations per Year and Total Number of 

Problem Banks, 19801994 428

Figure 12.3 Average Number of Examinations per Year for Texas 

Commercial Banks, 19801994 431

Figure 12.4 Median Examination Period (Days) for Failed Banks, 19801994 431

Figure 12.5 Composite CAMEL Ratings Two Years before Failure for Banks 

Failing between 1980 and 1994 433

Figure 12.6 CAMEL Ratings of Failed Banks Two Years before Failure, 

19801994 437

Figure 12.7 Median Asset Growth Rates of CAMEL 4-Rated Banks 

before and after Regulatory Intervention 451

Figure 12.8 Dividend Rates and Capital Infusions of CAMEL4-Rated 

Banks before and after Regulatory Intervention 453

Figure 13.1 Bank Condition Ratios for Failed and Nonfailed Banks, 19821986 482

Figure 13.2 Bank Risk Ratios for Failed and Nonfailed Banks, 19821986 484

Figure 13.3 Procedure Used in Contingency Table Analysis 492

List of Tables and Figures

History of the EightiesLessons for the Future xix