Profits and Balance Sheet Developments at U.S. Commercial Banks in 1999.

William F. Bassett and Egon Zakrajsek, of the Board's Division of Monetary Affairs, prepared this article. Thomas C. Allard assisted in developing the database used in this article and was responsible for maintaining it. James E. Cypert, Jr., provided research assistance.

The U.S. commercial banking industry posted record earnings in 1999. The industry's return on assets and return on equity both rose above the already high level of recent years (chart 1).(1) Profitability was concentrated at large banks--particularly among the 100 largest--and was driven upward by a surge in noninterest income and a significant slowdown in the growth of noninterest expense. Other sources of improved profitability were a stabilization of net interest income, which had been weakening in recent years, and lower loan loss provisioning permitted by generally good asset quality. On the negative side, 641 banks lost money in 1999; these institutions accounted for 7.4 percent of all domestic commercial banks in operation last year but for only about 1.5 percent of the industry's assets.

[Graph omitted]

Components of bank credit and bank deposit liabilities that had been boosted by the financial turmoil of 1998 declined early last year as financial markets calmed. Nonetheless, demand for household and business credit remained strong because of the rapid pace of economic activity. At the end of 1998, long-term private interest rates started to trend up, and from June to November 1999 the Federal Reserve increased the intended level of the federal funds rate three times in 25 basis point increments (chart 2).

[Graph omitted]

Consolidation within the banking industry slowed significantly in 1999. The net reduction in the number of banks, 195, was only about half the decline in each of the preceding two years. Among the 450 banks that ceased operations last year, 8 failed, and the remaining 442 merged with other banks, were purchased outright, or otherwise changed their charters. Meanwhile, 255 new banks were created--the most in one year since 1987. At the end of 1999, 8,620 banks were in operation, down from 12,728 a decade ago (chart 3). The share of industry assets held by the 100 largest banks moved up just 1/2 percentage point, to 70 percent, after having jumped an average of 4 percentage points per year between 1995 and 1998.

[Graph omitted]

Consolidation slowed even more dramatically among bank holding companies (BHCs) in 1999, perhaps in part because of the poor performance of their equity prices. The number of mergers between BHCs last year, 211, was the lowest since 1994; and the number of BHCs declined a net of only 27, to 5,953, by year's end. The percentage of BHC assets controlled by the 50 largest organizations remained steady at about 76 percent.

BALANCE SHEET DEVELOPMENTS

The growth of total bank assets slowed from 8.2 percent in 1998 to 5.4 percent in 1999 (table 1). The deceleration was most evident in securities holdings, in large part because, for a significant share of these assets, price declines associated with a rise in interest rates must be marked to market. In addition, core deposit inflows virtually stopped, leading banks to fund asset growth primarily through the issuance of relatively expensive managed liabilities.

1. Annual rates of growth of balance sheet items, 1990-99

Percent

              Item                     1990     1991     1992    1993

Assets                                  2.64     1.33     2.19    5.68
  Interest-earning assets               2.23     1.98     2.53    6.56
    Loans and leases (net)              2.37    -2.65    -1.04    6.05
      Commercial and industrial         -.67    -9.10    -4.10     .52
      Real estate                       8.79     2.73     1.94    6.13
        Booked in domestic offices      8.55     2.90     2.57    6.17
          One- to four-family
            residential                14.00     7.76     7.53   11.08
          Other                         3.62    -1.93    -2.86     .22
        Booked in foreign offices      16.64    -2.35   -17.80    4.67
      Consumer                           .38    -2.55    -1.66    9.06
      Other loans and leases           -5.68    -4.91    -4.24    9.97
      Loan-loss reserves and
        unearned income                  .35    -3.78    -4.85   -5.82
    Securities                          8.46    16.23    12.29   12.26
      Investment account                8.19    14.42    11.44    8.11
        U.S. Treasury                   3.50    32.01    23.95    7.24
        U.S. government agency and
          corporation obligations      24.02    15.88    12.77    9.62
        Other                          -6.70    -2.56    -5.20    6.09
      Trading account                  11.87    38.88    21.01   51.84
    Other                             -11.70     2.82     1.57   -7.90
  Non-interest-earning assets           5.51    -3.10     -.32    -.86

Liabilities                             2.37     1.01     1.35    5.12
  Core deposits                         7.58     5.25     5.09    1.49
    Transaction deposits                2.43     3.38    14.62    5.47
    Savings and small time deposits    10.51     6.24      .18    -.85
  Managed liabilities(1)               -6.15    -6.19    -6.07   12.30
    Deposits booked in foreign
      offices                          -5.88     3.81    -5.85   15.06
    Large time                         -5.68   -19.73   -26.20   -9.21
    Subordinated notes and
      debentures                       20.99     4.69    34.90   10.82
    Other managed liabilities          -8.06    -1.39     6.94   22.18
  Other                                 4.43    -4.18    -1.02   15.30

Equity capital                          6.64     5.98    13.75   12.58

MEMO
Commercial real estate loans(2)         3.62    -2.58    -4.03    -.60
Mortgage-backed securities             34.39    19.27    10.37    9.66

              Item                    1994     1995     1996    1997

Assets                                 8.06     7.55     6.09    9.24
  Interest-earning assets              5.77     7.69     5.67    8.88
    Loans and leases (net)             9.83    10.53     8.12    8.38
      Commercial and industrial        9.33    12.26     7.24   12.02
      Real estate                      7.90     8.33     5.44    9.30
        Booked in domestic offices     7.64     8.48     5.50    9.53
          One- to four-family
            residential               10.09    10.06     4.65    9.67
          Other                        4.35     6.25     6.75    9.33
        Booked in foreign offices     18.35     2.81     3.18     .34
      Consumer                        16.01     9.50     4.90   -2.18
      Other loans and leases           5.29    14.23    22.28   13.73
      Loan-loss reserves and
        unearned income               -2.22      .25     -.06    -.49
    Securities                        -2.61      .57      .84    8.86
      Investment account              -1.73    -1.58    -1.12    8.68
        U.S. Treasury                 -8.46   -19.21   -14.30   -8.85
        U.S. government agency and
          corporation obligations       .87     6.43     3.61   14.20
        Other                          2.49     4.20     1.82   11.21
      Trading account                 -9.43    18.51    14.44    9.97
    Other                              3.25     7.64     -.90   12.81
  Non-interest-earning assets         25.65     6.61     8.87   11.48

Liabilities                            8.31     7.17     5.95    9.13
  Core deposits                        -.17     3.97     4.12    4.53
    Transaction deposits               -.33    -3.09    -3.45   -4.54
    Savings and small time deposits    -.08     8.37     8.34    9.04
  Managed liabilities(1)              17.57    10.44     9.65   13.84
    Deposits booked in foreign
      offices                         30.89     5.13     4.27   11.13
    Large time                         8.72    19.61    21.16   20.15
    Subordinated notes and
      debentures                       9.23     6.61    17.74   21.05
    Other managed liabilities         12.91    11.24     8.21   12.23
  Other                               79.17    20.46     2.60   23.79

Equity capital                         5.24    12.00     7.72   10.46

MEMO
Commercial real estate loans(2)        4.00     6.35     7.66   10.13
Mortgage-backed securities            -3.12      .67     2.03   14.18

                                                         MEMO:
                                                         Dec.
              Item                    1998     1999      1999
                                                       (billions
                                                          of
                                                        dollars)

Assets                                  8.22    5.44     5,673
  Interest-earning assets               8.18    5.99     4,908
    Loans and leases (net)              8.90    8.01     3,394
      Commercial and industrial        12.96    8.07       965
      Real estate                       7.98   12.17     1,497
        Booked in domestic offices      7.96   12.31     1,465
          One- to four-family
            residential                 6.34    9.65       831
          Other                        10.28   16.01       633
        Booked in foreign offices       8.79    6.28        33
      Consumer                          1.00   -1.48       541
      Other loans and leases           14.02    6.35       451
      Loan-loss reserves and
        unearned income                 3.30    2.50        61
    Securities                          8.36    5.10     1,146
      Investment account               12.05    6.64     1,029
        U.S. Treasury                 -25.17   -1.89       111
        U.S. government agency and
          corporation obligations      16.98    1.82       595
        Other                          26.97   20.78       323
      Trading account                 -13.52   -6.69       117
    Other                               2.35   -7.57       369
  Non-interest-earning assets           8.48    2.08       765

Liabilities                             8.09    5.58     5,201
  Core deposits                         7.05     .20     2,675
    Transaction deposits               -1.41   -8.98       679
    Savings and small time deposits    10.73    3.76     1,996
  Managed liabilities(1)                9.60   15.49     2,177
    Deposits booked in foreign
      offices                           8.71   14.60       655
    Large time                          9.10   14.17       472
    Subordinated notes and
      debentures                       17.00    5.07        76
    Other managed liabilities           9.87   17.68       974
  Other                                 8.15   -6.06       349

Equity capital                          9.61    3.95       472

MEMO
Commercial real estate loans(2)        11.36   15.37       639
Mortgage-backed securities             22.09   -3.34       449

NOTE. Data are from year-end to year-end.

(1.) Measured as the sum of deposits in foreign offices, large time
deposits in domestic offices, federal funds purchased and securities
sold under repurchase agreements, demand notes issued to the U.S.
Treasury, subordinated notes and debentures, and other borrowed
money.

(2.) Measured as the sum of construction and land development loans
secured by real estate; real estate loans secured by nonfarm
nonresidential properties; real estate loans secured by
multifamily residential properties: and loans to finance
commercial real estate, construction, and land development
activities not secured by real estate.

Meanwhile, loans expanded a brisk 8 percent, about the same pace as in 1998, when bank lending was given a considerable boost by the Russian default in August of that year. Within loan categories, the growth of commercial and industrial loans moderated but remained strong, and real estate loans grew vigorously. Consumer loans originated by banks rose moderately last year.(2)

Loans to Businesses

Growth of loans to commercial and industrial (C&I) enterprises expanded a strong 8.1 percent in 1999, although the pace was down somewhat from the average of the previous two years. C&I lending last year was supported by a large rise in business outlays on capital goods that exceeded the increase in cash flow (chart 4). Cash-financed mergers and acquisitions, however, boosted overall financing needs by less than the previous year as the pace of net equity retirement slowed. Cash purchases of equity are frequently financed with bank loans, at least initially, and changes in merger and acquisition financing needs are typically cited as the main reason for changes in loan demand by respondents to the Federal Reserve's quarterly Senior Loan Officer Opinion Survey on Bank Lending Practices (BLPS).(3)

[Graph omitted]

In the wake of the Russian default, a large fraction of respondents to the BLPS reported tightening their standards and terms for C&I loans during the fourth quarter of 1998 (chart 5). As financial markets calmed during 1999, however, there was no indication that banks' standards or terms became any less stringent. In fact, on net, small fractions of BLPS respondents continued to report tightening standards and charging higher spreads on C&I loans. As the year unfolded, increasing fractions of banks reported charging higher premiums on riskier loans to large and medium-sized businesses, possibly because of admonitions by banking regulatory agencies for vigilance in the area of loan quality.(4)

[Graph omitted]

Information from the Federal Reserve's quarterly Survey of Terms of Business Lending (STBL) was consistent with the information from the BLPS, suggesting that banks had tightened lending standards and terms over the past year.(5) In the STBL, the share of loan originations that was secured by collateral hovered at levels near the top of the historical mange, as did the share of loan originations made under commitment. In addition, the dollar volume of loan originations rated as being of minimal or low risk increased from 29 percent of total originations in 1998 to 33 percent in 1999.(6)

STBL data also corroborate evidence from the BLPS that banks charged higher spreads on business loans in general and on riskier loans in particular. The average spread of loan rates over the intended federal funds rate on new C&I loans (adjusted for changes in the composition of loan originations) increased dramatically during the fourth quarter of 1998 and remained close to that elevated level throughout 1999 (chart 6). Indeed, the average spread on relatively risky loans made last year rose well above the levels established during the fourth quarter of 1998, accounting for much of the upward trend in the overall average loan spread.(7)

[Graph omitted]

Partly because of these developments, bank loans as a share of nonmortgage credit market debt owed by the nonfinancial business sector declined last year, as firms that borrowed met somewhat more of their funding needs by issuing commercial paper and bonds (chart 7). However, in the year's final quarter, the share of bank loans rose, particularly for larger banks, perhaps because of concerns about the risk of computer-related business disruptions during the century date change. Inventory growth picked up in that quarter, firms appeared to build up liquid assets for precautionary reasons, and bond issuance was curtailed, all adding to demand for intermediated debt. Nonetheless, BLPS respondents reported that concerns about the transition to the year 2000 had only a limited influence on bank lending (see box "Business Lending around the Century Date Change").

[Graph omitted]

Business Lending around the Century Date Change

Over the past two years, the Federal Reserve Board's
quarterly Senior Loan Officer Opinion Survey on Bank Lending
Practices (BLPS) has asked banks to report on their
management of risks related to potential Year 2000 (Y2K)
problems and about the supply of, and the demand for,
business credit extending over the century date change.
According to the May 1999 survey, a large majority of
banks had evaluated more than 90 percent of their material
business customers for Y2K preparedness.(1) By August,
almost all banks had reached this level, and more than
95 percent of the customers that they had evaluated were
making satisfactory progress.

About 80 percent of BLPS respondents consistently
reported that Y2K issues had no effect on either the
standards or the terms being applied to renewals of existing
lines of credit, even if their new maturity date extended into
2000. In addition, almost all banks reported that, for existing
customers, they were willing to extend lines of credit
specifically designed for addressing Y2K concerns. However,
only one-third of the respondents were willing to
extend such lines to new customers. Moreover, many banks
applied somewhat tighter standards and terms to Y2K contingency
lines of credit than to otherwise similar lines for
similar borrowers, and demand for such lines was not
widespread.

The Federal Reserve actively attempted to assuage fears
about the cost of funds extending over year-end. A "century
date change special liquidity facility" (SLF) made Federal
Reserve credit available to depository institutions in sound
financial condition without the usual administrative constraints
on discount window borrowing. The SLF was available
from October 1, 1999, to April 7, 2000, and offered
loans at a premium of 150 basis points over the Federal
Open Market Committee's intended federal funds rate.

Weekly data on bank credit revealed strong growth in
both C&I loans and security loans during November and
early December as banks' balance sheets expanded rapidly
in the fourth quarter of 1999. In the November 1999 BLPS,
several large banks reported increased demand from C&I
firms seeking to avoid high interest rates in the commercial
paper market. In the January 2000 BLPS, however, only a
few respondents suggested that the rise in demand for
C&I loans in the fourth quarter of 1999 was, even in part,
specifically due to concerns related to the century date
change. For security loans, the BLPS respondents indicated
that brokers and dealers had experienced heavy funding
needs and, in fact, turned to banks when the cost of
commercial paper with maturities extending over year-end
rose markedly and other institutional lenders pulled
back (chart).

[Graph omitted]

Evidence from the STBL

A statistical examination of the Federal Reserve's quarterly
Survey of Terms of Business Lending (STBL) suggests that
loans made under commitment and maturing in the first
three months of 2000 were only minimally more expensive
because of their maturity dates--about 6 basis points.(2) This
result is consistent with the information from the BLPS that
indicated that most banks were not increasing the cost of
outstanding lines of credit for Y2K lending. However, even
loans that were not made under commitment and that
matured in the first quarter carried only 22 extra basis points
on their spreads. Banks may have been able to charge
relatively low risk premiums at that time because of the
effectiveness of their preceding efforts to monitor their
customers' Y2K preparedness.

Aftermath

In the end, the century date change passed without any
major disruptions to financial markets and few reports of
Y2K-related difficulties elsewhere. The spread between the
rate on three-month commercial paper and the intended
federal funds rate fell consistently from its October peak
through the early part of 2000. Evidently in response,
security loans ran off through the end of February, reversing
their earlier rise. Banks also experienced some runoff of
C&I loans during the last two weeks of December and first
two weeks of January, In the January BLPS, banks mentioned
buildups of inventories and liquidity to explain strong
demand for C&I loans in the final months of 1999, and it
was possible that some of the strength in C&I lending was
for Y2K-related reasons that were not evident to respondents.
However, few domestic banks reported that they
extended more than a negligible amount of credit under
Y2K contingency lines.

Most banks reported no unusual funding pressures around
year-end. Sixty percent reported that neither credit demands
nor deposit flows were materially affected by Y2K-related
concerns. In addition, the increase in the demand for
currency near year-end was smaller than banks expected, and
they were thus left with large amounts of vault cash (which
increased $27 billion in the fourth quarter of 1999). Because
vault cash earns no return, this accumulation likely had a
small adverse effect on bank profitability during the final
quarter of last year.

(1.) A material business customer is one that represents a material
risk as indicated, for example, by the size of the overall relationship
with the customer, the customer's risk rating, the complexity of the
customer's operating and information technology systems, and the degree
of the customer's reliance on these systems.

(2.) Using data from the STBL, we examined the effect that various loan
characteristics (such as risk rating, maturity, commitment status, and
so on) may have had on the spread of fixed-rate loans over the intended
federal funds rate. To estimate the effect of Y2K jitters on this
spread, we used an indicator variable for loans maturing in the first
quarter of 2000 plus a variable representing the interaction of those
loans with commitment status. Numerous other versions of this
regression equation yielded qualitatively similar results (results
available upon request).

In jumping more than 15 percent, commercial real estate loans last year registered their largest increase since 1987, suggesting that rising interest rates had a limited effect on demand in this market. The rapid growth was also in spite of BLPS respondents' indications that they had tightened standards for commercial real estate lending in response to the financial market distress in the fourth quarter of 1998 (chart 8). The quickened pace was evident among banks of all sizes and in all categories of commercial real estate lending--multifamily housing, construction and land development, and nonfarm, nonresidential real estate. Construction and land development loans advanced most rapidly, 27 percent, while multifamily housing grew nearly 23 percent last year, a sharp acceleration from the 5 percent pace in 1998.

[Graph omitted]

In addition to the strong economy, two other factors contributed to boosting commercial real estate loans. Real estate investment trusts (REITs), which overall suffered a decline in their stock prices of nearly 20 percent in 1999, were much less active in acquiring and developing properties. Private developers, who generally use more debt financing than do REITs, filled the void, and turned to banks for financing. Second, the issuance of domestic securities backed by commercial mortgages (commercial-mortgage-backed securities, or CMBS) was off 24 percent in 1999. Spreads on CMBS spiked in the fourth quarter of 1998 and remained elevated throughout 1999, perhaps causing some banks that normally participate in this market to retain a greater portion of commercial real estate loans on their books (chart 9). In addition, banks as a whole were able to take market share from the commercial real estate divisions of Wall Street investment banks, which generally rely on CMBS financing rather than carrying loans on their balance sheets.

[Graph omitted]

Loans to Households

Banks were important suppliers of consumer credit again last year. The small slippage in the stock of consumer loans held by banks in 1999 reflected the high proportion of these loans that were securitized (see text note 2), a proportion that increased again in 1999 (chart 10). Correspondingly, the share of consumer loans in banks' loan portfolios fell to a new low of about 16 percent. Counting securitized loans, however, consumer loans originated by banks grew an estimated 4.7 percent in 1999.(8)

[Graph omitted]

Banks were willing suppliers of consumer credit, according to BLPS respondents, who also indicated that demand for consumer loans became moderately stronger, on net, throughout the year. However, the survey also suggested that banks, on net, continued to tighten standards and charge moderately higher spreads on credit card loans, which may have contributed to the fall in such loans at banks (chart 11).

[Graph omitted]

Real estate loans for one- to four-family homes increased 9.7 percent at banks, up from 6.3 percent in 1998. In part, the acceleration reflected an exceptionally strong housing market, with new and existing home sales reaching record levels early in the year despite the rise in mortgage rates that began at the end of 1998. In addition, rising interest rates drove up the share of mortgage lenders' originations that were attributable to adjustable-rate mortgages (ARMs), from 11 percent in January to 30 percent by August (chart 12). This shift to ARMs likely contributed to reduced securitizations because the maturities (more precisely, the durations) of ARMs match those of banks' liabilities more closely than do those of fixed-rate mortgages.

[Graph omitted]

Home equity loans increased 5.9 percent in 1999 after having fallen 1.6 percent in 1998. In addition, the ratio of outstanding home equity loans to total commitments declined from 46 percent in 1998 to 42 percent in 1999. During 1998, some households were able to tap into the accumulated equity in their homes directly in the form of cash-out refinancing and use the proceeds to substitute for other debt, including home equity loans.(9) Thus, the growth in home equity loans and lines (as well as consumer credit) last year may have been supported by the 67 percent plunge in refinancing activity relative to 1998 (chart 13).

[Graph omitted]

Other Loans and Leases

The other loans and leases category grew 6.4 percent in 1999. Leases, which expanded 22 percent in 1999, were the fastest growing component and now account, for almost one-third of this category, up from about one-seventh in 1994. Loans to depository institutions, the second largest item in this category, expanded only 2 percent in 1999, after advancing 13 percent in 1998. In part, the sluggishness of loans to depository institutions may reflect the increased reliance of commercial banks on loans from the Federal Home Loan Bank System (FHLB), as discussed below.

Securities

Taking banks' trading and investment accounts together, securities growth slowed in 1999 to a relatively moderate 5.1 percent, down from more than 8 percent per year in the previous two years. Holdings in the trading account fell sharply for a second year; holdings in the investment accounts rose, but more slowly than in 1998.

A significant amount, of the slowdown in the investment account was attributable to the effect of rising interest rates on the 86 percent of those assets that were classified as available for sale and therefore carried at market value. At the end of 1999, the market value of these securities was about $18 billion less than their book value, whereas at the end of 1998 the market value exceeded the book value by $10 billion.

Securities growth in the investment account was also held down by runoffs of securities acquired during the fourth quarter of 1998. This pattern was particularly evident for transactions in mortgage-backed securities, which banks retained in 1998 given the lack of demand for securitized assets during the financial crisis following the Russian default; as market conditions improved in the first half of 1999, banks then sold these securities.

Still, banks' investment accounts rose 6 percent in 1999. Within the investment account, which now comprises more than 18 percent of bank assets, the share represented by Treasury securities edged down, and the share in corporate and other private debt rose correspondingly. Some of the shift away from Treasury securities last year was perhaps the result of the depressing effect that soaring federal budget surpluses have had on the quantity of these securities, driving up the prices, and thus reducing the yields. Equity investments, although still a tiny fraction of total assets, grew rapidly.

Regarding the pullback in trading account assets, the 1998 fall represented a retreat from foreign trading operations, whereas the drop in 1999 was spread about equally across both domestic and foreign offices. At just over 2 percent, the share of assets held in trading accounts is now the lowest it has been since 1992.

Liabilities

A preference for safety and liquidity during the financial turmoil of the final quarter of 1998 had led to a 21 percent annualized rate of increase in core deposits. In contrast, against the backdrop of increasing market interest rates and soaring prices for technology stocks, deposits on net declined early in 1999, and core deposits were flat for the year as a whole. Transaction deposits shrank an appreciable 9 percent, an acceleration of declines that began in 1994 as a result of retail sweep arrangements. Meanwhile, small time and savings deposits grew less than 4 percent, down from the average of about 9 percent in recent years. As a share of total liabilities, core deposits fell about 3 percentage points, to about 52 percent, after reaching 67 percent as recently as 1992.

The sluggishness of core deposits led banking institutions to continue to increase their reliance on generally more expensive managed liabilities. Managed liabilities grew faster than total bank assets for the seventh consecutive year, advancing more than 15 percent. Foreign deposits and large time deposits rose at double-digit rates, with most of the increase in conjunction with faster asset growth in the fourth quarter of 1999. In part, the advance in large time deposits during the final quarter of 1999 reflected increased investor demand for safe, liquid assets over the century date change.

The other-managed-liabilities category, which advanced almost 10 percent in 1998 and nearly 18 percent ($146 billion) in 1999, now represents about 19 percent of total liabilities.(10) More than 25 percent of that gain was related to an increase in borrowing from the FHLB, which reported that advances to member commercial banks expanded about $40 billion during 1999. The FHLB attributed the growth partly to the increasing number of commercial banks joining the system.(11)

Capital

Growth in equity capital at banks slowed to about 4 percent in 1999 after reaching nearly 10 percent in 1998. However, the slowing was in line with that of asset growth, and the share of assets funded by equity was unchanged at 8.5 percent. Banks were able to add $16 billion to retained earnings even as they increased dividend payments. They also added about $19 billion to paid-in capital, the other source of equity capital. Approximately half of the $19 billion represented new capital, a large portion of which came from parent holding companies; the remainder came primarily from the excess of equity issued to fund mergers over the value of the shares retired in those mergers. These additions to equity capital were partially offset, however, by a swing from $5 billion in net unrealized gains on available-for-sale securities in 1998 to a $13 billion loss last year.

After falling in 1997 and 1998, the percentage of assets held by well-capitalized banks rose to near its 1996 record level (chart 14). In addition, the average margin by which banks remained well capitalized firmed a bit in 1999 after having narrowed significantly in the previous five years.(12) Tier 1 capital increased 7.5 percent, a rate that exceeded the increase in equity capital mainly because net unrealized gains or losses on debt securities do not affect regulatory capital. The ratio of tier 1 capital to risk weighted assets inched up 14 basis points in 1999, as risk-weighted assets advanced only 6 percent (chart 15). Tier 2 capital, on the other hand, declined 1 percent, causing the ratio of total capital to risk-weighted assets to slip 5 basis points, on balance, to just over 12 percent.(13) The leverage ratio increased in 1999, as average tangible assets grew only 4 percent.

[Graphs omitted]

TRENDS IN PROFITABILITY

The net income of commercial banks grew 16 percent in 1999, to $71.5 billion. Bank earnings were at record levels in every quarter but the second, when a large bank that was acquired at the end of the quarter posted a $1.5 billion net loss.(14) Even so, the proportion of banks reporting negative net income, which has been rising steadily since 1995, rose again in 1999, by more than 1 percentage point, to 7.4 percent. With last year's losses more concentrated at the smallest banks, however, the share of the industry's assets at unprofitable banks fell from 2.6 percent in 1998 to 1.5 percent in 1999, about the midpoint of its range over the past few years and well below the levels registered in the late 1980s and early 1990s.

The industrywide return on assets rebounded 11 basis points last year, to 1.3 percent, after having been depressed significantly by the high level of restructuring charges associated with the frenzied pace of mergers and acquisitions during 1998 (table 2). The return on equity surged 1.4 percentage points, to 15.5 percent, a new record. In turn, dividends, which are paid primarily to parent holding companies, soared more than 26 percent last year, to $52 billion. Dividends as a percentage of assets increased 16 basis points last year, to a record 0.96 percent, after having declined 10 basis points in 1998.

2. Selected income and expense items
as a proportion of assets, 1992-99

Percent

             Item                 1992   1993   1994   1995   1996

Net interest income               3.89   3.90   3.78   3.72   3.73
Noninterest income                1.95   2.13   2.00   2.02   2.18
Noninterest expense               3.86   3.94   3.75   3.64   3.71
Loss provisioning                  .78    .47    .28    .30    .37
Realized gains on investment
    account securities             .11    .09   -.01    .01    .03
  Income before taxes and
    extraordinary items           1.32   1.70   1.73   1.81   1.85

Taxes and extraordinary items      .41    .50    .58    .63    .65
  Net income (return on assets)    .91   1.20   1.15   1.18   1.20

Dividends                          .41    .62    .73    .75    .90

Retained income                    .49    .58    .42    .43    .30

             Item                 1997   1998   1999

Net interest income               3.67   3.52   3.53
Noninterest income                2.23   2.41   2.66
Noninterest expense               3.61   3.77   3.77
Loss provisioning                  .41    .41    .39
Realized gains on investment
    account securities             .04    .06    .00
  Income before taxes and
    extraordinary items           1.93   1.81   2.04

Taxes and extraordinary items      .67    .61    .72
  Net income (return on assets)   1.25   1.20   1.31

Dividends                          .90    .80    .96

Retained income                    .35    .39    .36

Strong performance in all key business areas contributed to the record-breaking level of bank profits in 1999. The ratio of noninterest expenses to revenue--a key influence on industry profitability in recent years--resumed its downward trend last year; it had jumped sharply in 1998 because of a high level of charges related to mergers and acquisitions. Noninterest income, which benefited from a sharp pickup in nondeposit fee income and strong gains in trading income, surged almost 17 percent, about three times faster than noninterest expense. In addition, net interest income rose, stabilizing as a percentage of assets after having trended down steadily from the relatively high levels posted in the mid-1990s.

Although widespread by function, the improvement in profitability last year nevertheless was concentrated at large and medium-sized banks. After a dip below 11 percent in 1998, the return on equity at the 10 largest banks shot up 3 percentage points, to 13.6 percent, in 1999 (chart 16). Thus, the profitability of the 10 largest banks (which held 35 percent of the industry's assets at the end of the year) reestablished itself in the relatively high range of the mid-1990s.

[Graph omitted]

At the next 90 largest banks (also accounting for 35 percent of industry assets), the return on equity increased 1.3 percentage points last year, to 18.6 percent, a record high. The return at the next 900 largest banks (18 percent of industry assets) rose 61 basis points, to 16.2 percent, also a new record. For the small banks (12 percent of industry assets)--the remaining 7,600 or so banks smaller than the 1,000 largest--the return on equity declined 60 basis points, to 11.4 percent, the first year since 1992 that this group returned less than 12 percent.

The profitability gap between large and small banks would have been greater but for the growth in recent years in the number of smaller banks that have elected corporate status under subchapter S of the Internal Revenue Code.(15) At the end of 1999, about 15 percent of insured commercial banks had claimed S status and accounted for little more than 2 percent of the industry's assets (table 3).

3. Banks claiming corporate status under subchapter S of
the Internal Revenue Code, year-end 1997-09

Percent

                                Percentage      MEMO:
Year   Number    Percentage    of assets of   Number of
                of all banks    all banks     all banks

1997     601        6.5             .9          9,188
1998   1,041       11.8            1.6          8,815
1999   1,283       14.9            2.0          8,620

NOTE. For definition of subchapter S status
see text note 15.

Despite the profitability of their bank subsidiaries, bank holding companies, particularly the large money center banks, ended the year with their stock prices down as much as 20 percent compared with the beginning of the year (chart 17), whereas the S&P 500 and most other broad stock indexes rose over the course of the year.

[Graph omitted]

The poor performance of the banking sector's equity prices was likely due to two factors. First, the rise in money market interest rates and the prime rate that began around midyear added to the interest burden on bank borrowers and raised the likelihood of an economic slowdown. Such developments increase the possibility of higher loan charge-off rates and loan loss provisioning and lowered future bank earnings.

Second, the earnings results of several large-scale bank mergers fell short of expectations last year. In particular, compared with analysts' initial forecasts, six large banks that were involved in mergers in 1997 and 1998 collectively generated an earnings shortfall of more than $5 billion during 1999.

Interest Income and Expense

Although market interest rates rose in the latter part of 1999, they were lower on average for the year than in 1998, and banks' interest income and interest expense as a percentage of their average interest-earning assets fell about 30 basis points last year. As a result, the industrywide net interest margin, or the ratio of net interest income to average interest-earning assets, remained about unchanged at roughly 4.1 percent in 1999 (chart 18, top).

[Graph omitted]

The net interest margin last year was above the levels of the late 1980s but well below the levels of the early 1990s, when diminished competition for deposit funds in a time of sluggish economic growth, plus a desire to curb asset growth to improve capital positions, resulted in deposit rates falling more than loan rates. The steady narrowing of the net interest margin since 1993 reflects a confluence of two factors: aggressive loan pricing and the increased reliance on managed liabilities.(16)

The decline in the industrywide net interest margin halted last year as banks became less accommodative late in 1998 and continued to tighten lending terms throughout 1999. As noted, respondents to the BLPS reported higher spreads on business loans throughout 1999, and evidence from the STBL indicates that the spreads on C&I loan originations during 1999 edged higher, especially for riskier loans.

The industrywide results mask important differences, however, in the behavior of the net interest margin across different bank sizes (chart 18, bottom). For all but the 100 largest banks, the net interest margin declined last year. The decline was particularly apparent for medium-sized banks (ranked 101 through 1,000), which saw their net interest margin slump 23 basis points, to 4.4 percent, a level not seen since the early 1990s. For small banks, the net interest margin declined 8 basis points and, at the end of 1999, stood considerably below the elevated levels of the mid-1990s. The net interest margin at the top 10 banks, on the other hand, climbed 13 basis points last year, to 3.5 percent, ending the string of declines that began in 1994. At the next largest 90 banks, the net interest margin edged up 2 basis points.

Noninterest Income and Expense

Contributing importantly to the industry's record profitability, noninterest income rose 25 basis points as a percent of assets last year--the largest annual gain on record--and increased nearly 2.5 percentage points as a share of revenue. At the end of 1999, noninterest income accounted for 43 percent of commercial banks' total revenue, up 10 percentage points over the past decade (chart 19, top).

[Graph omitted]

The surge in noninterest income last year was concentrated in trading income (chart 19, middle) and in the "nondeposit fee income" component of other noninterest income (chart 19, bottom), both categories reflecting activities of large banks. Nondeposit fee income, which jumped 1.6 percentage points as a share of revenue last year, includes credit card fees, mortgage servicing and refinancing fees, fees from the sale and servicing of mutual funds and annuities, ATM surcharges, and fee income from securitized loans and securities lending.

Although no data on the individual elements of nondeposit fee income are available, the increase last year probably reflected, in part, the continued growth in the share of bank loans, especially consumer loans that are securitized. In addition, the rapid growth of securities lending over the past decade (chart 20), spurred on by the desire to increase earnings on assets held in trust, has also likely contributed to the increase in nondeposit fees.(17) The major negative element in nondeposit fee income was probably the plunge in mortgage refinancing activity, for which banks collect processing fees.

[Graph omitted]

Trading income as a share of revenue grew a sharp 1/2 percentage point, finishing the year above 3 percent for the first time since 1993 (chart 19). The jump in trading revenue was driven by a five-fold increase in income earned on equity, commodity, and other exposures (table 4). Revenue from equity exposures soared more than 300 percent during 1999, and trading income earned on interest rate exposures shot up 56 percent. Trading income earned on foreign exchange exposures remained robust last year, although it declined about 7 percent from the very high level posted in 1998.

4. Trading revenue at all U.S. banks,
by type of exposure, 1995-99

Millions of dollar

                                       Equity,
Year   Total    Interest   Foreign    commodity,
                  rate     exchange   and other

1995    6,337    3,012      2,491        635
1996    7,526    4,112      2,689        725
1997    8,020    3,995      3,951         72
1998    7,994    2,469      5,170        355
1999   10,486    3,864      4,813      1,825

The nonfee component of other noninterest income advanced nearly 40 basis points as a share of revenue last year. This category includes income from professional services, such as those provided for holding company affiliates; gains on the sale of assets other than securities, such as loans and bank branches; and income from venture capital activities. Gains on the venture capital activities of banks' small business investment subsidiaries are also booked in this category. The record dollar amount of IPOs last year suggests that this category contributed importantly to the growth of the nonfee component (chart 21). Both deposit fees and fiduciary income as a share of revenue edged down about 5 basis points last year, although fiduciary income remained at an elevated level relative to historical norms.

[Graph omitted]

Noninterest expense as a share of revenue dropped 2.5 percentage points last year after having spiked up in 1998 (chart 22, top). The 1998 spike was produced by growth of nearly 18 percent in the broad "other noninterest expense" category (chart 22, bottom), which accounts for nearly half of total noninterest expense and includes charges for mergers and restructuring and for data processing services. As noted, merger activity was much higher in 1998 than 1999, and the slowdown in that activity probably caused the deceleration in the growth rate of other noninterest expense to just 3 percent and the decline in noninterest expense as a whole. Charges for computer services were likely high in both 1998 and 1999, given the effort to ensure computer system readiness for the century date change.

[Graph omitted]

The growth of noninterest expense was also damped by slowdowns in the industry's growth of wages and occupancy costs last year, both of which retreated significantly from the 10 percent pace they each posted in 1998. The rise in labor costs was restrained in part because employment, which had advanced 4.3 percent in 1998, rose less than 3 percent last year, perhaps because of the high level of industry mergers and acquisitions in recent years. With revenue growing faster than employment, revenue per employee increased 7.3 percent, more than off-setting the 5.5 percent rise in employment costs per employee. The decline in the growth of occupancy costs last year may also have reflected mergers and acquisitions (which can reduce the need for office space) and a significant slowdown in the rise of office rents.

Loan Performance and Loss Provisioning

Profitability last year was supported by good overall loan performance, as most indicators of asset quality showed few signs of deterioration. Reflecting the strong market for office and commercial space, delinquency and charge-off rates on commercial mortgages remained at very low levels last year (chart 23, left). The delinquency and charge-off rates on C&I loans both rose last year but remained fairly low by historical standards.

[Graph omitted]

The pickup in C&I charge-offs was driven entirely by an increase in loss rates on C&I loans booked at domestic offices. Evidence from a recent BLPS indicates that problem C&I loans at domestic commercial banks have been largely confined to specific industries, particularly health care. The charge-off rate on C&I loans booked abroad, which accounted for about 18 percent of all C&I loans last year, held steady in the elevated range posted in the aftermath of financial turmoil in the second half of 1998. Delinquencies and charge-off rates on agricultural production loans also rose early last year, likely because of low prices for agricultural products and increases in production costs.

The ratio of charge-offs to delinquencies on C&I loans increased for the second consecutive year in 1999 and now stands in the range comparable to that of the 1990-91 recession. In addition to the concentration of C&I loans in certain troubled industries, such as health care, a factor boosting delinquency and charge-off rates may be the "seasoning"--the increase in the age--of outstanding C&I loans. The longer a loan remains in a portfolio, the greater the probability of its delinquency and default.

Two factors may be contributing to the seasoning of banks' C&I loan portfolio. The first is the slowing in the growth of business loan originations, from 12 percent in 1997 and 1998 to 8 percent last year. When loan growth decelerates, the resulting reduction in the share of new loans in the portfolio can raise the average delinquency rate in the short run; the opposite effect occurs when loan growth accelerates. Second, according to the STBL, the average maturity of C&I loan originations has risen significantly over the past several years (chart 24). An increase in the maturity of loan originations would eventually raise the average age of outstanding loans in the portfolio.

[Graph omitted]

The quality of household loans improved last year, but the overall picture remains mixed. The delinquency rate on credit card loans, while declining 10 basis points, remained on the high side of historical norms. The net charge-off rate on credit card loans declined for the second consecutive year, but it too remained at an elevated level. A similar picture is presented by delinquency and charge-off rates on other consumer loans. By contrast, the delinquency rate on single-family home mortgages fell 20 basis points, to below 2 percent, an exceptionally low level, while the charge-off rate was essentially unchanged, also at a low level (chart 23, right).

Despite the slight deterioration in the quality of the C&I loan portfolio, the financial condition of the nonfinancial business sector remained generally positive. The aggregate debt-service burden for nonfinancial corporations--measured by the ratio of net interest payments to cash flow--increased somewhat in 1999 but stayed in a low range relative to historical levels (chart 25).

[Graph omitted]

On the household side, debt burden, as measured by the sum of interest payments and required principal payments as a fraction of disposable income, increased last year and moved closer to the high levels of the middle and late 1980s (chart 25). On a positive note, the number of personal bankruptcies filed last year retreated significantly from the record level posted at the end of 1998.

The exceptional strength of the economy in 1999 clearly contributed to the continued favorable trend in overall loan performance. However, a slowdown in income carries with it the prospect of greater loan losses. As has been the case for several years, loan loss provisioning last year was only a bit above loan charge-offs.

Given the robust growth in loans, reserves for loan and lease losses as a percentage of loans and leases continued their downward trend. At the end of last year, the fraction stood at about 1.8 percent (chart 26, top), more than 40 basis points below the average level of the past fifteen years. Relative to delinquent loans, however, loan-loss reserves remained elevated, although the ratio declined slightly last year (chart 26, bottom); relative to net charge-offs, loan-loss reserves posted their first increase since 1994 and are now near the middle of their historical range. The firming in the ratio of reserves to net charge-offs last year owes much to the decline in charge-offs on consumer loans.

[Graph omitted]

INTERNATIONAL OPERATIONS OF U.S. BANKS

The share of U.S. bank assets booked at foreign offices ticked down a bit in 1999, to 13 percent, after having fallen 2 percentage points in 1998 because of jitters surrounding many developing economies.(18) Strong income from foreign operations during the first quarter of 1999 helped boost the share of income attributable to such operations to 9.75 percent last year, up from 8.5 percent in the previous year. The rise in income was almost entirely attributable to a rebound in noninterest income, which in turn had been depressed in 1998 by the large trading losses that stemmed from the Russian default.

The exposure of U.S. commercial banks to Russia and to Eastern European, Latin American, and selected Asian economies slipped in 1999 after having fallen about 10 percent from year-end 1997 to year-end 1998 (table 5). On a percentage basis, banks cut their exposure to Eastern Europe and Russia by the largest amount last year; however, their total exposure to this area remained small--only 2.85 per cent of tier 1 capital at the end of 1999. The exposure of money center and other large banks to Latin America declined more than 10 percentage points, even as Moody's upgraded Mexico's sovereign debt to investment grade and the Brazilian economy rebounded after shaking off the effects of the devaluation of the real in January 1999.

5. Exposure of selected U.S. banking organizations to selected
economies at year-end, relative to tier 1 capital, 1997-99

Percent except as noted

                         All reporting            Money center
                                              and other large banks

Region or country

                     1997    1998    1999     1997    1998    1999

Selected Asian
  countries(1)       27.11   15.49   14.37    43.76   24.02   20.73

Eastern Europe and
    Russia
  All                 5.84    3.49    2.85     9.97    5.61    4.25
  Russia              3.02     .43     .37     5.15     .68     .55

Latin America
  All                49.92   42.93   39.00    78.78   64.20   53.90
  Brazil             16.39   11.27   10.49    26.28   17.04   14.53

Total                82.87   61.90   56.22   132.51   93.83   78.88

                            Other                   MEMO:
                                                Total exposure
Region or country                             all reporting banks
                                              (billions of dollars)

                     1997    1998    1999     1997     1998    1999

Selected Asian
  countries(1)        3.90    2.08    1.75    55.24    37.87    37.45

Eastern Europe and
    Russia
  All                  .14     .16     .08    11.91     8.53     7.43
  Russia               .08     .00     .01     6.16     1.05      .95

Latin America
  All                 9.54    9.51    9.41   101.73   104.96   101.63
  Brazil              2.59     .00    2.47    33.40    27.55    27.34

Total                13.57   11.75   11.24   168.89   151.36   146.51

NOTE. Tier 1 capital for 1997 is estimated; for definition of tier 1
capital, see text note 13. Exposures consist of lending and
derivatives exposures for cross-border and local-office
operations. Respondents may file information on one
bank or on the bank holding company as a whole.

At year-end 1999, "all reporting" banks consisted of 104 institutions
with a total of $261 billion in tier 1 capital; of these institutions,
6 were money center banks ($133 billion in tier 1 capital), 5 were
"other large" banks ($40 billion), and the remaining 93 were "other"
banks ($87 billion). The average "other" bank at year-end 1999
had $13 billion in assets.

(1.) Indonesia, Korea, Malaysia, Philippines, and Thailand.

SOURCE. Federal Financial Institutions Examination Council
Statistical Release E.16, "Country Exposure Survey,"
available at www.ffiec.gov/E16/

RECENT DEVELOPMENTS

By the end of April 2000, the intended level of the federal funds rate had increased 50 basis points from its level at the end of 1999; the economy, however, appeared to be sustaining its momentum. The banking industry remained healthy, with high profits, good loan performance, and strong demand for credit. Many large bank holding companies, especially those with large securities underwriting and trading operations, reported higher than expected profits during the first three months of 2000. Core loan categories have continued to grow rapidly, while investments in securities have picked up a bit.

Bank holding company stocks, particularly those of money center banks, benefited briefly in late March from a swing by investors away from the technology sector to the so-called "old economy" stocks. By the end of April, however, the stock prices of money center bank holding companies were down 3.6 percent from year-end 1999, and those of regional banks were about 5 percent lower. Both had slightly underperformed the broader market, as measured by the S&P 500.

A new era in the financial services industry officially arrived when the Gramm-Leach-Bliley Act became effective on March 11. Shortly thereafter, the Federal Reserve Board announced that it had approved the applications of 117 bank holding companies and foreign banking concerns that had filed to become financial holding companies under the new law. These new entities will be allowed to merge with insurance companies and investment banks as well as to engage in numerous other previously restricted lines of business, most notably merchant banking.

A.1. Report of income, all U.S. banks, 1990-99

Millions of dollars

        Item             1990      1991      1992      1993      1994

Gross interest
      income            320,404   290,692   256,415   244,742   257,064
    Taxable
      equivalent        324,054   293,879   259,394   247,620   259,821
  Loans                 238,829   215,019   185,938   178,425   189,762
  Securities             51,031    52,769    51,825    48,678    48,299
  Gross federal
      funds sold and
      reverse
      repurchase
      agreements         12,571     9,149     5,913     4,796     6,415
  Other                  17,971    13,757    12,739    12,843    12,587

Gross interest
    expense             204,949   168,492   122,517   105,615   110,849
  Deposits              161,483   139,431    98,809    79,503    79,106
  Gross federal
      funds purchased
      and repurchase
      agreements         22,778    14,439     9,263     8,442    12,476
  Other                  20,687    14,623    14,441    17,669    19,269

Net interest income     115,455   122,200   133,898   139,127   146,215
    Taxable
      equivalent        119,105   125,387   136,877   142,005   148,972

Loss provisioning(1)     32,282    34,871    26,813    16,841    10,993

Noninterest income       55,684    61,124    67,044    75,847    77,223
  Service charges on
    deposits             11,446    12,884    14,126    14,898    15,281
  Income from
    fiduciary
    activities            8,886     9,499    10,452    11,199    12,124
  Trading income          4,854     5,954     6,273     9,238     6,249
  Other                  30,497    32,785    36,193    40,513    43,572

Noninterest expense     116,606   126,665   132,815   140,523   144,905
  Salaries, wages,
    and employee
    benefits             52,111    53,810    55,484    58,507    60,904
  Expenses of
    premises and
    fixed assets         17,547    17,984    18,152    18,578    18,978
  Other                  46,948    54,871    59,181    63,439    65,023

Net noninterest
    expense              60,922    65,541    65,771    64,676    67,682

Realized gains on
    investment
    account
    securities              474     2,897     3,957     3,054      -560

Income before taxes
    and extraordinary
    items                22,725    24,684    45,273    60,662    66,989
  Taxes                   7,749     8,292    14,450    19,861    22,430
  Extraordinary
    items                   650     1,198       401     2,085       -17
Net income               15,626    17,590    31,224    42,886    44,542

  Cash dividends
    declared             13,965    15,562    14,226    22,068    28,164
  Retained income         1,661     2,028    16,997    20,816    16,377

                         1995      1996      1997      1998      1999

Gross interest
      income            302,376   313,115   338,230   359,166   367,203
    Taxable
      equivalent        305,010   315,575   340,664   361,629   369,840
  Loans                 227,218   239,307   255,504   270,942   279,321
  Securities             51,030    50,601    52,662    56,597    62,389
  Gross federal
      funds sold and
      reverse
      repurchase
      agreements          9,744     9,265    13,658    14,997    12,333
  Other                  14,382    13,944    16,407    16,627    13,160

Gross interest
    expense             147,958   150,045   164,516   177,990   175,341
  Deposits              105,329   107,465   117,351   125,208   119,964
  Gross federal
      funds purchased
      and repurchase
      agreements         18,424    16,775    20,440    22,182    21,203
  Other                  24,204    25,806    26,724    30,599    34,174

Net interest income     154,418   163,070   173,714   181,176   191,862
    Taxable
      equivalent        157,052   165,530   176,148   183,639   194,499

Loss provisioning(1)     12,631    16,206    19,173    21,197    21,054

Noninterest income       83,851    95,278   105,775   123,779   144,586
  Service charges on
    deposits             16,057    17,042    18,558    19,770    21,589
  Income from
    fiduciary
    activities           12,890    14,288    16,604    19,272    21,136
  Trading income          6,337     7,526     8,020     7,994    10,486
  Other                  48,567    56,421    62,593    76,746    91,374

Noninterest expense     151,137   162,399   170,995   193,679   204,958
  Salaries, wages,
    and employee
    benefits             64,013    67,775    72,347    79,505    86,399
  Expenses of
    premises and
    fixed assets         19,760    20,883    22,082    24,158    25,943
  Other                  67,363    73,741    76,567    90,018    92,616

Net noninterest
    expense              67,286    67,121    65,220    69,900    60,372

Realized gains on
  investment account
  securities                481     1,123     1,826     3,087       251

Income before taxes
    and extraordinary
    items                74,980    80,864    91,146    92,881   110,689
  Taxes                  26,222    28,430    31,989    31,909    39,410
  Extraordinary
    items                    28        88        56       506       169
Net income               48,785    52,521    59,212    61,478    71,447

  Cash dividends
    declared             31,105    39,391    42,726    41,304    52,123
  Retained income        17,681    13,131    16,486    20,174    19,324

(1) Includes provisions for loan and lease losses
and for allocated transfer risk.
A.2. Portfolio composition, interest rates, and
income and expense, all U.S. banks, 1990-99

A. All banks

           Item                1990    1991    1992    1993    1994

                               Balance sheet items as a percentage
                               of average net consolidated assets

Interest-earning assets       87.82   88.04   88.33   88.50   86.55
  Loans and leases, net       60.53   59.55   57.30   56.25   56.07
    Commercial and
        industrial            18.50   17.33   15.78   14.88   14.51
      U.S. addressees         15.99   15.00   13.54   12.72   12.35
      Foreign addressees       2.51    2.33    2.24    2.16    2.16
    Consumer                  11.77   11.45   11.00   11.00   11.43
      Credit card              3.78    3.88    3.80    3.88    4.21
      Installment and
        other                  7.99    7.57    7.20    7.11    7.22
    Real estate               23.86   24.87   24.87   24.80   24.43
      In domestic offices     23.10   24.11   24.18   24.18   23.80
        Construction and
          land development     4.00    3.41    2.64    1.99    1.65
        Farmland                .51     .53     .56     .57     .56
        One- to four-family
            residential       11.21   12.27   12.91   13.49   13.74
          Home equity          1.67    1.95    2.09    2.07    1.91
          Other                9.54   10.32   10.83   11.42   11.84
        Multifamily
          residential           .62     .66     .75     .79     .79
        Nonfarm
          nonresidential       6.76    7.23    7.32    7.33    7.07
      In foreign offices        .76     .76     .69     .62     .63
    Depository
      institutions             1.60    1.42    1.24    1.08    1.42
    Foreign governments         .78     .75     .73     .67     .41
    Agricultural
      production                .96    1.01    1.02     .99    1.00
    Other loans                3.93    3.60    3.50    3.56    3.34
    Lease-financing
      receivables              1.12    1.09    1.03     .99    1.03
    LESS: Unearned income
      on loans                 -.42    -.36    -.28    -.21    -.16
    LESS: Loss reserves(1)    -1.57   -1.62   -1.60   -1.51   -1.36
  Securities                  19.09   20.70   23.52   25.37   24.27
    Investment account        17.63   18.93   21.18   22.50   21.60
      Debt                    17.37   18.62   20.82   22.12   21.21
        U.S. Treasury          4.57    5.06    6.49    7.08    6.77
        U.S. government
            agency and
            corporation
            obligations        7.56    8.75    9.86   10.73   10.24
          Government-backed
            mortgage pools     4.08    4.51    4.52    4.74    4.67
          Collateralized
            mortgage
            obligations        1.25    2.07    3.12    3.72    3.24
          Other                2.22    2.16    2.21    2.27    2.33
        State and local
          government           2.64    2.28    2.08    2.06    2.02
        Private mortgage-
          backed securities   n.a.      .94     .82     .73     .64
        Other                  2.59    1.59    1.58    1.52    1.54
      Equity                    .27     .31     .37     .38     .39
    Trading account            1.46    1.77    2.34    2.87    2.67
  Gross federal funds sold
    and reverse RPs            4.46    4.58    4.54    4.27    3.82
  Interest-bearing balances
    at depositories            3.75    3.21    2.97    2.62    2.40
Non-interest-earning assets   12.18   11.96   11.67   11.50   13.45
  Revaluation gains on
    off-balance-sheet
    items(2)                  n.a.    n.a.    n.a.    n.a.     2.61
  Other                       12.18   11.96   11.67   11.50   10.84

Liabilities                   93.60   93.33   92.82   92.15   92.12
  Interest-bearing
      liabilities             76.53   76.58   75.32   73.92   71.86
    Deposits                  63.44   64.45   62.94   60.26   57.34
      In foreign offices       9.26    8.55    8.37    8.32    9.39
      In domestic offices     54.18   55.90   54.56   51.94   47.96
        Other checkable
          deposits             6.19    6.72    7.65    8.24    7.80
        Savings (including
          MMDAs)              16.59   18.00   20.28   20.91   19.60
        Small-denomination
          time deposits       19.96   21.30   19.21   16.98   15.33
        Large-denomination
          time deposits       11.44    9.89    7.42    5.81    5.23
    Gross federal funds
      purchased and RPs        8.03    7.09    7.02    7.47    7.60
    Other                      5.07    5.03    5.36    6.19    6.92
  Non-interest-bearing
      liabilities             17.07   16.75   17.50   18.23   20.26
    Demand deposits in
      domestic offices        12.79   12.59   13.24   13.86   13.49
    Revaluation losses on
      off-balance-sheet
      items(2)                n.a.    n.a.    n.a.    n.a.     2.32
    Other                      4.27    4.16    4.27    4.37    4.45

Capital account                6.40    6.67    7.18    7.85    7.88

MEMO
Commercial real estate
  loans                       n.a.    12.02   11.34   10.63    9.94
Other real estate owned         .50     .75     .82     .63     .36
Managed liabilities           34.31   31.05   28.70   28.28   29.61
Average net consolidated
  assets (billions
  of dollars)                 3,338   3,379   3,442   3,566   3,863

                              Effective interest rate (percent)(3)

Rates earned
Interest-earning assets       10.67    9.57    8.27    7.61    7.61
    Taxable equivalent        10.80    9.69    8.37    7.71    7.70
  Loans and leases, gross     11.49   10.40    9.20    8.69    8.62
      Net of loss
        provisions             9.94    8.72    7.87    7.87    8.12
  Securities                   8.79    8.19    7.04    6.08    5.96
      Taxable equivalent       9.21    8.56    7.34    6.36    6.20
    Investment account         8.67    8.25    7.11    6.07    5.79
      U.S. government and
        other debt             8.92    8.43    7.18    6.07    5.80
      State and local          7.39    7.25    6.81    6.25    5.87
      Equity                   7.34    6.20    5.32    4.79    4.79
    Trading account           10.15    7.54    6.40    6.16    7.41
  Gross federal funds sold
    and reverse RPs            8.08    5.69    3.58    3.04    4.26
  Interest-bearing balances
    at depositories            9.96    8.44    7.31    6.61    5.71

Rates paid
Interest-bearing
    liabilities                8.04    6.55    4.75    4.01    4.01
  Interest-bearing deposits    7.57    6.34    4.51    3.65    3.53
    In foreign offices        10.71    8.54    7.32    6.82    5.59
    In domestic offices        7.02    6.00    4.07    3.14    3.14
      Other checkable
        deposits               4.79    4.34    2.70    1.99    1.85
      Savings (including
        MMDAs)                 5.99    5.11    3.25    2.50    2.58
      Large-denomination
        time deposits(4)       8.03    6.69    4.90    4.00    4.09
      Small-denomination
        time deposits(4)       7.97    6.93    5.15    4.19    4.17
  Gross federal funds
    purchased and RPs          7.97    5.76    3.64    3.07    4.18
  Other interest-bearing
    liabilities               12.26    8.65    7.87    8.02    7.25

                               Income and expense as a percentage
                               of average net consolidated assets

Gross interest income          9.60    8.60    7.45    6.86    6.65
    Taxable equivalent         9.71    8.70    7.54    6.94    6.73
  Loans                        7.15    6.36    5.40    5.00    4.91
  Securities                   1.53    1.56    1.51    1.37    1.25
  Gross federal funds sold
    and reverse RPs             .38     .27     .17     .13     .17
  Other                         .54     .41     .37     .36     .33

Gross interest expense         6.14    4.99    3.56    2.96    2.87
  Deposits                     4.84    4.13    2.87    2.23    2.05
  Gross federal funds
    purchased and RPs           .68     .43     .27     .24     .32
  Other                         .62     .43     .42     .50     .50

Net interest income            3.46    3.62    3.89    3.90    3.78
    Taxable equivalent         3.57    3.71    3.98    3.98    3.86

Loss provisioning(5)            .97    1.03    .78      .47     .28

Noninterest income             1.67    1.81    1.95    2.13    2.00
  Service charges on
    deposits                    .34     .38     .41     .42     .40
  Income from fiduciary
    activities                  .27     .28     .30     .31     .31
  Trading income                .15     .18     .18     .26     .16
    Interest rate exposures   n.a.    n.a.    n.a.    n.a.    n.a.
    Foreign exchange
      exposures               n.a.    n.a.    n.a.    n.a.    n.a.
    Equity, commodity, and
      other exposures         n.a.    n.a.    n.a.    n.a.    n.a.
  Other                         .91     .97    1.05    1.14    1.13

Noninterest expense            3.49    3.75    3.86    3.94    3.75
  Salaries, wages, and
    employee benefits          1.56    1.59    1.61    1.64    1.58
  Expenses of premises and
    fixed assets                .53     .53     .53     .52     .49
  Other                        1.41    1.62    1.72    1.78    1.68

Net noninterest expense        1.83    1.94    1.91    1.81    1.75

Realized gains on
  investment account
  securities                    .01     .09     .11     .09    -.01

Income before taxes and
    extraordinary items         .68     .73    1.32    1.70    1.73
  Taxes                         .23     .25     .42     .56     .58
  Extraordinary items           .02     .04     .01     .06    (*)

Net income (return on
    assets)                     .47     .52     .91    1.20    1.15
  Cash dividends declared       .42     .46     .41     .62     .73
  Retained income               .05     .06     .49     .58     .42

MEMO: Return on equity         7.31    7.80   12.64   15.32   14.63

           Item                1995    1996    1997    1998    1999

                              Balance sheet items as a percentage
                              of average net consolidated assets

Interest-earning assets       86.47   86.80   86.58   86.26   86.55
  Loans and leases, net       58.37   59.89   58.69   58.33   59.36
    Commercial and
        industrial            15.20   15.60   15.78   16.38   17.09
      U.S. addressees         12.87   13.07   13.18   13.62   14.43
      Foreign addressees       2.33    2.53    2.60    2.75    2.66
    Consumer                  12.08   12.21   11.44   10.36    9.71
      Credit card              4.69    4.87    4.55    3.96    3.51
      Installment and
        other                  7.39    7.34    6.89    6.39    6.20
    Real estate               25.01   25.06   25.02   24.87   25.44
      In domestic offices     24.36   24.43   24.41   24.30   24.87
        Construction and
          land development     1.59    1.63    1.73    1.86    2.18
        Farmland                .56     .56     .55     .55     .56
        One- to four-family
            residential       14.42   14.43   14.42   14.26   14.10
          Home equity          1.88    1.85    1.94    1.89    1.76
          Other               12.54   12.57   12.48   12.37   12.33
        Multifamily
          residential           .81     .85     .83     .82     .88
        Nonfarm
          nonresidential       6.97    6.96    6.88    6.81    7.15
      In foreign offices        .65     .63     .61     .57     .57
    Depository
      institutions             1.88    2.29    1.89    1.88    1.94
    Foreign governments         .30     .26     .18     .15     .16
    Agricultural
      production                .96     .92     .90     .89     .83
    Other loans                3.15    3.36    2.84    2.81    2.76
    Lease-financing
      receivables              1.19    1.51    1.87    2.14    2.53
    LESS: Unearned income
      on loans                 -.14    -.12    -.09    -.07    -.06
    LESS: Loss reserves(1)    -1.26   -1.21   -1.13   -1.07   -1.04
  Securities                  21.94   21.01   20.41   20.38   20.39
    Investment account        19.39   18.20   17.25   17.49   18.33
      Debt                    18.98   17.75   16.75   16.94   17.73
        U.S. Treasury          5.25    4.20    3.38    2.71    2.14
        U.S. government
            agency and
            corporation
            obligations        9.81    9.75    9.74   10.29   10.85
          Government-backed
            mortgage pools     4.47    4.80    4.94    5.17    5.23
          Collateralized
            mortgage
            obligations        2.67    2.11    1.94    2.13    2.15
          Other                2.68    2.83    2.86    2.99    3.46
        State and local
          government           1.80    1.68    1.59    1.57    1.62
        Private mortgage-
          backed securities     .62     .61     .50     .67     .88
        Other                  1.49    1.51    1.54    1.71    2.24
      Equity                    .41     .45     .50     .55     .61
    Trading account            2.55    2.81    3.16    2.90    2.06
  Gross federal funds sold
    and reverse RPs            3.93    3.82    5.18    5.37    4.61
  Interest-bearing balances
    at depositories            2.23    2.08    2.29    2.17    2.18
Non-interest-earning assets   13.53   13.20   13.42   13.74   13.45
  Revaluation gains on
    off-balance-sheet
    items(2)                   2.90    2.25    2.59    2.95    2.57
  Other                       10.62   10.95   10.83   10.79   10.89

Liabilities                   91.99   91.73   91.57   91.51   91.51
  Interest-bearing
      liabilities             71.86   71.62   71.36   71.33   72.52
    Deposits                  56.30   55.87   55.01   54.66   54.80
      In foreign offices      10.28   10.01   10.02   10.15   10.46
      In domestic offices     46.03   45.86   44.99   44.51   44.34
        Other checkable
          deposits             6.63    4.75    3.62    3.11    2.81
        Savings (including
          MMDAs)              17.48   18.71   19.13   19.91   21.00
        Small-denomination
          time deposits       16.14   15.97   15.17   14.15   13.10
        Large-denomination
          time deposits        5.77    6.42    7.08    7.34    7.42
    Gross federal funds
      purchased and RPs        7.71    7.18    8.13    7.99    7.97
    Other                      7.85    8.56    8.21    8.68    9.75
  Non-interest-bearing
      liabilities             20.13   20.11   20.21   20.18   18.99
    Demand deposits in
      domestic offices        12.68   12.82   12.16   11.00    9.78
    Revaluation losses on
      off-balance-sheet
      items(2)                 2.88    2.14    2.64    2.97    2.52
    Other                      4.57    5.14    5.41    6.21    6.70

Capital account                8.01    8.27    8.43    8.49    8.49

MEMO
Commercial real estate
  loans                        9.83    9.92    9.99   10.12   10.87
Other real estate owned         .19     .14     .11     .08     .06
Managed liabilities           32.08   32.73   34.09   34.94   36.58
Average net consolidated
  assets (billions
  of dollars)                 4,148   4,376   4,733   5,144   5,438

                              Effective interest rate (percent)(3)

Rates earned
Interest-earning assets        8.33    8.14    8.15    7.99    7.73
    Taxable equivalent         8.41    8.21    8.22    8.06    7.79
  Loans and leases, gross      9.25    8.99    9.01    8.84    8.50
      Net of loss
        provisions             8.74    8.39    8.34    8.15    7.86
  Securities                   6.51    6.42    6.50    6.37    6.28
      Taxable equivalent       6.73    6.66    6.73    6.63    6.48
    Investment account         6.35    6.35    6.45    6.29    6.26
      U.S. government and
        other debt             6.42    6.47    6.60    6.45    6.42
      State and local          5.82    5.55    5.41    5.23    5.13
      Equity                   5.51    5.23    5.15    4.92    4.87
    Trading account            7.73    6.86    6.75    6.85    6.48
  Gross federal funds sold
    and reverse RPs            5.63    5.21    5.45    5.29    4.78
  Interest-bearing balances
    at depositories            6.84    6.21    6.24    6.31    5.95

Rates paid
Interest-bearing
    liabilities                4.99    4.82    4.92    4.88    4.48
  Interest-bearing deposits    4.47    4.33    4.39    4.31    3.88
    In foreign offices         6.12    5.54    5.44    5.66    4.91
    In domestic offices        4.11    4.07    4.16    4.01    3.65
      Other checkable
        deposits               2.06    2.03    2.25    2.29    2.08
      Savings (including
        MMDAs)                 3.19    2.99    2.93    2.79    2.50
      Large-denomination
        time deposits(4)       5.47    5.39    5.45    5.22    4.93
      Small-denomination
        time deposits(4)       5.44    5.40    5.54    5.48    5.11
  Gross federal funds
    purchased and RPs          5.65    5.12    5.17    5.19    4.74
  Other interest-bearing
    liabilities                7.47    6.93    6.95    6.89    6.49

                               Income and expense as a percentage
                               of average net consolidated assets

Gross interest income          7.29    7.16    7.15    6.98    6.75
    Taxable equivalent         7.35    7.21    7.20    7.03    6.80
  Loans                        5.48    5.47    5.40    5.27    5.14
  Securities                   1.23    1.16    1.11    1.10    1.15
  Gross federal funds sold
    and reverse RPs             .23     .21     .29     .29     .23
  Other                         .35     .32     .35     .32     .24

Gross interest expense         3.57    3.43    3.48    3.46    3.22
  Deposits                     2.54    2.46    2.48    2.43    2.21
  Gross federal funds
    purchased and RPs           .44     .38     .43     .43     .39
  Other                         .58     .59     .56     .59     .63

Net interest income            3.72    3.73    3.67    3.52    3.53
    Taxable equivalent         3.79    3.78    3.72    3.57    3.58

Loss provisioning(5)            .30     .37     .41     .41     .39

Noninterest income             2.02    2.18    2.23    2.41    2.66
  Service charges on
    deposits                    .39     .39     .39     .38     .40
  Income from fiduciary
    activities                  .31     .33     .35     .37     .39
  Trading income                .15     .17     .17     .16     .19
    Interest rate exposures   n.a.      .09     .08     .05     .07
    Foreign exchange
      exposures               n.a.      .06     .08     .10     .09
    Equity, commodity, and
      other exposures         n.a.      .02    (*)      .01     .03
  Other                        1.17    1.29    1.32    1.49    1.68

Noninterest expense            3.64    3.71    3.61    3.77    3.77
  Salaries, wages, and
    employee benefits          1.54    1.55    1.53    1.55    1.59
  Expenses of premises and
    fixed assets                .48     .48     .47     .47     .48
  Other                        1.62    1.69    1.62    1.75    1.70

Net noninterest expense        1.62    1.53    1.38    1.36    1.11

Realized gains on
  investment account
  securities                    .01     .03     .04     .06    (*)

Income before taxes and
    extraordinary items        1.81    1.85    1.93    1.81    2.04
  Taxes                         .63     .65     .68     .62     .72
  Extraordinary items          (*)     (*)     (*)      .01    (*)

Net income (return on
    assets)                    1.18    1.20    1.25    1.20    1.31
  Cash dividends declared       .75     .90     .90     .80     .96
  Retained income               .43     .30     .35     .39     .36

MEMO: Return on equity        14.69   14.52   14.84   14.07   15.48

(*) In  absolute value, less than 0.005 percent.

n.a. Not available. MMDA Money market deposit account. RP Repurchase
agreement. CD Certificate of deposit.

(1.) Includes the allowance for loan and lease losses and the allocated
transfer risk reserve.

(2.) Before 1994, the netted value of off-balance-sheet items appeared
in "trading account securities" if a gain and "other
non-interest-bearing liabilities" if a loss.

(3.) When possible, based on the average of quarterly balance sheet
data reported on schedule RC-K of the quarterly Call Reports.

(4.) Before 1997, data for large time open accounts are included in
small-denomination time deposits.

(5.) Includes provisions for loan and lease losses and for allocated
transfer risk.
B. Ten largest banks by assets

           Item                1990    1991    1992    1993    1994

                              Balance sheet items as a percentage
                              of average net consolidated assets

Interest-earning assets       84.85   85.41   85.16   84.79   76.97
  Loans and leases, net       61.69   62.14   58.34   55.57   49.91
    Commercial and
        industrial            22.91   22.42   20.32   18.65   16.43
      U.S. addressees
      Foreign addressees      13.39   13.44   12.00   10.75    9.16
    Consumer                   9.53    8.97    8.32    7.90    7.27
      Credit card              6.87    7.20    7.31    7.33    6.59
      Installment and
        other                  2.20    2.53    2.61    2.50    2.28
    Real estate                4.67    4.67    4.70    4.83    4.31
      In domestic offices     20.56   21.68   19.93   18.54   16.21
        Construction and
          land development    17.36   18.37   17.07   15.99   13.80
        Farmland               3.79    3.42    2.48    1.59     .84
        One- to four-family
            residential         .08     .08     .07     .07     .06
          Home equity          9.31   10.34   10.08   10.29    9.69
          Other                1.31    1.63    1.63    1.60    1.40
        Multifamily
          residential          8.00    8.71    8.46    8.68    8.29
        Nonfarm
          nonresidential        .68     .57     .58     .53     .41
      In foreign offices       3.51    3.95    3.86    3.51    2.79
    Depository                 3.20    3.32    2.85    2.55    2.41
      institutions             3.64    3.05    2.56    2.35    3.37
    Foreign governments        2.76    2.88    2.75    2.46    1.27
    Agricultural
      production                .31     .31     .28     .27     .25
    Other loans                6.05    5.61    6.05    6.82    6.44
    Lease-financing
      receivables              1.60    1.68    1.51    1.30    1.14
    LESS: Unearned income
      on loans                 -.39    -.35    -.27    -.21    -.16
    LESS: Loss reserves(1)    -2.63   -2.34   -2.08   -1.94   -1.63
  Securities                  14.03   15.58   19.13   22.74   20.43
    Investment account         9.22    9.38   10.70   12.45   11.68
      Debt                     8.98    9.08   10.36   12.08   11.30
        U.S. Treasury          1.09    1.35    2.30    2.39    2.17
        U.S. government
            agency and
            corporation
            obligations        2.91    3.46    4.45    6.14    5.16
          Government-backed
            mortgage pools     2.24    2.26    2.43    3.30    2.79
          Collateralized
            mortgage
            obligations         .54    1.12    1.97    2.76    2.31
          Other                 .14     .08     .05     .08     .06
        State and local
          government           1.08     .77     .66     .59     .60
        Private mortgage-
          backed securities   n.a.      .48     .33     .38     .43
        Other                  3.90    3.01    2.62    2.59    2.94
      Equity                    .24     .30     .33     .36     .38
    Trading account            4.81    6.19    8.43   10.30    8.74
  Gross federal funds sold
    and reverse RPs            2.88    2.96    3.23    2.71    2.68
  Interest-bearing balances
    at depositories            6.25    4.74    4.45    3.76    3.95
Non-interest-earning assets   15.15   14.59   14.84   15.21   23.03
  Revaluation gains on
    off-balance-sheet
    items(2)                  n.a.    n.a.    n.a.    n.a.     9.89
  Other                       15.15   14.59   14.84   15.21   13.14

Liabilities                   95.29   94.97   94.44   93.24   93.42
  Interest-bearing
      liabilities             73.97   74.62   73.08   71.56   64.33
    Deposits                  57.95   57.67   55.73   52.91   48.20
      In foreign offices      29.66   28.47   27.16   25.51   26.10
      In domestic offices     28.28   29.19   28.56   27.41   22.10
        Other checkable
          deposits             2.74    3.00    3.38    3.45    2.91
        Savings (including
          MMDAs)              12.05   13.50   14.91   15.33   12.70
        Small-denomination
          time deposits        6.16    6.55    5.72    5.09    3.98
        Large-denomination
          time deposits        7.33    6.14    4.56    3.53    2.51
    Gross federal funds
      purchased and RPs        6.90    6.80    6.19    6.70    5.83
    Other                      9.13   10.15   11.16   11.94   10.29
  Non-interest-bearing
      liabilities             21.32   20.35   21.36   21.68   29.09
    Demand deposits in
      domestic offices        10.93   10.36   11.05   11.27   10.15
    Revaluation losses on
      off-balance-sheet
      items(2)                n.a.    n.a.    n.a.    n.a.     8.75
    Other                     10.39    9.99   10.30   10.41   10.20

Capital account                4.71    5.03    5.56    6.76    6.58

MEMO
Commercial real estate
  loans                       n.a.     9.05    8.01    6.46    4.65
Other real estate owned         .42     .78    1.13    1.02     .58
Managed liabilities           54.79   53.23   50.82   49.23   46.21
Average net consolidated
  assets (billions
  of dollars)                   725     717     775     818     949

                              Effective interest rate (percent)(3)

Rates earned
Interest-earning assets       11.65    9.92    8.67    8.16    8.15
    Taxable equivalent        11.70    9.95    8.72    8.20    8.18
  Loans and leases, gross     12.29   10.46    9.36    9.07    8.89
      Net of loss
        provisions            11.10    8.58    7.51    7.95    8.38
  Securities                   9.85    8.52    7.38    6.69    7.09
      Taxable equivalent      10.00    8.63    7.54    6.77    7.19
    Investment account         9.34    8.99    7.96    6.90    6.57
      U.S. government and
        other debt             9.68    9.29    8.13    6.99    6.70
      State and local          7.54    7.67    7.40    6.99    6.35
      Equity                   5.82    4.22    4.04    3.72    3.27
    Trading account           10.75    7.84    6.69    6.45    7.79
  Gross federal funds sold
    and reverse RPs            8.01    5.60    3.65    3.02    4.52
  Interest-bearing balances
    at depositories           11.06   10.05    9.29    8.34    7.27

Rates paid
Interest-bearing
    liabilities               10.18    7.71    6.17    5.60    5.43
  Interest-bearing deposits    9.03    7.09    5.33    4.50    4.32
    In foreign offices        11.11    8.76    7.55    6.87    6.04
    In domestic offices        6.81    5.47    3.25    2.36    2.35
      Other checkable
        deposits               4.35    3.93    1.97    1.28    1.10
      Savings (including
        MMDAs)                 6.21    5.09    2.95    2.14    2.35
      Large-denomination
        time deposits(4)       7.96    6.50    4.66    3.55    3.12
      Small-denomination
        time deposits(4)       7.76    6.09    3.81    3.01    2.80
  Gross federal funds
    purchased and RPs          7.75    5.98    4.04    3.26    4.05
  Other interest-bearing
    liabilities               17.27   11.20   10.40   11.16   10.87

                               Income and expense as a percentage
                               of average net consolidated assets

Gross interest income         10.37    8.77    7.69    7.22    6.37
    Taxable equivalent        10.43    8.80    7.72    7.25    6.40
  Loans                        7.96    6.77    5.65    5.22    4.49
  Securities                    .86     .84     .85     .86     .77
  Gross federal funds sold
    and reverse RPs             .25     .17     .14     .11     .15
  Other                        1.30     .98    1.05    1.04     .97

Gross interest expense         7.65    5.81    4.54    4.06    3.52
  Deposits                     5.41    4.23    3.09    2.48    2.15
  Gross federal funds
    purchased and RPs           .64     .43     .28     .24     .24
  Other                        1.60    1.15    1.17    1.35    1.13

Net interest income            2.72    2.96    3.15    3.16    2.86
    Taxable equivalent         2.77    2.99    3.18    3.19    2.88

Loss provisioning(5)            .77    1.21    1.12     .64     .26

Noninterest income             2.27    2.40    2.59    2.99    2.33
  Service charges on
    deposits                    .23     .26     .30     .30     .26
  Income from fiduciary
    activities                  .31     .33     .37     .39     .36
  Trading income                .52     .64     .66     .91     .53
    Interest rate exposures   n.a.    n.a.    n.a.    n.a.    n.a.
    Foreign exchange
      exposures               n.a.    n.a.    n.a.    n.a.    n.a.
    Equity, commodity, and
      other exposures         n.a.    n.a.    n.a.    n.a.    n.a.
  Other                        1.21    1.16    1.27    1.38    1.18

Noninterest expense            3.55    3.83    3.86    4.13    3.56
  Salaries, wages, and
    employee benefits          1.74    1.79    1.78    1.88    1.65
  Expenses of premises and
    fixed assets                .65     .66     .65     .66     .55
  Other                        1.16    1.38    1.43    1.59    1.36

Net noninterest expense        1.28    1.44    1.27    1.14    1.23

Realized gains on
  investment account
  securities                    .02     .04     .11     .13     .02

Income before taxes and
    extraordinary items         .69     .34     .87    1.50    1.39
  Taxes                         .27     .17     .26     .53     .48
  Extraordinary items           .06     .03    (*)      .16    (*)

Net income (return on
    assets)                     .48     .21     .61    1.13     .91
  Cash dividends declared       .26     .21     .18     .28     .58
  Retained income               .21    (*)      .43     .85     .33

MEMO: Return on equity        10.13    4.23   10.91   16.75   13.86

           Item                1995    1996    1997    1998    1999

                              Balance sheet items as a percentage
                              of average net consolidated assets

Interest-earning assets       77.02   79.94   81.62   81.07   81.29
  Loans and leases, net       50.05   53.51   50.91   50.77   53.38
    Commercial and
        industrial            16.16   17.17   16.90   18.07   19.24
      U.S. addressees
      Foreign addressees       8.66    9.59   10.24   11.76   13.14
    Consumer                   7.50    7.59    6.66    6.31    6.10
      Credit card              6.60    6.22    6.40    6.04    5.94
      Installment and
        other                  1.96    1.23    1.34    1.30    1.36
    Real estate                4.65    4.99    5.06    4.74    4.58
      In domestic offices     15.82   16.53   17.42   16.51   16.96
        Construction and
          land development    13.48   14.44   15.69   15.08   15.55
        Farmland                .58     .51     .68     .77     .90
        One- to four-family
            residential         .06     .06     .09     .09     .10
          Home equity          9.62   10.43   11.02   10.33   10.77
          Other                1.40    1.53    1.70    1.72    1.54
        Multifamily
          residential          8.22    8.90    9.31    8.61    9.22
        Nonfarm
          nonresidential        .38     .38     .39     .38     .43
      In foreign offices       2.83    3.05    3.52    3.51    3.35
    Depository                 2.35    2.09    1.73    1.43    1.41
      institutions             4.95    6.06    4.14    4.00    4.30
    Foreign governments         .90     .69     .45     .35     .38
    Agricultural
      production                .21     .23     .31     .28     .26
    Other loans                5.85    6.42    4.21    3.79    3.97
    Lease-financing
      receivables              1.14   1.59     2.24    2.81    3.41
    LESS: Unearned income
      on loans                 -.14    -.11    -.07    -.06    -.05
    LESS: Loss reserves(1)    -1.45   -1.30   -1.08   -1.01   -1.03
  Securities                  19.53   19.83   20.00   19.72   18.34
    Investment account        10.65   10.60   10.97   12.12   13.08
      Debt                    10.27   10.22   10.55   11.65   12.57
        U.S. Treasury          2.03    1.93    1.56    1.70    1.98
        U.S. government
            agency and
            corporation
            obligations        4.46    4.59    5.34    6.31    6.35
          Government-backed
            mortgage pools     2.89    3.58    4.26    5.13    5.03
          Collateralized
            mortgage
                obligations    1.50    . 95     .93     .93     .79
          Other                 .08     .06     .15     .26     .52
        State and local
          government            .49     .39     .51     .47     .45
        Private mortgage-
          backed securities     .32     .30     .32     .60     .57
        Other                  2.97    3.01    2.81    2.57    3.22
      Equity                    .38     .38     .42     .47     .51
    Trading account            8.88    9.23    9.03    7.60    5.25
  Gross federal funds sold
    and reverse RPs            3.20    3.10    7.56    7.81    6.64
  Interest-bearing balances
    at depositories            4.25    3.50    3.15    2.77    2.94
Non-interest-earning assets   22.98   20.06   18.38   18.93   18.71
  Revaluation gains on
    off-balance-sheet
    items(2)                  10.77    7.63    7.36    7.61    6.66
  Other                       12.21   12.43   11.02   11.32   12.05

Liabilities                   93.59   93.04   92.61   92.58   92.28
  Interest-bearing
      liabilities             63.37   64.45   65.83   65.81   66.88
    Deposits                  47.49   47.87   47.36   47.65   48.80
      In foreign offices      28.36   26.41   22.18   20.17   21.04
      In domestic offices     19.12   21.46   25.18   27.48   27.76
        Other checkable
          deposits             2.30    1.61    1.21    .99      .74
        Savings (including
          MMDAs)              10.56   12.31   14.26   15.84   16.83
        Small-denomination
          time deposits        4.04    4.68    5.82    6.03    5.66
        Large-denomination
          time deposits        2.23    2.86    3.89    4.62    4.53
    Gross federal funds
      purchased and RPs        6.17    5.88   10.26    9.79    8.84
    Other                      9.71   10.69    8.20    8.37    9.24
  Non-interest-bearing
      liabilities             30.22   28.59   26.78   26.76   25.40
    Demand deposits in
      domestic offices         8.88    9.73    8.98    8.46    7.82
    Revaluation losses on
      off-balance-sheet
      items(2)                10.68    7.27    7.53    7.66    6.51
    Other                     10.66   11.59   10.27   10.64   11.07

Capital account                6.41    6.96    7.39    7.42    7.72

MEMO
Commercial real estate
  loans                        4.40    4.65    5.45    5.61    5.69
Other real estate owned         .27     .18     .13     .09     .06
Managed liabilities           47.94   47.39   46.02   44.43   45.49
Average net consolidated
  assets (billions
  of dollars)                 1,051   1,189   1,514   1,820   1,935

                              Effective interest rate (percent)(3)

Rates earned
Interest-earning assets        8.20    7.72    7.55    7.54    7.35
    Taxable equivalent         8.22    7.74    7.60    7.57    7.39
  Loans and leases, gross      8.84    8.32    8.25    8.21    7.99
      Net of loss
        provisions             8.62    8.11    7.93    7.62    7.50
  Securities                   7.41    6.80    6.70    6.79    6.52
      Taxable equivalent       7.47    6.85    6.85    6.89    6.65
    Investment account         7.06    6.71    6.61    6.71    6.50
      U.S. government and
        other debt             7.22    6.86    6.80    6.92    6.68
      State and local          6.23    5.73    5.55    5.50    5.65
      Equity                   4.03    3.84    3.47    2.98    2.93
    Trading account            7.83    6.90    6.81    6.92    6.56
  Gross federal funds sold
    and reverse RPs            5.20    4.92    5.45    5.20    4.52
  Interest-bearing balances
    at depositories            7.15    6.71    6.91    7.16    7.22

Rates paid
Interest-bearing
    liabilities                5.88    5.44    5.41    5.29    4.79
  Interest-bearing deposits    4.99    4.57    4.54    4.40    3.82
    In foreign offices         6.07    5.62    5.52    5.83    4.99
    In domestic offices        3.42    3.32    3.69    3.39    3.04
      Other checkable
        deposits               1.29    1.32    1.97    1.67    1.44
      Savings (including
        MMDAs)                 3.11    2.76    2.68    2.45    2.11
      Large-denomination
        time deposits(4)       3.73    4.62    5.17    4.53    4.36
      Small-denomination
        time deposits(4)       5.08    4.58    5.45    5.21    4.95
  Gross federal funds
    purchased and RPs          5.22    4.93    5.02    5.18    4.53
  Other interest-bearing
    liabilities                9.80    8.86    9.13    8.85    8.61

                               Income and expense as a percentage
                               of average net consolidated assets

Gross interest income          6.42    6.26    6.31    6.21    6.01
    Taxable equivalent         6.43    6.27    6.33    6.23    6.03
  Loans                        4.44    4.48    4.31    4.27    4.35
  Securities                    .75     .71     .73     .81     .85
  Gross federal funds sold
    and reverse RPs             .21     .18     .45     .42     .30
  Other                        1.00     .88     .82     .70     .51

Gross interest expense         3.74    3.52    3.55    3.48    3.16
  Deposits                     2.43    2.26    2.26    2.20    1.97
  Gross federal funds
    purchased and RPs           .35     .31     .54     .54     .40
  Other                         .95     .95     .75     .74     .79

Net interest income            2.68    2.73    2.76    2.73    2.84
    Taxable equivalent         2.70    2.75    2.79    2.75    2.86

Loss provisioning(5)            .11     .11     .16     .31     .26

Noninterest income             2.16    2.34    2.12    2.16    2.55
  Service charges on
    deposits                    .25     .28     .32     .33     .37
  Income from fiduciary
    activities                  .30     .31     .34     .32     .31
  Trading income                .46     .52     .43     .34     .46
    Interest rate exposures   n.a.      .30     .23     .10     .17
    Foreign exchange
      exposures               n.a.      .17     .20     .22     .19
    Equity, commodity, and
      other exposures         n.a.      .05    (*)      .02     .09
  Other                        1.15    1.23    1.04    1.17    1.41

Noninterest expense            3.32    3.57    3.24    3.47    3.45
  Salaries, wages, and
    employee benefits          1.58    1.57    1.45    1.45    1.57
  Expenses of premises and
    fixed assets                .50     .50     .47     .47     .50
  Other                        1.24    1.50    1.33    1.54    1.38

Net noninterest expense        1.16    1.23    1.12    1.30     .90

Realized gains on
  investment account
  securities                    .03     .04     .08     .11     .03

Income before taxes and
    extraordinary items        1.44    1.44    1.56    1.22    1.71
  Taxes                         .55     .52     .58     .44     .66
  Extraordinary items          (*)     (*)     (*)     (*)     (*)

Net income (return on
    assets)                     .88     .92     .98     .78    1.05
  Cash dividends declared       .57     .70     .82     .53     .79
  Retained income               .31     .21     .15     .25     .26

MEMO: Return on equity        13.78   13.21   13.22   10.53   13.58

(*) In  absolute value, less than 0.005 percent.

n.a. Not available. MMDA Money market deposit account. RP Repurchase
agreement. CD Certificate of deposit.

(1.) Includes the allowance for loan and lease losses and the allocated
transfer risk reserve.

(2.) Before 1994, the netted value of off-balance-sheet items appeared
in "trading account securities" if a gain and "other
non-interest-bearing liabilities" if a loss.

(3.) When possible, based on the average of quarterly balance sheet
data reported on schedule RC-K of the quarterly Call Reports.

(4.) Before 1997, data for large time open accounts are included in
small-denomination time deposits.

(5.) Includes provisions for loan and lease losses and for allocated
transfer risk.
C. Banks ranked 11 through 100 by assets

           Item                1990    1991    1992    1993    1994

                              Balance sheet items as a percentage
                              of average net consolidated assets

Interest-earning assets       86.81   86.88   87.97   88.36   88.16
  Loans and leases, net       61.22   60.08   58.30   57.33   58.56
    Commercial and
        industrial            21.76   20.53   18.83   18.03   18.03
      U.S. addressees         20.44   19.30   17.78   17.05   16.99
      Foreign addressees       1.33    1.24    1.05     .98    1.04
    Consumer                  12.25   11.66   11.72   11.47   12.62
      Credit card              5.48    5.04    5.16    5.23    5.99
      Installment and
        other                  6.76    6.62    6.56    6.24    6.63
    Real estate               20.21   21.51   21.89   22.11   22.26
      In domestic offices     20.04   21.37   21.78   22.01   22.17
        Construction and
          land development     4.91    4.00    3.02    2.08    1.63
        Farmland                .12     .12     .14     .13     .14
        One- to four-family
            residential        8.53   10.17   11.36   12.30   12.98
          Home equity          1.67    2.07    2.50    2.54    2.33
          Other                6.86    8.10    8.85    9.76   10.65
        Multifamily
          residential           .46     .54     .66     .71     .71
        Nonfarm
          nonresidential       6.01    6.53    6.61    6.79    6.72
      In foreign offices        .18     .14     .11     .10     .09
    Depository
      institutions             1.57    1.58    1.43    1.30    1.49
    Foreign governments         .52     .39     .33     .30     .28
    Agricultural
      production                .28     .31     .31     .29     .29
    Other loans                4.82    4.55    4.28    4.05    3.47
    Lease-financing
      receivables              1.67    1.53    1.49    1.47    1.60
    LESS: Unearned income
      on loans                 -.26    -.22    -.17    -.11    -.07
    LESS: Loss reserves(1)    -1.60   -1.76   -1.79   -1.60   -1.41
  Securities                  16.19   17.38   20.38   21.97   21.19
    Investment account        15.32   16.25   19.24   20.60   19.82
      Debt                    15.14   16.02   18.99   20.34   19.50
        U.S. Treasury          3.42    3.78    5.88    7.05    6.85
        U.S. government
            agency and
            corporation
            obligations        7.42    8.43    9.26    9.55    9.28
          Government-backed
            mortgage pools     5.32    5.38    5.22    5.21    5.30
          Collateralized
            mortgage
            obligations        1.56    2.48    3.54    3.71    3.07
          Other                 .54     .57     .50     .63     .91
        State and local
          government           2.03    1.63    1.46    1.31    1.21
        Private mortgage-
          backed securities   n.a.     1.09    1.05    1.06     .93
        Other                  2.27    1.10    1.34    1.37    1.22
      Equity                    .18     .22     .25     .26     .32
    Trading account             .88    1.13    1.14    1.37    1.37
  Gross federal funds sold
    and reverse RPs            4.41    4.90    4.78    4.98    5.11
  Interest-bearing balances
    at depositories            4.98    4.51    4.52    4.08    3.30
Non-interest-earning assets   13.19   13.12   12.03   11.64   11.84
  Revaluation gains on
    off-balance-sheet
    items(2)                  n.a.    n.a.    n.a.    n.a.      .57
  Other                       13.19   13.12   12.03   11.64   11.28

Liabilities                   94.35   93.93   93.13   92.56   92.47
  Interest-bearing
      liabilities             77.02   76.07   74.66   73.38   72.86
    Deposits                  57.46   59.24   56.99   54.22   53.03
      In foreign offices       7.84    6.69    6.20    6.78    8.05
      In domestic offices     49.62   52.54   50.79   47.43   44.98
        Other checkable
          deposits             4.75    5.36    6.26    7.21    6.91
        Savings (including
          MMDAs)              15.50   17.62   20.21   20.60   20.13
        Small-denomination
          time deposits       15.59   17.99   15.98   14.19   13.26
        Large-denomination
          time deposits       13.78   11.56    8.34    5.44    4.68
    Gross federal funds
      purchased and RPs       13.03   10.94   11.45   11.93   11.48
    Other                      6.53    5.89    6.22    7.23    8.34
  Non-interest-bearing
      liabilities             17.33   17.87   18.47   19.18   19.62
    Demand deposits in
      domestic offices        13.23   13.76   14.52   15.38   15.27
    Revaluation losses on
      off-balance-sheet
      items(2)                n.a.    n.a.    n.a.    n.a.      .53
    Other                      4.10    4.10    3.95    3.80    3.82

Capital account                5.65    6.07    6.87    7.44    7.53

MEMO
Commercial real estate
  loans                       n.a.    11.83   11.09   10.29    9.69
Other real estate owned         .46     .76     .70     .47     .25
Managed liabilities           41.59   35.49   32.59   31.76   32.89
Average net consolidated
  assets (billions
  of dollars)                   995   1,006   1,003   1,082   1,204

                              Effective interest rate (percent)(3)

Rates earned
Interest-earning assets       10.46    9.30    7.97    7.35    7.29
    Taxable equivalent        10.55    9.39    8.07    7.45    7.37
  Loans and leases, gross     11.09    9.96    8.75    8.25    8.22
      Net of loss
        provisions             9.08    7.98    7.45    7.46    7.68
  Securities                   8.86    8.23    7.00    6.05    5.70
      Taxable equivalent       9.18    8.57    7.30    6.32    5.92
    Investment account         8.92    8.37    7.12    6.14    5.70
      U.S. government and
        other debt             9.18    8.51    7.16    6.14    5.69
      State and local          7.32    7.23    6.80    6.30    6.04
      Equity                   8.09    7.36    6.71    5.20    5.00
    Trading account            8.01    6.46    4.73    4.74    5.75
  Gross federal funds sold
    and reverse RPs            8.15    5.80    3.70    3.11    4.31
  Interest-bearing balances
    at depositories            9.72    8.15    6.76    6.50    4.69

Rates paid
Interest-bearing               7.96    6.41    4.43    3.76    3.72
    liabilities                7.55    6.27    4.30    3.51    3.25
  Interest-bearing deposits   10.08    8.39    7.26    7.37    4.60
    In foreign offices         7.15    6.01    3.96    2.98    3.03
    In domestic offices
      Other checkable
        deposits               4.67    4.21    2.43    1.70    1.62
      Savings (including
        MMDAs)                 6.07    5.04    3.07    2.33    2.46
      Large-denomination
        time deposits(4)       8.11    6.77    5.10    4.30    4.21
      Small-denomination
        time deposits(4)       8.09    6.96    5.07    4.06    4.18
  Gross federal funds
    purchased and RPs          8.12    5.75    3.57    3.04    4.28
  Other interest-bearing
    liabilities                9.27    6.55    5.77    5.97    5.24

                               Income and expense as a percentage
                               of average net consolidated assets

Gross interest income          9.31    8.24    7.12    6.58    6.46
    Taxable equivalent         9.39    8.31    7.19    6.64    6.51
  Loans                        7.01    6.15    5.23    4.84    4.91
  Securities                   1.37    1.36    1.37    1.26    1.13
  Gross federal funds sold
    and reverse RPs             .38     .28     .18     .15     .21
  Other                         .56     .45     .34     .32     .21

Gross interest expense         6.08    4.80    3.26    2.74    2.67
  Deposits                     4.36    3.75    2.48    1.93    1.73
  Gross federal funds
    purchased and RPs          1.12     .67     .43     .38     .51
  Other                         .60     .38     .35     .43     .43

Net interest income            3.23    3.43    3.86    3.84    3.79
    Taxable equivalent         3.31    3.51    3.93    3.91    3.85

Loss provisioning(5)           1.27    1.22     .78     .47     .32

Noninterest income             1.84    2.05    2.25    2.29    2.25
  Service charges on
    deposits                    .34     .41     .44     .46     .45
  Income from fiduciary
    activities                  .33     .36     .38     .38     .39
  Trading income                .08     .10     .09     .14     .08
    Interest rate exposures   n.a.    n.a.    n.a.    n.a.    n.a.
    Foreign exchange
      exposures               n.a.    n.a.    n.a.    n.a.    n.a.
    Equity, commodity, and
      other exposures         n.a.    n.a.    n.a.    n.a.    n.a.
  Other                        1.09    1.19    1.33    1.32    1.33

Noninterest expense            3.44    3.77    3.98    3.95    3.86
  Salaries, wages, and
    employee benefits          1.47    1.52    1.53    1.52    1.50
  Expenses of premises and
    fixed assets                .50     .51     .49     .47     .47
  Other                        1.48    1.74    1.95    1.95    1.89

Net noninterest expense        1.60    1.73    1.73    1.65    1.61

Realized gains on
  investment account
  securities                    .03     .14     .15     .09    -.01

Income before taxes and
    extraordinary items         .38     .62    1.50    1.81    1.85
  Taxes                         .15     .19     .48     .56     .63
  Extraordinary items           .01     .03     .03    (*)     (*)

Net income (return on
    assets)                     .24     .47    1.04    1.25    1.22
  Cash dividends declared       .38     .47     .46     .76     .86
  Retained income              -.14    (*)      .58     .49     .36

MEMO: Return on equity         4.18    7.71   15.16   16.86   16.27

           Item                1995    1996    1997    1998    1999

                              Balance sheet items as a percentage
                              of average net consolidated assets

Interest-earning assets       88.31   87.75   86.95   87.39   87.94
  Loans and leases, net       62.68   64.24   63.89   64.42   64.29
    Commercial and
        industrial            19.26   18.95   19.01   18.92   19.41
      U.S. addressees         18.10   17.71   17.78   17.59   18.19
      Foreign addressees       1.16    1.24    1.22    1.33    1.22
    Consumer                  14.23   15.67   15.62   14.53   13.58
      Credit card              7.34    8.26    8.50    7.67    6.79
      Installment and
        other                  6.89    7.40    7.12    6.86    6.79
    Real estate               23.25   23.26   22.99   24.60   24.81
      In domestic offices     23.10   23.10   22.85   24.42   24.63
        Construction and
          land development     1.50    1.55    1.69    2.03    2.43
        Farmland                .13     .13     .14     .17     .19
        One- to four-family
            residential       14.16   14.15   13.88   14.86   14.16
          Home equity          2.19    2.08    2.22    2.17    2.08
          Other               11.97   12.07   11.65   12.69   12.07
        Multifamily
          residential           .77     .89     .93    1.00    1.02
        Nonfarm
          nonresidential       6.54    6.37    6.21    6.36    6.82
      In foreign offices        .15     .16     .15     .18     .19
    Depository
      institutions             1.59    1.50    1.27    1.06     .92
    Foreign governments         .20     .20     .09     .06     .06
    Agricultural
      production                .26     .28     .29     .33     .33
    Other loans                3.32    3.30    3.21    3.38    3.01
    Lease-financing
      receivables              1.96    2.41    2.70    2.75    3.32
    LESS: Unearned income
      on loans                 -.07    -.06    -.05    -.04    -.04
    LESS: Loss reserves(1)    -1.32   -1.27   -1.24   -1.16   -1.11
  Securities                  18.64   16.87   15.80   16.67   17.78
    Investment account        17.88   16.06   15.07   16.13   17.26
      Debt                    17.51   15.62   14.58   15.58   16.62
        U.S. Treasury          4.82    3.34    2.81    2.25    1.70
        U.S. government
            agency and
            corporation
            obligations        9.40    9.12    8.98    9.93   10.56
          Government-backed
            mortgage pools     5.06    5.42    5.17    4.98    5.12
          Collateralized
            mortgage
            obligations        2.82    2.16    2.13    2.83    2.87
          Other                1.51    1.54    1.68    2.12    2.56
        State and local
          government           1.11     .99     .88     .92     .99
        Private mortgage-
          backed securities    1.02     .96     .73     .96    1.34
        Other                  1.16    1.21    1.18    1.53    2.03
      Equity                    .37     .44     .49     .55     .65
    Trading account             .76     .80     .73     .54     .51
  Gross federal funds sold
    and reverse RPs            4.52    4.26    4.38    3.57    3.34
  Interest-bearing balances
    at depositories            2.47    2.38    2.88    2.72    2.54
Non-interest-earning assets   11.69   12.25   13.05   12.61   12.06
  Revaluation gains on
    off-balance-sheet
    items(2)                    .50     .51     .69     .75     .57
  Other                       11.18   11.75   12.36   11.86   11.49

Liabilities                   92.23   92.02   91.85   91.63   91.65
  Interest-bearing
      liabilities             74.05   73.14   72.62   73.40   74.95
    Deposits                  52.32   51.81   51.47   51.51   51.51
      In foreign offices       8.12    7.52    7.85    8.15    7.97
      In domestic offices     44.20   44.30   43.62   43.36   43.54
        Other checkable
          deposits             5.62    3.06    1.95    1.75    1.60
        Savings (including
          MMDAs)              18.78   20.76   21.09   21.41   22.46
        Small-denomination
          time deposits       14.24   14.09   13.43   12.84   11.85
        Large-denomination
          time deposits        5.55    6.39    7.15    7.36    7.62
    Gross federal funds
      purchased and RPs       11.37   10.00    9.36    9.48    9.78
    Other                     10.36   11.32   11.79   12.41   13.66
  Non-interest-bearing
      liabilities             18.18   18.89   19.22   18.23   16.71
    Demand deposits in
      domestic offices        14.26   14.47   14.17   12.40   10.52
    Revaluation losses on
      off-balance-sheet
      items(2)                  .49     .49     .68     .76     .58
    Other                      3.43    3.93    4.37    5.07    5.60

Capital account                7.77    7.98    8.15    8.37    8.35

MEMO
Commercial real estate
  loans                        9.42    9.38    9.44   10.11   11.00
Other real estate owned         .13     .08     .06     .04     .03
Managed liabilities           35.68   35.60   36.60   38.09   39.81
Average net consolidated
  assets (billions
  of dollars)                 1,338   1,450   1,604   1,745   1,877

                              Effective interest rate (percent)(3)

Rates earned
Interest-earning assets        8.31    8.16    8.31    8.10    7.91
    Taxable equivalent         8.37    8.23    8.36    8.17    7.94
  Loans and leases, gross      9.10    8.87    9.03    8.82    8.56
      Net of loss
        provisions             8.49    8.05    8.11    8.01    7.73
  Securities                   6.38    6.42    6.50    6.21    6.45
      Taxable equivalent       6.56    6.66    6.70    6.46    6.55
    Investment account         6.34    6.41    6.52    6.22    6.47
      U.S. government and
        other debt             6.38    6.50    6.63    6.31    6.59
      State and local          6.05    5.84    5.58    5.36    5.28
      Equity                   5.68    4.84    5.07    5.26    5.39
    Trading account            7.27    6.53    6.05    5.86    5.63
  Gross federal funds sold
    and reverse RPs            5.91    5.31    5.45    5.46    5.13
  Interest-bearing balances
    at depositories            6.78    5.82    5.77    5.67    4.81

Rates paid
Interest-bearing               4.94    4.70    4.79    4.76    4.42
    liabilities                4.35    4.15    4.22    4.15    3.80
  Interest-bearing deposits    6.30    5.29    5.23    5.22    4.71
    In foreign offices         4.01    3.96    4.04    3.96    3.64
    In domestic offices
      Other checkable
        deposits               1.89    1.78    2.01    2.41    2.06
      Savings (including
        MMDAs)                 3.10    2.91    2.84    2.76    2.51
      Large-denomination
        time deposits(4)       5.70    5.50    5.47    5.32    5.01
      Small-denomination
        time deposits(4)       5.35    5.26    5.43    5.35    5.09
  Gross federal funds
    purchased and RPs          5.86    5.19    5.29    5.22    4.91
  Other interest-bearing
    liabilities                6.43    5.95    5.85    5.81    5.44

                               Income and expense as a percentage
                               of average net consolidated assets

Gross interest income          7.40    7.24    7.26    7.16    7.05
    Taxable equivalent         7.45    7.28    7.30    7.20    7.09
  Loans                        5.79    5.80    5.87    5.79    5.61
  Securities                   1.13    1.03     .98    1.00    1.12
  Gross federal funds sold
    and reverse RPs             .27     .23     .22     .19     .18
  Other                         .21     .18     .19     .18     .14

Gross interest expense         3.62    3.39    3.41    3.45    3.29
  Deposits                     2.29    2.18    2.23    2.23    2.04
  Gross federal funds
    purchased and RPs           .67     .55     .51     .51     .51
  Other                         .66     .66     .68     .71     .74

Net interest income            3.78    3.84    3.85    3.71    3.76
    Taxable equivalent         3.84    3.89    3.89    3.75    3.79

Loss provisioning(5)            .39     .54     .60     .53     .54

Noninterest income             2.38    2.61    2.76    3.07    3.37
  Service charges on
    deposits                    .44     .44     .44     .42     .42
  Income from fiduciary
    activities                  .40     .43     .44     .49     .52
  Trading income                .09     .08     .08     .09     .08
    Interest rate exposures   n.a.      .03     .02     .03     .02
    Foreign exchange
      exposures               n.a.      .04     .05     .06     .06
    Equity, commodity, and
      other exposures         n.a.      .01    (*)     (*)     (*)
  Other                        1.45    1.67    1.79    2.07    2.36

Noninterest expense            3.79    3.85    3.85    4.03    4.15
  Salaries, wages, and
    employee benefits          1.47    1.51    1.51    1.53    1.54
  Expenses of premises and
    fixed assets                .47     .48     .46     .46     .46
  Other                        1.85    1.86    1.88    2.04    2.15

Net noninterest expense        1.41    1.24    1.10     .96     .78

Realized gains on
  investment account
  securities                    .02     .02     .02     .03    -.01

Income before taxes and
    extraordinary items        2.01    2.09    2.18    2.24    2.43
  Taxes                         .70     .75     .77     .79     .87
  Extraordinary items          (*)     (*)     (*)     (*)     (*)

Net income (return on
    assets)                    1.31    1.34    1.42    1.46    1.56
  Cash dividends declared       .85    1.07     .93     .96    1.17
  Retained income               .46     .26     .48     .50     .38

MEMO: Return on equity        16.84   16.78   17.36   17.38   18.63

(*) In  absolute value, less than 0.005 percent.

n.a. Not available. MMDA Money market deposit account. RP Repurchase
agreement. CD Certificate of deposit.

(1.) Includes the allowance for loan and lease losses and the allocated
transfer risk reserve.

(2.) Before 1994, the netted value of off-balance-sheet items appeared
in "trading account securities" if a gain and
"other non-interest-bearing liabilities" if a loss.

(3.) When possible, based on the average of quarterly balance sheet
data reported on schedule RC-K of the quarterly Call Reports.

(4.) Before 1997, data for large time open accounts are included in
small-denomination time deposits.

(5.) Includes provisions for loan and lease losses and for allocated
transfer risk.
D. Banks ranked 101 through 1,000 by assets

           Item                1990    1991    1992    1993    1994

                              Balance sheet items as a percentage
                              of average net consolidated assets

Interest-earning assets       88.84   88.91   89.02   89.55   90.09
  Loans and leases, net       63.09   61.03   58.49   57.94   59.75
    Commercial and
        industrial            16.69   15.04   13.34   12.19   12.07
      U.S. addressees         16.56   14.88   13.16   12.03   11.90
      Foreign addressees        .13     .16     .18     .16     .16
    Consumer                  15.48   15.13   14.18   14.83   15.85
      Credit card              5.22    5.74    5.37    5.63    6.06
      Installment and
        other                 10.26    9.39    8.80    9.20    9.79
    Real estate               27.01   27.51   28.11   28.61   29.42
      In domestic offices     26.99   27.47   28.07   28.59   29.39
        Construction and
          land development     4.37    3.66    2.86    2.26    2.08
        Farmland                .28     .28     .32     .34     .36
        One- to four-family
            residential       12.49   13.22   14.26   15.17   16.24
          Home equity          2.31    2.53    2.56    2.50    2.33
          Other               10.18   10.69   11.69   12.67   13.91
        Multifamily
          residential           .73     .80     .96    1.07    1.13
        Nonfarm
          nonresidential       9.11    9.50    9.69    9.75    9.57
      In foreign offices        .03     .05     .04     .02     .03
    Depository
      institutions             1.05     .93     .80     .43     .40
    Foreign governments         .09     .07     .05     .03     .02
    Agricultural
      production                .47     .49     .54     .56     .62
    Other loans                3.16    2.81    2.47    2.16    2.01
    Lease-financing
      receivables               .83     .85     .79     .77     .83
    LESS: Unearned income
      on loans                 -.50    -.40    -.30    -.21    -.15
    LESS: Loss reserves(1)    -1.20   -1.42   -1.49   -1.44   -1.30
  Securities                  19.34   21.28   24.13   25.92   25.71
    Investment account        18.87   20.91   23.78   25.64   25.40
      Debt                    18.54   20.55   23.32   25.16   24.95
        U.S. Treasury          5.44    6.16    7.75    8.64    8.26
        U.S. government
            agency and
            corporation
            obligations        7.75    9.35   11.08   12.32   12.67
          Government-backed
            mortgage pools     3.83    4.51    4.74    4.97    5.57
          Collateralized
            mortgage
            obligations        1.72    2.73    3.95    4.82    4.39
          Other                2.19    2.11    2.39    2.53    2.71
        State and local
          government           3.11    2.65    2.27    2.26    2.29
        Private mortgage-
          backed securities   n.a.     1.16    1.01     .84     .75
        Other                  2.25    1.23    1.21    1.10     .99
      Equity                    .32     .37     .46     .48     .44
    Trading account             .48     .36     .35     .28     .31
  Gross federal funds sold
    and reverse RPs            4.51    4.71    4.92    4.48    3.64
  Interest-bearing balances
    at depositories            1.90    1.89    1.47    1.20     .98
Non-interest-earning assets   11.16   11.09   10.98   10.45    9.91
  Revaluation gains on
    off-balance-sheet
    items(2)                  n.a.    n.a.    n.a.    n.a.      .02
  Other                       11.16   11.09   10.98   10.45    9.90

Liabilities                   93.07   92.89   92.47   91.85   91.62
  Interest-bearing
      liabilities             77.04   77.26   75.98   74.42   74.77
    Deposits                  65.05   66.35   65.65   63.05   60.38
      In foreign offices       1.65    1.76    1.56    1.43    1.69
      In domestic offices     63.40   64.59   64.09   61.62   58.69
        Other checkable
          deposits             7.31    7.83    9.14    9.94    9.70
        Savings (including
          MMDAs)              19.69   20.79   23.34   24.06   22.92
        Small-denomination
          time deposits       24.09   25.22   23.56   20.77   19.29
        Large-denomination
          time deposits       12.31   10.76    8.06    6.85    6.78
    Gross federal funds
      purchased and RPs        8.43    7.46    7.17    7.43    8.45
    Other                      3.56    3.45    3.15    3.93    5.94
  Non-interest-bearing
      liabilities             16.03   15.63   16.49   17.43   16.85
    Demand deposits in
      domestic offices        14.07   13.56   14.39   15.07   14.58
    Revaluation losses on
      off-balance-sheet
      items(2)                n.a.    n.a.    n.a.    n.a.      .02
    Other                      1.96    2.07    2.10    2.36    2.25

Capital account                6.93    7.11    7.53    8.15    8.38

MEMO                          n.a.    14.63   13.91   13.37   13.05
Commercial real estate
  loans                         .52     .77     .80     .57     .28
Other real estate owned
Managed liabilities           26.00   23.48   20.00   19.69   22.89
Average net consolidated
  assets (billions
  of dollars)                   937     962     968     977   1,032

                              Effective interest rate (percent)(3)

Rates earned
Interest-earning assets       10.42    9.55    8.14    7.43    7.58
    Taxable equivalent        10.57    9.70    8.25    7.55    7.68
  Loans and leases, gross     11.21   10.43    9.11    8.57    8.64
      Net of loss
        provisions             9.48    8.72    7.83    7.76    8.11
  Securities                   8.52    8.11    6.88    5.78    5.69
      Taxable equivalent       9.00    8.54    7.19    6.10    5.93
    Investment account         8.49    8.12    6.90    5.79    5.69
      U.S. government and
        other debt             8.76    8.30    6.95    5.76    5.68
      State and local          7.33    7.25    6.83    6.30    5.92
      Equity                   6.94    6.02    5.08    4.95    5.30
    Trading account            9.92    7.19    5.61    4.74    5.29
  Gross federal funds sold
    and reverse RPs            7.99    5.64    3.47    3.02    4.06
  Interest-bearing balances
    at depositories            8.52    6.82    4.61    3.51    4.28

Rates paid
Interest-bearing
    liabilities                7.26    6.11    4.19    3.33    3.57
  Interest-bearing deposits    7.05    6.06    4.17    3.26    3.31
    In foreign offices         8.12    6.38    4.25    3.35    4.31
    In domestic offices        7.02    6.05    4.17    3.25    3.28
      Other checkable
        deposits               4.75    4.28    2.67    2.02    1.87
      Savings (including
        MMDAs)                 5.98    5.14    3.33    2.58    2.64
      Large-denomination
        time deposits(4)       8.04    6.64    4.76    3.90    4.23
      Small-denomination
        time deposits(4)       8.03    7.08    5.35    4.40    4.40
  Gross federal funds
    purchased and RPs          7.86    5.62    3.46    2.95    4.12
  Other interest-bearing
    liabilities                8.28    6.78    5.28    4.44    4.92

                               Income and expense as a percentage
                               of average net consolidated assets

Gross interest income          9.38    8.64    7.36    6.75    6.90
    Taxable equivalent         9.51    8.76    7.46    6.84    6.99
  Loans                        7.21    6.52    5.46    5.07    5.26
  Securities                   1.60    1.70    1.64    1.49    1.45
  Gross federal funds sold
    and reverse RPs             .36     .28     .17     .14     .14
  Other                         .20     .15     .08     .06     .06

Gross interest expense         5.54    4.68    3.16    2.46    2.65
  Deposits                     4.58    4.03    2.75    2.07    2.01
  Gross federal funds
    purchased and RPs           .67     .42     .25     .22     .35
  Other                         .29     .23     .17     .17     .29

Net interest income            3.83    3.96    4.19    4.28    4.25
    Taxable equivalent         3.97    4.08    4.30    4.38    4.34

Loss provisioning(5)           1.12    1.07     .77     .47     .33

Noninterest income             1.50    1.65    1.69    1.84    1.86
  Service charges on
    deposits                    .37     .40     .44     .45     .42
  Income from fiduciary
    activities                  .26     .27     .28     .29     .28
  Trading income                .02     .04     .02     .03     .02
    Interest rate exposures   n.a.    n.a.    n.a.    n.a.    n.a.
    Foreign exchange
      exposures               n.a.    n.a.    n.a.    n.a.    n.a.
    Equity, commodity, and
      other exposures         n.a.    n.a.    n.a.    n.a.    n.a.
  Other                         .84     .95     .95    1.08    1.14

Noninterest expense            3.50    3.77    3.87    3.92    3.78
  Salaries, wages, and
    employee benefits          1.47    1.48    1.51    1.51    1.49
  Expenses of premises and
    fixed assets                .49     .49     .49     .48     .46
  Other                        1.55    1.80    1.87    1.93    1.83

Net noninterest expense        2.01    2.12    2.18    2.08    1.92

Realized gains on
  investment account
  securities                    .01     .09     .10     .06    -.05

Income before taxes and
    extraordinary items         .72     .86    1.35    1.78    1.96
  Taxes                         .21     .29     .44     .61     .67
  Extraordinary items          (*)     -.07    (*)      .04    (*)

Net income (return on
    assets)                     .51     .49     .91    1.22    1.29
  Cash dividends declared       .53     .33     .49     .79     .81
  Retained income              -.02     .16     .42     .43     .48

MEMO: Return on equity         7.37    6.93   12.13   14.93   15.40

           Item                1995    1996    1997    1998    1999

                              Balance sheet items as a percentage
                              of average net consolidated assets

Interest-earning assets       90.12   90.13   90.31   90.39   90.75
  Loans and leases, net       62.18   62.63   62.21   61.12   61.50
    Commercial and
        industrial            12.70   12.79   12.43   12.49   12.65
      U.S. addressees         12.54   12.61   12.20   12.16   12.33
      Foreign addressees        .16     .18     .23     .32     .32
    Consumer                  16.25   15.88   13.99   12.28   10.79
      Credit card              6.30    6.66    5.48    4.48    3.37
      Installment and
        other                  9.95    9.22    8.51    7.80    7.42
    Real estate               30.82   31.37   33.26   33.94   35.88
      In domestic offices     30.80   31.35   33.23   33.91   35.86
        Construction and
          land development     2.21    2.38    2.69    2.88    3.49
        Farmland                .40     .46     .53     .56     .58
        One- to four-family
            residential       17.49   17.34   18.16   18.18   18.23
          Home equity          2.36    2.31    2.30    2.14    1.99
          Other               15.13   15.04   15.85   16.04   16.24
        Multifamily
          residential          1.21    1.29    1.29    1.26    1.43
        Nonfarm
          nonresidential       9.48    9.88   10.57   11.03   12.12
      In foreign offices        .02     .02     .02     .02     .02
    Depository
      institutions              .35     .48     .57     .50     .44
    Foreign governments         .02     .02     .02     .03     .03
    Agricultural
      production                .69     .71     .74     .80     .78
    Other loans                1.80    1.69    1.50    1.32    1.27
    Lease-financing
      receivables               .90    1.01     .99     .99     .78
    LESS: Unearned income
      on loans                 -.12    -.10    -.10    -.09    -.08
    LESS: Loss reserves(1)    -1.22   -1.22   -1.18   -1.13   -1.06
  Securities                  23.09   22.67   23.47   24.26   25.16
    Investment account        22.89   22.55   23.36   24.15   25.08
      Debt                    22.43   22.03   22.75   23.47   24.31
        U.S. Treasury          6.49    5.61    4.95    3.92    2.53
        U.S. government
            agency and
            corporation
            obligations       12.23   12.66   13.98   15.13   16.28
          Government-backed
            mortgage pools     5.42    5.68    6.23    6.46    6.71
          Collateralized
            mortgage
            obligations        3.56    3.12    3.02    3.23    3.52
          Other                3.25    3.85    4.73    5.44    6.06
        State and local
          government           2.13    2.24    2.45    2.70    2.91
        Private mortgage-
          backed securities     .68     .76     .59     .65    1.00
        Other                   .89     .77     .78    1.06    1.59
      Equity                    .47     .52     .61     .69     .77
    Trading account             .20     .12     .10     .11     .08
  Gross federal funds sold
    and reverse RPs            3.91    3.87    3.59    4.18    3.35
  Interest-bearing balances
    at depositories             .93     .96    1.03     .83     .75
Non-interest-earning assets    9.88    9.87    9.69    9.61    9.25
  Revaluation gains on
    off-balance-sheet
    items(2)                    .05     .02    (*)     (*)      .01
  Other                        9.83    9.84    9.69    9.61    9.24

Liabilities                   91.36   91.06   90.79   90.55   90.90
  Interest-bearing
      liabilities             75.00   75.06   75.19   75.43   76.78
    Deposits                  59.69   59.99   61.51   62.41   61.97
      In foreign offices       1.71    1.33    1.23    1.31    1.20
      In domestic offices     57.97   58.66   60.28   61.10   60.77
        Other checkable
          deposits             8.54    6.21    4.97    4.23    3.76
        Savings (including
          MMDAs)              20.76   22.51   23.60   25.66   27.36
        Small-denomination
          time deposits       21.12   21.61   22.05   21.21   19.62
        Large-denomination
          time deposits        7.56    8.34    9.66    9.99   10.03
    Gross federal funds
      purchased and RPs        8.31    8.19    7.08    6.16    6.91
    Other                      7.00    6.88    6.59    6.86    7.90
  Non-interest-bearing
      liabilities             16.36   16.00   15.60   15.13   14.12
    Demand deposits in
      domestic offices        14.07   13.84   13.16   11.91   10.20
    Revaluation losses on
      off-balance-sheet
      items(2)                  .05     .02     .01     .01     .01
    Other                      2.24    2.14    2.44    3.22    3.91

Capital account                8.64    8.94    9.21    9.45    9.10

MEMO                          13.20   13.84   14.79   15.38   17.28
Commercial real estate
  loans                         .17     .13     .11     .09     .08
Other real estate owned
Managed liabilities           24.61   24.78   24.63   24.46   26.31
Average net consolidated
  assets (billions
  of dollars)                 1,092   1,076     967     935     972

                              Effective interest rate (percent)(3)

Rates earned
Interest-earning assets        8.42    8.40    8.50    8.31    7.83
    Taxable equivalent         8.51    8.49    8.59    8.43    7.92
  Loans and leases, gross      9.43    9.38    9.48    9.36    8.75
      Net of loss
        provisions             8.76    8.59    8.60    8.60    8.13
  Securities                   6.23    6.31    6.42    6.22    6.02
      Taxable equivalent       6.49    6.59    6.69    6.57    6.29
    Investment account         6.24    6.31    6.42    6.22    6.01
      U.S. government and
        other debt             6.28    6.40    6.55    6.35    6.16
      State and local          5.80    5.50    5.36    5.15    4.98
      Equity                   6.05    6.30    6.35    6.34    5.97
    Trading account            5.55    5.94    6.37    6.84    7.18
  Gross federal funds sold
    and reverse RPs            5.45    5.24    5.41    5.30    4.97
  Interest-bearing balances
    at depositories            6.09    5.54    5.49    5.70    5.05

Rates paid
Interest-bearing
    liabilities                4.64    4.57    4.66    4.59    4.19
  Interest-bearing deposits    4.26    4.26    4.34    4.28    3.84
    In foreign offices         5.94    5.43    5.42    5.54    5.07
    In domestic offices        4.21    4.23    4.32    4.25    3.82
      Other checkable
        deposits               2.02    1.96    2.17    2.15    1.98
      Savings (including
        MMDAs)                 3.24    3.11    3.08    2.96    2.65
      Large-denomination
        time deposits(4)       5.62    5.47    5.56    5.50    5.17
      Small-denomination
        time deposits(4)       5.53    5.57    5.57    5.64    5.11
  Gross federal funds
    purchased and RPs          5.61    5.16    5.21    5.13    4.82
  Other interest-bearing
    liabilities                6.27    5.89    6.12    6.00    5.37

                               Income and expense as a percentage
                               of average net consolidated assets

Gross interest income          7.68    7.67    7.76    7.63    7.19
    Taxable equivalent         7.76    7.75    7.84    7.71    7.27
  Loans                        5.98    5.99    6.01    5.85    5.48
  Securities                   1.43    1.42    1.50    1.50    1.51
  Gross federal funds sold
    and reverse RPs             .21     .20     .19     .22     .17
  Other                         .07     .06     .06     .05     .04

Gross interest expense         3.46    3.40    3.47    3.44    3.20
  Deposits                     2.56    2.57    2.70    2.71    2.44
  Gross federal funds
    purchased and RPs           .46     .43     .37     .32     .34
  Other                         .44     .40     .40     .41     .42

Net interest income            4.23    4.27    4.29    4.19    3.99
    Taxable equivalent         4.31    4.35    4.37    4.27    4.07

Loss provisioning(5)            .43     .50     .56     .48     .39

Noninterest income             1.84    1.88    2.08    2.26    2.32
  Service charges on
    deposits                    .42     .42     .40     .39     .38
  Income from fiduciary
    activities                  .27     .28     .32     .37     .38
  Trading income                .03     .02     .01     .02     .02
    Interest rate exposures   n.a.      .01     .01     .01     .01
    Foreign exchange
      exposures               n.a.      .01    (*)     (*)     (*)
    Equity, commodity, and
      other exposures         n.a.     (*)     (*)     (*)     (*)
  Other                        1.12    1.16    1.34    1.48    1.54

Noninterest expense            3.68    3.68    3.73    3.86    3.70
  Salaries, wages, and
    employee benefits          1.44    1.44    1.51    1.57    1.56
  Expenses of premises and
    fixed assets                .45     .45     .46     .47     .47
  Other                        1.79    1.80    1.76    1.83    1.68

Net noninterest expense        1.84    1.81    1.65    1.61    1.39

Realized gains on
  investment account
  securities                   -.01     .02     .02     .04    -.01

Income before taxes and
    extraordinary items        1.96    1.98    2.10    2.15    2.21
  Taxes                         .67     .69     .73     .73     .75
  Extraordinary items          (*)     (*)     (*)      .06     .01

Net income (return on
    assets)                    1.28    1.29    1.37    1.47    1.47
  Cash dividends declared       .87    1.04    1.10    1.01    1.06
  Retained income               .41     .25     .28     .46     .41

MEMO: Return on equity        14.82   14.45   14.93   15.56   16.19

(*) In absolute value, less than 0.005 percent.

n.a. Not available. MMDA Money market deposit account.
RP Repurchase agreement. CD Certificate of deposit.

(1.) Includes the allowance for loan and lease losses and the allocated
transfer risk reserve.

(2.) Before 1994, the netted value of off-balance-sheet items appeared
in "trading account securities" if a gain and "other
non-interest-bearing liabilities" if a loss.

(3.) When possible, based on the average of quarterly balance sheet
data reported on schedule RC-K of the quarterly Call Reports.

(4.) Before 1997, data for large time open accounts are included in
small-denomination time deposits.

(5.) Includes provisions for loan and lease losses and for allocated
transfer risk.
E. Banks not ranked among the 1,000 largest by assets

           Item               1990    1991    1992    1993    1994

                               Balance sheet items as a percentage
                               of average net consolidated assets

Interest-earning assets       91.06   91.25   91.39   91.65   91.72
  Loans and leases, net       54.74   54.05   53.03   52.94   54.64
    Commercial and
        industrial            11.53   10.60    9.74    9.24    9.31
      U.S. addressees         11.49   10.56    9.69    9.20    9.26
      Foreign addressees        .04     .04     .04     .04     .05
    Consumer                  11.20   10.44    9.69    9.18    9.37
      Credit card              1.00    1.02    1.00     .93     .96
      Installment and
        other                 10.20    9.42    8.69    8.25    8.41
    Real estate               28.35   29.34   30.15   31.09   32.19
      In domestic offices     28.35   29.33   30.15   31.08   32.19
        Construction and
          land development     2.37    2.18    1.98    1.93    2.14
        Farmland               1.86    1.93    2.06    2.20    2.34
        One- to four-family
            residential       15.37   16.00   16.44   16.81   16.95
          Home equity          1.16    1.29    1.34    1.27    1.21
          Other               14.21   14.71   15.10   15.54   15.73
        Multifamily
          residential           .66     .71     .77     .84     .93
        Nonfarm
          nonresidential       8.09    8.50    8.90    9.30    9.83
      In foreign offices       (*)     (*)     (*)     (*)     (*)
    Depository
      institutions              .23     .20     .13     .12     .13
    Foreign governments         .01     .01     .01     .02     .01
    Agricultural
      production               3.30    3.48    3.55    3.58    3.89
    Other loans                1.41    1.24     .99     .87     .81
    Lease-financing
      receivables               .18     .17     .17     .18     .20
    LESS: Unearned income
      on loans                 -.58    -.51    -.43    -.36    -.31
    LESS: Loss reserves(1)     -.89    -.93    -.96    -.97    -.95
  Securities                  28.38   29.99   32.10   33.06   32.90
    Investment account        28.28   29.94   32.04   33.00   32.86
      Debt                    27.92   29.56   31.60   32.55   32.42
        U.S. Treasury          8.77    9.24   10.25   10.48   10.81
        U.S. government
            agency and
            corporation
            obligations       12.43   13.82   15.04   15.80   15.35
          Government-backed
            mortgage pools     4.58    5.59    5.52    5.38    4.81
          Collateralized
            mortgage
            obligations         .90    1.56    2.66    3.33    3.11
          Other                6.93    6.68    6.85    7.09    7.43
        State and local
          government           4.56    4.26    4.29    4.70    5.01
        Private mortgage-
          backed securities   n.a.      .89     .77     .47     .27
        Other                  2.15    1.34    1.26    1.10     .98
      Equity                    .36     .38     .44     .45     .44
    Trading account             .10     .06     .05     .07     .04
  Gross federal funds sold
    and reverse RPs            6.13    5.64    5.10    4.69    3.42
  Interest-bearing balances
    at depositories            1.81    1.57    1.16     .97     .77
Non-interest-earning assets    8.94    8.75    8.61    8.35    8.28
  Revaluation gains on
    off-balance-sheet
    items(2)                  n.a.    n.a.    n.a.    n.a.     (*)
  Other                        8.94    8.75    8.61    8.35    8.28

Liabilities                   91.40   91.37   91.07   90.63   90.43
  Interest-bearing
      liabilities             77.83   78.39   77.83   76.89   76.19
    Deposits                  75.79   76.40   75.75   74.53   73.14
      In foreign offices        .07     .08     .07     .08     .09
      In domestic offices     75.72   76.33   75.68   74.45   73.05
        Other checkable
          deposits            10.45   10.99   12.33   13.15   13.31
        Savings (including
          MMDAs)              18.73   19.35   22.10   23.55   23.23
        Small-denomination
          time deposits       35.37   35.88   32.85   30.10   28.83
        Large-denomination
          time deposits       11.17   10.11    8.40    7.65    7.68
    Gross federal funds
      purchased and RPs        1.36    1.31    1.36    1.44    1.89
    Other                       .67     .68     .72     .91    1.16
  Non-interest-bearing
      liabilities             13.57   12.98   13.24   13.75   14.25
    Demand deposits in
      domestic offices        12.37   11.84   12.23   12.82   13.34
    Revaluation losses on
      off-balance-sheet
      items(2)                n.a.    n.a.    n.a.    n.a.     (*)
    Other                      1.21    1.14    1.01     .93     .90

Capital account                8.60    8.63    8.93    9.37    9.57

MEMO
Commercial real estate
  loans                       n.a.    11.74   11.84   12.22   13.02
Other real estate owned         .61     .66     .65     .52     .35
Managed liabilities           13.29   12.19   10.56   10.10   10.83
Average net consolidated
  assets (billions
  of dollars)                   681     694     697     688     679

                              Effective interest rate (percent)(3)

Rates earned
Interest-earning assets       10.31    9.64    8.43    7.62    7.57
    Taxable equivalent        10.52    9.82    8.59    7.78    7.72
  Loans and leases, gross     11.60   11.02    9.83    9.14    9.00
      Net of loss
        provisions            10.65   10.08    9.05    8.63    8.65
  Securities                   8.42    8.04    6.99    5.92    5.61
      Taxable equivalent       8.99    8.53    7.40    6.33    5.99
    Investment account         8.41    8.04    6.99    5.92    5.61
      U.S. government and
        other debt             8.59    8.20    7.06    5.91    5.59
      State and local          7.46    7.17    6.70    6.09    5.69
      Equity                   8.30    7.14    5.64    5.16    5.52
    Trading account           12.13    8.41    7.14    4.83    6.03
  Gross federal funds sold
    and reverse RPs            8.12    5.66    3.51    2.95    4.08
  Interest-bearing balances
    at depositories            8.55    7.35    5.59    4.53    4.64

Rates paid
Interest-bearing
    liabilities                7.02    6.17    4.44    3.54    3.49
  Interest-bearing deposits    6.96    6.15    4.44    3.53    3.44
    In foreign offices         7.57    5.95    3.97    2.91    3.92
    In domestic offices        6.96    6.15    4.44    3.53    3.44
      Other checkable
        deposits               5.02    4.61    3.14    2.42    2.29
      Savings (including
        MMDAs)                 5.73    5.18    3.62    2.91    2.83
      Large-denomination
        time deposits(4)       7.92    6.72    4.90    3.96    4.12
      Small-denomination
        time deposits(4)       7.88    6.98    5.36    4.39    4.28
  Gross federal funds
    purchased and RPs          8.03    5.72    3.74    3.17    4.12
  Other interest-bearing
    liabilities                7.84    7.06    5.01    4.64    4.98

                               Income and expense as a percentage
                               of average net consolidated assets

Gross interest income          9.51    8.91    7.79    7.05    7.01
    Taxable equivalent         9.68    9.06    7.94    7.19    7.15
  Loans                        6.44    6.04    5.30    4.91    4.98
  Securities                   2.38    2.41    2.24    1.95    1.84
  Gross federal funds sold
    and reverse RPs             .53     .34     .18     .14     .15
  Other                         .17     .12     .07     .05     .04

Gross interest expense         5.44    4.82    3.45    2.72    2.65
  Deposits                     5.28    4.70    3.36    2.63    2.52
  Gross federal funds
    purchased and RPs           .11     .07     .05     .04     .07
  Other                         .05     .05     .04     .04     .06

Net interest income            4.07    4.09    4.34    4.33    4.36
    Taxable equivalent         4.24    4.24    4.49    4.48    4.50

Loss provisioning(5)            .53     .51     .42     .27     .19

Noninterest income             1.01    1.07    1.16    1.25    1.30
  Service charges on
    deposits                    .42     .44     .45     .45     .44
  Income from fiduciary
    activities                  .14     .14     .16     .16     .17
  Trading income                .01     .01     .01     .01    (*)
    Interest rate exposures   n.a.    n.a.    n.a.    n.a.    n.a.
    Foreign exchange
      exposures               n.a.    n.a.    n.a.    n.a.    n.a.
    Equity, commodity, and
      other exposures         n.a.    n.a.    n.a.    n.a.    n.a.
  Other                         .44     .49     .55     .64     .69

Noninterest expense            3.49    3.59    3.67    3.74    3.78
  Salaries, wages, and
    employee benefits          1.64    1.64    1.69    1.72    1.75
  Expenses of premises and
    fixed assets                .49     .49     .49     .48     .49
  Other                        1.36    1.46    1.49    1.53    1.55

Net noninterest expense        2.48    2.52    2.51    2.48    2.48

Realized gains on
  investment account
  securities                   (*)      .06     .09     .07    -.03

Income before taxes and
    extraordinary items        1.06    1.11    1.50    1.64    1.66
  Taxes                         .34     .35     .47     .51     .51
  Extraordinary items           .02     .19     .02     .05    (*)

Net income (return on
    assets)                     .74     .95    1.04    1.19    1.15
  Cash dividends declared       .49     .89     .50     .56     .57
  Retained income               .25     .06     .54     .63     .58

MEMO: Return on equity         8.61   11.05   11.64   12.65   12.05

          Item                1995    1996    1997    1998    1999

                              Balance sheet items as a percentage
                              of average net consolidated assets

Interest-earning assets       91.70   91.64   91.65   91.89   91.83
  Loans and leases, net       56.62   57.37   58.77   59.12   59.74
    Commercial and
        industrial             9.65    9.98   10.15   10.33   10.65
      U.S. addressees          9.59    9.90   10.07   10.25   10.56
      Foreign addressees        .06     .07     .08     .08     .08
    Consumer                   9.57    9.41    9.06    8.47    8.16
      Credit card              1.04    1.03     .91     .70     .68
      Installment and
        other                  8.53    8.38    8.15    7.77    7.48
    Real estate               33.54   34.10   35.51   36.04   36.79
      In domestic offices     33.54   34.09   35.50   36.04   36.79
        Construction and
          land development     2.38    2.61    2.82    3.01    3.28
        Farmland               2.48    2.55    2.68    2.83    2.94
        One- to
            four-family
            residential       17.45   17.47   18.15   18.05   17.64
          Home equity          1.20    1.19    1.24    1.21    1.17
          Other               16.25   16.28   16.91   16.84   16.47
        Multifamily
          residential           .95     .92     .95     .93     .98
        Nonfarm
          nonresidential      10.27   10.54   10.91   11.21   11.95
      In foreign offices       (*)     (*)     (*)     (*)     (*)
    Depository
      institutions              .16     .17     .17     .12     .13
    Foreign governments        (*)     (*)     (*)     (*)      .01
    Agricultural
      production               3.95    3.93    4.05    4.27    4.04
    Other loans                 .76     .72     .70     .69     .70
    Lease-financing
      receivables               .22     .23     .25     .25     .27
    LESS: Unearned income
      on loans                 -.30    -.27    -.24    -.20    -.15
    LESS: Loss reserves(1)     -.93    -.90    -.88    -.86    -.86
  Securities                  30.50   29.53   28.21   26.68   26.93
    Investment account        30.46   29.50   28.18   26.65   26.90
      Debt                    30.01   29.01   27.65   26.11   26.36
        U.S. Treasury          9.19    7.85    6.70    5.05    3.33
        U.S. government
            agency and
            corporation
            obligations       15.12   15.67   15.55   15.42   16.92
          Government-backed
            mortgage pools     4.19    4.21    4.00    3.90    3.95
          Collateralized
            mortgage
            obligations        2.75    2.46    2.19    2.01    2.08
          Other                8.18    9.00    9.37    9.51   10.89
        State and local
          government           4.69    4.62    4.59    4.80    4.94
        Private
          mortgage-backed
          securities            .20     .18     .19     .16     .28
        Other                   .81     .68     .61     .68     .89
      Equity                    .45     .49     .52     .54     .54
    Trading account             .03     .03     .03     .03     .03
  Gross federal funds sold
    and reverse RPs            3.92    4.05    3.96    5.12    4.16
  Interest-bearing balances
    at depositories             .67     .69     .71     .96    1.00
Non-interest-earning assets    8.30    8.36    8.35    8.11    8.17
  Revaluation gains on
    off-balance-sheet
    items(2)                   (*)     (*)     (*)     (*)     (*)
  Other                        8.30    8.36    8.35    8.11    8.17

Liabilities                   90.03   89.81   89.62   89.53   89.75
  Interest-bearing
      liabilities             75.74   75.58   75.47   75.35   75.90
    Deposits                  72.68   72.47   71.99   71.76   71.34
      In foreign offices        .11     .10     .09     .07     .08
      In domestic offices     72.56   72.36   71.90   71.70   71.26
        Other checkable
          deposits            12.37   11.75   11.37   11.17   11.03
        Savings (including
          MMDAs)              20.40   19.56   18.98   19.01   19.71
        Small-denomination
          time deposits       30.91   31.28   31.05   30.42   29.01
        Large-denomination
          time deposits        8.88    9.77   10.49   11.10   11.51
    Gross federal funds
      purchased and RPs        1.78    1.70    1.68    1.50    1.82
    Other                      1.28    1.41    1.80    2.09    2.74
  Non-interest-bearing
      liabilities             14.29   14.23   14.15   14.18   13.85
    Demand deposits in
      domestic offices        13.22   13.13   13.09   13.08   12.80
    Revaluation losses on
      off-balance-sheet
      items(2)                 (*)     (*)     (*)     (*)     (*)
    Other                      1.07    1.10    1.06    1.10    1.05

Capital account                9.97   10.19   10.38   10.47   10.25

MEMO
Commercial real estate
  loans                       13.71   14.18   14.78   15.25   16.32
Other real estate owned         .25     .20     .16     .13     .11
Managed liabilities           12.08   13.00   14.08   14.77   16.18
Average net consolidated
  assets (billions
  of dollars)                   666     661     648     644     654

                               Effective interest rate (percent)(3)

Rates earned
Interest-earning assets        8.41    8.35    8.50    8.33    8.04
    Taxable equivalent         8.56    8.49    8.63    8.49    8.18
  Loans and leases, gross      9.85    9.74    9.81    9.70    9.29
      Net of loss
        provisions             9.42    9.31    9.36    9.22    8.80
  Securities                   6.09    6.10    6.25    5.98    5.86
      Taxable equivalent       6.49    6.52    6.65    6.47    6.29
    Investment account         6.09    6.10    6.25    5.98    5.86
      U.S. government and
        other debt             6.17    6.23    6.43    6.16    6.04
      State and local          5.64    5.44    5.32    5.15    5.03
      Equity                   6.26    6.06    6.40    6.11    6.15
    Trading account            6.12    6.48    6.60    4.61    4.04
  Gross federal funds sold
    and reverse RPs            5.95    5.39    5.51    5.36    4.97
  Interest-bearing balances
    at depositories            5.91    6.10    5.70    5.66    5.69

Rates paid
Interest-bearing
    liabilities                4.47    4.49    4.61    4.60    4.28
  Interest-bearing deposits    4.39    4.44    4.54    4.53    4.22
    In foreign offices         5.73   11.43    4.77    5.08    4.34
    In domestic offices        4.39    4.43    4.54    4.53    4.22
      Other checkable
        deposits               2.50    2.41    2.46    2.45    2.28
      Savings (including
        MMDAs)                 3.32    3.24    3.37    3.39    3.21
      Large-denomination
        time deposits(4)       5.55    5.49    5.53    5.54    5.22
      Small-denomination
        time deposits(4)       5.51    5.59    5.67    5.64    5.25
  Gross federal funds
    purchased and RPs          5.62    5.10    5.23    5.05    4.73
  Other interest-bearing
    liabilities                6.87    5.84    6.15    6.44    5.52

                               Income and expense as a percentage
                               of average net consolidated assets

Gross interest income          7.80    7.75    7.89    7.74    7.45
    Taxable equivalent         7.93    7.87    8.01    7.86    7.57
  Loans                        5.66    5.67    5.85    5.80    5.59
  Securities                   1.86    1.80    1.76    1.59    1.58
  Gross federal funds sold
    and reverse RPs             .25     .24     .24     .29     .22
  Other                         .04     .04     .04     .05     .06

Gross interest expense         3.38    3.38    3.47    3.46    3.24
  Deposits                     3.19    3.22    3.28    3.25    3.01
  Gross federal funds
    purchased and RPs           .10     .08     .08     .07     .08
  Other                         .09     .08     .11     .13     .15

Net interest income            4.42    4.37    4.41    4.28    4.21
    Taxable equivalent         4.55    4.49    4.54    4.40    4.33

Loss provisioning(5)            .25     .25     .27     .29     .30

Noninterest income             1.38    1.42    1.44    1.52    1.43
  Service charges on
    deposits                    .44     .44     .44     .42     .42
  Income from fiduciary
    activities                  .22     .20     .20     .23     .26
  Trading income                .01    (*)     (*)     (*)     (*)
    Interest rate exposures   n.a.     (*)     (*)     (*)     (*)
    Foreign exchange
      exposures               n.a.     (*)     (*)     (*)     (*)
    Equity, commodity, and
      other exposures         n.a.     (*)     (*)     (*)     (*)
  Other                         .71     .78     .79     .86     .75

Noninterest expense            3.81    3.70    3.70    3.74    3.71
  Salaries, wages, and
    employee benefits          1.80    1.77    1.80    1.82    1.81
  Expenses of premises and
    fixed assets                .50     .49     .49     .49     .49
  Other                        1.51    1.44    1.41    1.43    1.41

Net noninterest expense        2.43    2.28    2.27    2.22    2.28

Realized gains on
  investment account
  securities                   (*)      .01     .01     .02    (*)

Income before taxes and
    extraordinary items        1.75    1.85    1.89    1.79    1.63
  Taxes                         .55     .59     .59     .53     .47
  Extraordinary items          (*)     (*)     (*)     (*)     (*)

Net income (return on
    assets)                    1.20    1.26    1.30    1.26    1.17
  Cash dividends declared       .62     .64     .73     .83     .67
  Retained income               .58     .62     .57     .43     .49

MEMO: Return on equity        12.05   12.33   12.54   12.01   11.39

(*) In absolute value, less than 0.005 percent.

n.a. Not available. MMDA Money market deposit account.
RP Repurchase agreement. CD Certificate of deposit.

(1.) Includes the allowance for loan and lease losses and the allocated
transfer risk reserve.

(2.) Before 1994, the netted value of off-balance-sheet items appeared
in "trading account securities" if a gain and "other
non-interest-bearing liabilities" if a loss.

(3.) When possible, based on the average of quarterly balance sheet
data reported on schedule RC-K of the quarterly Call Reports.

(4.) Before 1997, data for large time open accounts are included in
small-denomination time deposits.

(5.) Includes provisions for loan and lease losses and for allocated
transfer risk.

(1.) Except where otherwise indicated, data in this article are from the quarterly Reports of Condition and Income (Call Reports) for insured domestic commercial banks and nondeposit trust companies (hereafter, banks). The data consolidate information from foreign and domestic offices and have been adjusted to take account of mergers. For additional information on the adjustments to the data, see the appendix in William B. English and William R. Nelson, "Profits and Balance Sheet Developments at U.S. Commercial Banks in 1997," Federal Reserve Bulletin, vol. 84 (June 1997), p. 408.

Size categories, based on assets at the start of each quarter, are as follows: the 10 largest banks, large banks (those ranked 11 through 100), medium-sized banks (those ranked 101 through 1,000), and small banks (those not among the largest 1,000 banks). At the start of the fourth quarter of 1999, the approximate asset sizes of the banks in those groups were as follows: the 10 largest banks, more than $74 billion; large banks, $6.3 billion to $74 billion; medium-sized banks, $326 million to $6.2 billion; small banks, less than $326 million.

Many of the data series reported here begin in 1985 because the Call Reports were significantly revised at the start of that year. Data for 1984 and earlier years are taken from Federal Deposit Insurance Corporation, Statistics on Banking (FDIC, 1999). The data reported here are also available on the Internet, at www.fdic.gov/bank/ statistical/statistics/index.html/

Data shown in this article may not match data published in earlier years because of revisions and corrections. In the tables, components may not sum to totals because of rounding.

(2.) In contrast, consumer loans on banks' books fell slightly because securitizations (selling loans as backing for securities, a process that takes the loans off the banks' balance sheets) rose faster than originations.

(3.) The survey sample is selected from among the largest insured domestic commercial banks in each Federal Reserve District and from among the largest foreign-related banking institutions in those Federal Reserve Districts where such institutions are common. As of December 31, 1999, the 57 domestic banks covered in the May 2000 survey accounted for nearly half of the $4.95 trillion in assets held by all domestic banks; and the 21 foreign-related institutions accounted for nearly 30 percent of the $806 billion in assets held by all such institutions in the United States. The survey is available at www.federalreserve.gov/boarddocs/SnLoanSurvey/

(4.) Board of Governors of the Federal Reserve System, "Recent Trends in Bank Lending Standards for Commercial Loans," Supervision and Regulation Letters SR 99-23 (SUP), September 28, 1999, available at www.federalreserve.gov/boarddocs/srletters/1999/ sr9923.htm/

(5.) The STBL data are based on a representative sample of up to 348 insured domestic commercial banks and up to 50 foreign-related banking institutions. The sample data are used to estimate the terms of loans extended during the survey period at all domestic banks and at all foreign-related institutions. The data are available at www.federalreserve.gov/releases/E2/

(6.) Loans in the STBL receive risk ratings ranging from 1 to 5, which correspond to minimal risk, low risk, moderate risk, acceptable risk, and classified, respectively. For more information on loan rating categories in the STBL see, Thomas F. Brady, William B. English, and William R. Nelson, "Recent Changes to the Federal Reserve's Survey of Terms of Business Lending." Federal Reserve Bulletin, vol. 84 (August 1998), pp. 604-15.

(7.) Between 1998 and 1999, the four-quarter uncentered moving average spread over the intended federal funds rate--weighted by volume--increased only 8 basis points on 1-rated (minimal-risk) loans and 9 basis points on 2-rated (low-risk) loans; in contrast, the corresponding spreads for 3-rated and 4-rated loans increased 24 basis points and 55 basis points respectively.

(8.) The growth at banks, however, lagged behind the 7.3 percent growth of consumer credit originated by all lenders. The notable overall strength in auto lending and leasing--activities in which banks are not major players--may have contributed to their lagging performance.

(9.) An estimated one-third of homeowners who refinanced their mortgages in 1998 took some cash out as part of the loan.

(10.) Other managed liabilities include, among other things, federal funds purchased and securities sold under repurchase agreements, loans sold under repurchase agreements that mature in more than one day, sales of participations in pools of loans that mature in more than one day, purchases of term federal funds, as well as borrowings from Federal Reserve Banks and Federal Home Loan Banks.

(11.) Federal Housing Finance Board, Federal Home Loan Bank System 1999 Financial Report (FHFB, 2000), p. 19.

(12.) An institution is deemed to be well capitalized if it (1) has a total risk-based capital ratio of at least 10 percent, (2) has a tier 1 risk-based capital ratio of at least 6 percent, (3) has a leverage ratio of at least 5 percent, and (4) is not subject to any written agreement, order, capital directive, or prompt corrective action directive issued by regulatory authorities.

The average margin by which banks remained well capitalized was computed as follows. First, among the leverage, tier 1, and total capital ratios of each well-capitalized bank, the institution's tightest capital ratio is defined as the one closest to the regulatory standard for being well capitalized. The bank's margin is then defined as the percentage point difference between its tightest capital ratio and the corresponding regulatory standard. The average margin among all well-capitalized banks--the measure referred to in the text--is the weighted average of all the individual margins, with the weights being each bank's share of the total assets of well-capitalized banks.

(13.) The tier 1 ratio is the ratio of tier 1 capital to risk-weighted assets, and the total ratio is the ratio of the sum of tier 1 and tier 2 capital to risk-weighted assets. Tier 1 capital consists primarily of common equity (excluding intangible assets such as goodwill and excluding net unrealized gains on investment account debt securities classified as available for sale) and certain perpetual preferred stock. Tier 2 capital consists primarily of subordinated debt, preferred stock not included in tier 1 capital, and loan-loss reserves. Risk-weighted assets are calculated by multiplying the amount of assets and the credit-equivalent amount of off-balance-sheet items (an estimate of the potential credit exposure posed by the item) by the risk weight for each category. The risk weights rise from zero to one as the credit risk of the assets increases. The leverage ratio is the ratio of tier 1 capital to average tangible assets. Tangible assets are equal to total assets less assets excluded from common equity in the calculation of tier 1 capital.

(14.) Bankers Trust Company of New York, which was acquired by Deutsche Bank AG in June 1999.

(15.) A subchapter S corporation is generally not subject to federal taxes at the corporate level, and its net income can therefore be as much as one-half higher than the income of a comparable bank that does not have subchapter S status. For many banks, the main impediment to claiming S status is the restriction on the maximum number of shareholders, which currently stands at seventy-five, and the fact that stockholders cannot be other companies.

(16.) For historical perspective on the net interest margin, see Antulio N. Bomfim and William R. Nelson, "Profits and Balance Sheet Developments at U.S. Commercial Banks in 1998," Federal Reserve Bulletin, vol. 85 (June 1999), p. 379.

(17.) Banks lend securities on behalf of their trust customers, typically pension funds and some other large institutional investors, to increase earnings on assets held in trust. In the case of most transactions, banks receive cash as collateral, which, in turn, they invest. The trust benefits both from the interest earned on the invested cash collateral and from the excess of cash collateral received over the value of the securities lent. The bank benefits from the fees it earns.

(18.) For additional details on the international operations of U.S. banks, see English and Nelson, "Profits and Balance Sheet Developments at U.S. Commercial Banks in 1997," p. 406.