Profits and balance sheet developments at U.S. commercial banks in 2002.The U.S. commercial banking industry continued to be highly profitable in 2002, despite the lackluster performance of the U.S. economy. Returns on both bank equity and assets rose, the latter reaching its highest level in more than three decades (chart 1). An important contributor to last year's bank profitability was the decline to extraordinarily low levels of market interest rates. As a result of the Federal Reserve's aggressive easing in 2001 in response to economic weakness, shone-term interest rates were low throughout 2002 and fell further in November as monetary policy was eased again (chart 2). Longer-term rates backed up early in the year before falling dramatically to multidecade lows by year-end. With the cost of holding liquid deposits low and with weak equity markets evidently adding to the attractiveness of liquidity, banks were the recipients of large inflows of inexpensive savings deposits that helped to reduce interest expense and boost net interest margins. Net interest margins also benefited from the shape of the yield curve, which, despite the decline in long-term rates, was considerably steeper on average in 2002 than in 2001. In addition, the decline in longer-term interest rates boosted realized gains on securities. Profitability was supported as well by a reduction in non-interest expense following a change in accounting rules that substantially limited the requirement to amortize goodwill. Finally, bank profitability benefited from a leveling off of loan charge-offs and loan provisioning, which seemed to reflect an improved ability of the household and business sectors to service their bank loans and other debt made possible by the generally low levels of market interest rates. [GRAPHICS OMITTED] Both the household and business sectors took considerable advantage of falling long-term interest rates to strengthen their balance sheets. A drop in mortagage rates to record lows prompted a surge of mortagage refinancing. Households were able to reduce their interest rate burden in part by liquidating some of the equity in their homes and using the proceeds to pay down more-expensive consumer debt. Corporations also enjoyed a reduction in their interest rate burdens. Moreover, by issuing bonds and paying down short-term debt obligations, they were able to bolster liquidity. The balance sheet strengthening on the part of both households and firms likely contributed to the stabilization of banks' credit quality during 2002. With delinquency rates for business and household loans flattening or declining, banks were able to hold loss provisioning steady, albeit at a high level. Commercial and industrial lending continued to decline in 2002 and reflected weak business investment and the paydown of loans with the proceeds of bond issuance. However, bank support of the mortgage market was considerable: The share of bank assets accounted for by residential mortgages and mortgage-backed securities rose over the year by 2 1/4 percentage points, to 26.1 percent. According to the Federal Deposit Insurance Corporation, ten commercial banks failed in 2002 and required government assistance to dispose of their assets and insured deposits. At the time of closing, these banks held about $2.5 billion in assets, a tiny percentage of industry assets but the highest share since 1993. The number of bank mergers fell for the second consecutive year, to 305, the smallest number in more than a decade. With the slow pace of economic recovery, only 111 new bank charters were created in 2002, the lowest number in any year since 1994. Thus, total commercial banks in the United States continued to decline, falling to 7,935 as of December 31, 2002 (chart 3). (1) The share of industry assets at the ten largest banks continued to increase in 2002, and the rise was due largely to an internal consolidation among Citigroup subsidiaries. This consolidation had little effect on the share of assets at the largest 100 banks, as it took place within this group. [GRAPHIC OMITTED] Reorganization activity also declined at the bank holding company (BHC) level. The number of mergers between BHCs dropped to 126, the smallest number since 1991. The formation of new BHCs, however, pushed up the overall total by 2 over the year, to 5,963. The share of banking and nonbanking assets held by the top fifty BHCs remained flat, at about 77.5 percent. The number of financial holding companies, a subset of BHCs that have a greater scope of allowed activities under the Gramm-Leach-Bliley Act, rose to 715 in 2002, up from 665 in 2001. The share of BHC assets held at financial holding companies rose to 74 percent. BALANCE SHEET DEVELOPMENTS Total bank assets grew 7.2 percent in 2002, about in line with the expansion of total domestic nonfinancial debt (table 1). Asset growth was driven primarily by real estate loans--particularly residential mortgage and home equity loans--and securities held on balance sheet. These advances more than offset sharp declines in commercial and industrial loans. Overall, total loans and leases increased 5.9 percent last year, a pace more than three times that in 2001. On the liability side of the balance sheet, banks enjoyed continued strong inflows of core deposits, a reflection of the drop in the opportunity cost of holding liquid deposits and, apparently, of a surge in the demand for safe, liquid assets stemming from increased economic uncertainty and a volatile and weak stock market. Even so, banks found it necessary to expand their managed liabilities moderately. Banks seemed to respond to the uncertain economic outlook in 2002 by bolstering their capital positions. Equity capital grew somewhat more quickly than assets, and the ratio of total regulatory capital to risk-weighted assets rose slightly as well; the increase in the latter ratio reflected the strong growth of assets with low risk weights, such as Treasury and agency securities and residential mortgages. Loans to Businesses Commercial and industrial (C&I) loans fell 7.3 percent over the year, the largest decline since 1991. The contraction was due mainly to weak demand, but the decrease reflected also a further tightening of bank lending policies. Although non financial firms expanded their capital expenditures a bit last year, their internally generated funds rose smartly, which caused the financing gap--and thus borrowing needs--to plummet to levels not seen since 1997 (chart 4). A paucity of merger activity and the attractiveness of the bond market as an alternative source of funds, which induced many firms to issue longer-term debt and use the proceeds to pay down bank loans and other short-term debt, also held down demand. Respondents to the Federal Reserve's Senior Loan Officer Opinion Survey on Bank Lending Practices (BLPS BLPS - Base Level Personnel System BLPS - Boon Lay Primary School (Singapore)) noted these factors, particularly the first two, in reporting that the demand for C&I loans was quite weak in 2002 (chart 5, third panel). [GRAPHICS OMITTED] On net, BLPS respondents also reported a tightening in lending standards in all four surveys conducted in 2002, although these fractions declined over the course of the year (chart 5, top panel). A similar picture can be painted for lending terms (chart 5, second panel): According to the BLPS, a substantial percentage of banks (albeit a smaller one than in 2001) reported increased spreads over the cost of funds and increased premiums for riskier loans throughout the year. The responses to special questions in the April 2002 BLPS indicated that most respondent banks, which accounted for more than 90 percent of total C&I loans plus unused loan commitments, had also tightened standards and terms for backup lines of credit for commercial paper issuers, particularly those with A2/P2 ratings. Virtually all the banks cited heightened concerns about possible deterioration in issuers' credit quality and a higher probability of lines being drawn because of less-certain conditions in the commercial paper market as reasons for tightening standards and terms. Concerns about improper corporate accounting practices also restrained supply: According to the August BLPS, most banks had increased their scrutiny of financial statements and loan details in response to the wave of accounting scandals that permeated the first part of the year. [GRAPHIC OMITTED] Nonetheless, results from the October BLPS suggested that reduced demand from creditworthy borrowers was a much more important reason than tighter supply conditions for the decline in C&I loans last year. Most of the BLPS banks are included in the 100 largest banks, for which C&I loans dropped more than 10 percent in 2002; in contrast, smaller banks posted a positive growth rate, albeit below that of previous years (see box on C&I lending). Unlike C&I loans, growth in commercial real estate (CRE) loans was solid in 2002, at 8.8 percent, down modestly from the 10.9 percent growth of 2001. The slowdown was due entirely to a sharp deceleration in the expansion of construction and land development lending, which was likely pulled down by high rates of office vacancy and declining office rents. The growth of nonfarm, nonresidential loans and multifamily loans actually picked up in 2002. As has been the pattern of the past several years, lending grew faster at small banks than at larger banks: The top 100 banks expanded their commercial real estate loans 2.2 percent, less than half the 2001 growth rate, while growth at other banks was 16.1 percent, only a bit less than in the previous year. According to the banks in the BLPS, which are mainly large ones, slower CRE lending flows appeared to reflect both tighter lending conditions and weaker demand. A substantial (although declining) fraction of BLPS respondents reported a tightening of lending standards throughout 2002 (chart 6). In addition, responses to the April 2003 BLPS indicated that terms for CRE loans had been tightened during 2002, as they had been in 2001, with significant percentages of banks reporting increased loan spreads and higher loan-to-value ratios. Banks cited mostly concerns about the general and local economic outlook as well as a decreased tolerance for risk as the main causes for tightening their terms. Demand for CRE loans continued to weaken throughout the year, according to BLPS respondents. [GRAPHICS OMITTED] Loans to Households Record low mortgage rates supported the growth of residential mortgage loans held by commercial banks, which jumped an extraordinary 20 percent in 2002. Home equity loans expanded nearly 40 percent, and other one- to four-family residential mortgages also grew rapidly. This acceleration appeared to be due in part to a lack of securitizations, as outstanding residential mortgages securitized by banks and for which banks retained servicing rights or provided credit enhancements declined slightly. (2) The lack of growth in these securitized residential loans may reflect a reduction in the cost of funding loans on balance sheet due to strong inflows of deposits (discussed below). The vigorous demand for residential mortgage credit was due to both an increase in housing construction and the desire of many homeowners to cash out part of their accumulated equity in existing homes. The Mortgage Bankers Association's index of refinancing activity was moderate for the first part of 2002 but surged in the second half, coincident with the sharp decline in mortgage rates, and peaked at a level even higher than that registered in the fall of 2001 (chart 7). Almost half the respondents to the October BLPS indicated that between 20 percent and 40 percent of the customers who refinanced their mortgages over the previous six months engaged in cash-out refinancing; about one-fifth of banks reported that more than 40 percent of their customers did so. [GRAPHIC OMITTED] A main reported use of these funds was to pay down other, more expensive household debt. Nevertheless, consumer loans held on banks' balance sheets grew an overall 6.5 percent in 2002--more than 2 percentage points faster than in 2001. The boost was due largely to a 7.3 percent expansion of consumer installment loans that probably reflected in part strong auto sales last year. In contrast to the brisk advance of consumer loans held on balance sheet, securitized consumer loans on which banks retained servicing rights or provided credit enhancements grew sluggishly last year, again perhaps because of a more favorable cost of directly funding consumer loans on balance sheet. (3) Although many banks have reported efforts to expand their lending to households, banks have also increased their scrutiny of credit cards and consumer installment loans, amid high charge-off rates on these loans (discussed below). According to the BLPS, the percentage of banks reporting tighter lending standards for credit card and other consumer loans oscillated between about 10 percent and 20 percent during the year, although the percentage of banks reporting tighter terms declined in the first part of the year and remained low thereafter (chart 8). [GRAPHIC OMITTED] Other Loans and Leases Other loans and leases edged slightly lower in 2002. Because many leases, the largest component in this category, are made to businesses, this weak performance is probably due to some of the same factors that depressed C&I loans over the past two years. Also, banks' interest in engaging in automobile leases may have faded after reportedly lower-than-expected profits in previous years from such transactions. The second largest component of other loans and leases, lending to other depository institutions, posted strong growth after a decline in 2001. Securities Banks' holding of securities jumped more than 16 percent in 2002, the strongest advance in the past ten years. The increase reflected a rapid expansion of both trading accounts and investment accounts. (4) As a share of total assets, securities increased 1.3 percentage points, to 21.7 percent, at year-end (chart 9). The rise is a continuation of the trend initiated in 2001. [GRAPHIC OMITTED] The attractiveness of securities may have reflected partly the steepness of the yield curve last year ytogether with the short maturities of many bank liabilities. Much of the increase in banks' securities holdings was concentrated in mortgage-backed securities (MBS). The diversification of credit risk and low regulatory risk weights associated with agency-related MBS no doubt continued to serve as inducements for banks to expand their holdings of mortgage-related assets. As has been the case for several years, growth in MBS was stronger at small banks than at large banks, with institutions ranked outside the top 100 now holding about one-quarter of all MBS. Overall, at year-end MBS accounted for almost half of securities held in investment accounts and almost 10 percent of total assets. Treasury and agency securities (excluding agency MBS) also registered strong growth last year. Liabilities Core deposits expanded 7.6 percent in 2002, the highest growth rate of the past ten years, save for the 10.6 percent advance in 2001. In a pattern that is typical in periods of low market interest rates, the growth was fueled entirely by savings accounts, as the opportunity cost of the liquidity they provide fell further and a declining and volatile stock market generated a strong demand for liquid and safe assets. A runoff of small time deposits partly offset the strong inflows to liquid deposits, but the sum of small time and savings deposits expanded briskly and pushed the share of this category to almost 50 percent of total domestic liabilities (chart 10). The strong inflow of core deposits enabled banks, especially large ones, to hold down their reliance on more-expensive managed liabilities. A 5.1 percent contraction in transaction deposits resumed the pattern of decline exhibited since the mid-1990s. This downtrend appears to reflect the continued spread of arrangements to shift business balances into money market deposit accounts to decrease reserve requirements. [GRAPHIC OMITTED] Total managed liabilities increased about 5 percent last year. Noticeably faster expansion among banks outside the top 100 reflected their stronger asset growth. The smallest banks, those ranked below the top 1,000, continued to show rapid growth in managed liabilities, although these instruments accounted for a relatively small share of their total liabilities. Capital Equity capital increased 7.9 percent in 2002, a little faster than assets. Retained earnings, paid-in capital, and unrealized gains on available-for-sale securities all contributed to the rise in equity capital. While total assets rose more than 7 percent for the year, risk-weighted assets grew only about 4 percent. As in 2001, banks substituted securities and residential real estate loans, which carry relatively low risk weights, for assets with high risk weights, such as C&I loans. Tier 1 capital increased 5.6 percent for the year, while tier 2 capital increased 2.3 percent. (5) The leverage ratio edged up 2 basis points, to 7.83 percent, at the end of the fourth quarter. The ratio of tier 1 capital to risk-weighted assets increased slightly to just under 10 percent. The ratio of tier 1 and tier 2 capital to risk-weighted assets rose to 12.83 percent over the year (chart 11). The increase of 7 basis points was due almost entirely to banks outside the top 100, for which the ratio advanced 29 basis points; at larger banks the ratio inched up only 2 basis points. The share of assets held by banks that were considered well capitalized for regulatory purposes remained near its very high level of the past several years (chart 12). (6) [GRAPHICS OMITTED] Derivatives Derivatives are financial instruments whose value is based on the prices of other instruments. Banks enter into derivatives contracts both to satisfy customer demand in their role as market makers and to manage their own market and credit risks. Banks' use of such contracts, as measured by the notional value of the underlying assets involved, grew 24 percent in 2002, to more than $56 trillion. The market value of a derivatives contract, however, is typically much smaller than its notional value. When acting to meet customer demand, banks usually limit their net exposure by entering into at least partially offsetting contracts with different counterparties. These offsetting transactions account for the bulk of banks' activities in derivative markets. At the end of 2002, the fair market value of banks' contracts that had positive market value was $1.17 trillion, while the fair market value of contracts with negative value was $1.14 trillion. On net, the fair value was $27 billion, a level down about $4 billion from 2001 but still well above the level of any other recent year. The overwhelming majority of derivatives contracts is held by large institutions: The top ten banks by assets held in excess of 97 percent of the value (either notional or fair) of all contracts last year. The most common type of derivatives contracts is swaps, which are agreements to exchange the payment streams of two underlying assets (for example, the interest payments of a fixed-rate and of a variable-rate bond); at the end of 2002, swaps accounted for 58 percent of the notional value of all derivatives. Forwards (agreements to buy or sell the underlying asset for a certain price at a certain date in the future) and options (contracts giving the buyer the right to buy or sell a specified asset at a specified price on or before a certain future date) account for an additional 41 percent of total notional value. One of the fastest growing derivatives markets in which banks are involved is that for credit derivatives, although it constitutes only about 1 percent of the total notional value. Credit derivatives transfer the risk of default of certain assets from one party, the beneficiary, to another, the guarantor; banks act both as guarantors and beneficiaries. The market for credit derivatives is even more concentrated than the market for other derivatives, with five banks accounting for 96 percent of the notional value outstanding. On net, banks have been receivers of guarantees in each year since 1997 (the first year for which data are available), except for 2001. In 2002 banks were net receivers of guarantees totaling about $59 billion. According to a survey conducted by Fitch Ratings, those net guarantees were likely provided largely by the insurance and reinsurance sector. A series of special questions in the January 2003 BLPS elicited some information on how banks use the most common of credit derivatives, credit default swaps (CDS). (7) Only thirteen domestic banks said that they use CDS to hedge risk in their C&I loan portfolio. Even among those banks that use CDS for this purpose, the majority do so for less than 4 percent of their total C&I loan commitments (outstanding loans plus unused lines of credit). The most commonly cited reason for buying credit protection is that purchasing CDS is superior to selling loans outright because the transactions preserve the bank's relationship with the borrower. Also important was that CDS can provide protection for loans for which no resale or securitization markets exist. A smaller fraction of banks use CDS to acquire credit exposure--that is, they are net sellers of protection--and most of these banks that do so report that such exposure equals less than 2 percent of their total C&I loan commitments. The two most important reasons given for selling credit protection are its risk diversification benefits and its profitability relative to lending. Almost all banks that use CDS, both as buyers and sellers of protection, reported that their participation in the CDS market did not affect their direct C&I lending. A few banks, however, indicated that their CDS market participation allowed them to increase moderately their direct C&I lending. Among the domestic banks that do not use CDS either to hedge loans or as standalone investments, most found the expenses related to CDS outweighed the benefits. Other often-cited reasons for avoiding CDS are their risk, the complications of managing them, and the difficulty of finding them in the desired amounts or maturities. Although relatively few banks actively participate in the CDS market, a majority of BLPS respondents reported using CDS spreads to impute value to certain loan assets or to price new loans. TRENDS IN PROFITABILITY The profitability of the banking industry increased markedly in 2002 as most income components improved. A steep yield curve fostered a noticeable rise in net interest income as a share of assets. Non-interest income grew at about the pace of recent years, but non-interest expense declined significantly as a share of assets, largely because of a change in accounting rules regarding goodwill rather than an active move on the part of banks to reduce costs. Falling interest rates allowed banks to book somewhat greater realized gains on securities in 2002 than in 2001. Loan-loss provisioning, while considerable, held steady as a share of assets as credit quality stabilized during 2002. This confluence of positive developments caused banks' return on assets to rise 16 basis points, to 1.33 percent, the highest level in three decades, while the return on equity advanced 1.1 percentage points, to 14.5 percent. Consistent with robust aggregate earnings, relatively few banks were unprofitable: The proportion of banks with negative net income declined 1.7 percentage points, to 6.5 percent, and accounted for only 1.6 percent of industry assets. A 22 percent surge in banks' dividend payments, made primarily to parent holding companies, reflected the strong earnings. Relative to after-tax income, dividends in 2002 were at their highest level in more than a decade. Also, rapid growth of retained income boosted equity capital. The high levels-of profitability led bank holding company stocks (chart 13) to outperform the S&P 500 during 2002. Within that total, though, concerns about the exposure of the largest holding companies to some of the major corporate bankruptcies during the year restrained the growth of stock prices at the top fifty banking organizations. These concerns were most evident last summer, when the association of a few very large banks with major corporate accounting scandals began to surface and to receive intense publicity. [GRAPHIC OMITTED] Interest Income and Expense Banks' interest expense and interest income both moved down with the general level of interest rates last year. On balance, banks benefited as interest expense tumbled 37 percent, while interest income declined only 13 percent. Thus, the industry's net interest margin--the ratio of net interest income to average interest-earning assets--increased in 2002 for the second consecutive year, rising 9 basis points, to 4.04 percent (chart 14). Much of the improvement occurred early in the year, when the yield curve was steepest. As the yield curve flattened during the year, the net interest margin narrowed. [GRAPHIC OMITTED] The rise in the net interest margin was greatest at the 100 largest banks. (8) Funding at these banks is dependent particularly on managed liabilities, and therefore this group benefited most from the substitution of these liabilities for less-expensive core deposits, discussed earlier. The net interest margin was also supported at these banks by a shift toward higher-yielding loans. The share of interest-earning assets that consists of consumer loans moved up from 10.0 percent to 10.5 percent, while the business loan share, which earned a rate of return 4.3 percentage points less than that of consumer loans last year, decreased from 17 percent to 14.5 percent. The smallest banks, those outside the 1,000 largest, were also able to raise their net interest margin, despite benefiting least from the inflow of low-cost core deposits. Their success was due largely to their ability to limit the decline in the rate of return on their loans, especially real estate loans, which made up about 45 percent of their interest-earning assets. (9) Small banks were also relatively successful at limiting the decline in the rate of return on their noncredit-card consumer loans. The net interest margin at banks among the 1,000 largest but outside the top 100 declined last year. Although these banks gained somewhat from the inflow of lower-cost core deposits, they also experienced the largest decline in rates of return on their assets, a drop that reflected mainly a significant fall in the share of interest-earning assets consisting of relatively high-return consumer loans. Non-interest Income and Expense Non-interest income grew 5.3 percent in 2002, around the pace of the previous two years. The increase was due in large part to deposit fees, which expanded at a double-digit rate for the third consecutive year. Banks also enjoyed increased gains from the sale of loans, which, though small, nearly doubled as a share of total revenue. On their quarterly earnings statements, banks reported a rise in fees associated with mortgage refinancing, which evidently contributed to the 6.6 percent growth in other non-interest income. Fiduciary income, primarily fees received for services rendered by banks' trust divisions, declined for the second consecutive year. Non-interest income was also restrained by a 15 percent drop in trading income. The ratio of total non-interest expense to total revenue, already low by historical standards, dropped further in 2002, to about 57 percent (chart 15). Most of the decline was due to a change in the accounting rules that eliminated the requirement to amortize goodwill unless it is impaired (see box on "Goodwill"). A reduction in merger-related charges may also have been a factor behind the drop in non-interest expense in 2002: Measured by number and dollar volume, bank mergers were lower in 2002 than in any of the preceding five years. The decline in non-interest expense occurred last year despite a jump in the fourth quarter, attributable mainly to Citibank and J.P. Morgan Chase. The sudden rise likely reflected large legal fees and other costs associated with their roles in the Enron debacle and analyst malfeasance. [GRAPHIC OMITTED] Salaries and benefits inched up relative to revenue in 2002. The increase was entirely at banks outside the top 100, where salaries and benefits have been steadily rising relative to total revenue since 1996. At the top 100 banks, the ratio of salaries and benefits to total revenue continued to trend down last year, albeit more slowly than during the late 1990s. The cost of premises and fixed assets relative to total revenue edged lower. Loan Performance and Loss Provisioning Credit quality generally stabilized during 2002. Despite some adverse developments, delinquency rates on most types of household and business loans declined, while others remained steady. On the corporate side, bankruptcies of several large firms, including WorldCom, continued to pressure delinquency and charge-off rates, especially at large banks. Extreme financial stress was also a problem for a segment of the household sector, as the personal bankruptcy rate ran at record levels last year. Working strongly to counter the impact of these problems, however, were the declines in interest rates, which allowed for a material reduction in the debt burden of businesses and a leveling off for households (chart 16). Even so, debt burdens remain elevated in both sectors. [GRAPHIC OMITTED] C&I Loans The delinquency rate on C&I loans rose during the first two quarters of 2002, but it held steady through year-end at a relatively elevated 3.9 percent, despite continued runoffs in outstanding loans (chart 17). This pattern reflects primarily developments at the 100 largest banks; at other banks, the delinquency rate has been about unchanged since the second half of 2001 and is below that of the top 100 banks. The higher delinquency rate at large banks is consistent with the increased difficulties at large firms recently, which are reflected in the rise in bankruptcies following corporate governance scandals. Reportedly, the use of credit default swaps by some large banks mitigated the effects of some of the larger loan defaults on their credit quality. [GRAPHIC OMITTED] While delinquency rates are far below the peaks of the early 1990s, recent charge-off rates have exceeded their earlier highs. According to responses to the April 2003 BLPS, C&I charge-off rates have been high in part because they have been associated with a relatively narrow group of delinquent loans on which recovery rates have been low. In addition, banks have charged off C&I loans aggressively, facilitated by the growth of a liquid secondary market for distressed loans. This market provides banks with a way to clear their balance sheets of underperforming loans. When loans are sold, they must first be classified as an "available-for-sale" asset and marked to market, with any shortfalls of market from book value charged off. Commercial Real Estate Loans Vacancy rates for commercial office buildings continued to increase during 2002 and approached the levels of the early 1990s, and office rents fell faster than at any point during the previous fifteen years. Despite these signs of deterioration in commercial real estate markets, delinquency rates on commercial real estate loans were low and declining in 2002. Charge-off rates have also remained low. According to the April 2003 BLPS, the improved quality of these loans reflects mainly declines in the burden of servicing them due to lower interest rates. In addition, banks reported that some borrowers have a substantial equity position in their properties, an additional incentive to keep loans current. Also, banks have been reporting on BLPS surveys since 1998 that they have been tightening standards on commercial real estate loans; and in the January 2002 and April 2003 surveys, they reported tightening lending terms in both 2001 and 2002. The most common method of tightening terms was to reduce maximum loan-to-value ratios. Loans to Households The credit quality of loans to households also generally improved last year as the household interest rate burden was held down by falling interest rates. Also, a decline in the delinquency rate on residential real estate loans during 2002 (chart 18) partly reflected the rapid expansion of these loans, as new loans are much less likely to become delinquent than older loans. Charge-off rates likely were held down by the rapid rise in housing prices over the past several years, which has served to reduce the likelihood of a loss to banks when loans are foreclosed. [GRAPHIC OMITTED] Delinquency rates on credit card loans, which averaged 4.87 percent in 2002, were little changed from the elevated level of a year earlier. By contrast, delinquency rates on consumer installment loans declined, reaching the lowest level since 1995. The high charge-off rates on both credit cards and consumer installment loans last year were perhaps partly a reflection of a jump in personal bankruptcies. Securitized Loans Delinquency rates on loans that had been securitized by banks and on which they retained servicing rights or provided credit enhancements, almost all of which are loans to households, also suggest a stabilization of credit quality: A year-end comparison shows that rates slipped from 4.9 percent in 2001 to 4.8 percent in 2002. For securitized residential real estate loans (both single-family mortgages and home equity loans), delinquency rates ticked up 9 basis points, to 5.0 percent, at the end of 2002. The rate on these securitized loans is more than twice the delinquency rate on loans that are held on banks' books, possibly because a greater proportion of the securitized loans are subprime. Like delinquencies on credit card loans held on banks' books, the delinquency rate on securitized credit card receivables was relatively flat during 2002 and averaged about 5 percent. Delinquency rates on securitized auto loans and some other small items declined. Loss Provisioning Loan charge-offs rose again last year, but the pace of the increase slowed markedly. Accordingly, after two years of growth at rates above 40 percent, loan-loss provisioning increased only 4.3 percent in 2002. As a share of loans and leases, loss provisioning edged up 2 basis points in 2002, to 1.16 percent, the highest level since 1992. However, banks' ability to absorb these losses improved slightly as the ratio of loss provisioning to total revenue moved down a touch, to 11.3 percent (chart 19). [GRAPHIC OMITTED] The growth in loss provisioning occurred entirely at large banks, where charge-offs have been particularly high, consistent with the surge in large corporate bankruptcies. Loss provisioning decreased 11 percent at banks outside the 100 largest banks, where charge-offs have also diminished. Additions to loan-loss reserves continued to bolster the ratio of loan-loss reserves both to total loans and leases and to delinquent loans (chart 20). However, as charge-offs grew faster than reserves, particularly at large banks, the ratio of loan-loss reserves to charge-offs again declined in 2002, moving down to 175 percent, the lowest level since 1991. [GRAPHIC OMITTED] INTERNATIONAL OPERATIONS OF U.S. COMMERCIAL BANKS With world economic growth remaining sluggish, banks curbed their foreign operations in 2002, and the share of bank assets booked in foreign offices fell for the fifth consecutive year, to 10.8 percent. The curtailment of operations abroad was particularly notable in Latin America, where U.S. banking activity declined 24 percent in 2002 (table 2). Argentina remained unstable following the crisis of late 2001, and apprehension regarding the future financial situation in Brazil was considerable. By contrast, lending in Eastern Europe, especially Russia, expanded by 36 percent, albeit from a small base. Exposure to Asia remained steady. With the decline in exposure to foreign markets, the share of net income due to foreign operations fell to 6.5 percent, the lowest proportion during the past decade. Also contributing to the decline in earnings from international operations was the second consecutive yearly decrease in the return on foreign assets. Likely in response to continued credit problems in Argentina, loss provisioning for foreign loans increased significantly. Such loss provisioning as a ratio of foreign loans jumped to the highest level since 1989 and surpassed that associated with the Russian default of 1998. RECENT DEVELOPMENTS Bank profitability continued to be strong in the first quarter of 2003 as many trends of the previous year remained in place. On a seasonally adjusted basis, returns on equity and assets were at their averages for 2002. Robust mortgage refinancing and increased trading revenue provided support to non-interest income, while non-interest expense continued to decline as a share of assets. Although net interest income slipped, banks continued to book capital gains, and provisioning was noticeably below the average for last year on improving credit quality in both household and business sectors. Bank holding company stock prices moved roughly in line with the Wilshire 5000, ending the first quarter at about the same level as at the end of 2002. [GRAPHIC OMITTED] A.1. Portfolio composition, interest rates, and income and expense, all U.S. banks, 1993-2002
A. All banks
Item 1993 1994 1995 1996
Balance sheet items as a
percentage of average net
consolidated assets
Interest-earning assets 89.06 87.11 86.97 87.38
Loans and leases, net 56.25 56.07 58.37 59.89
Commercial and industrial 14.88 14.51 15.20 15.60
U.S. addressees 12.72 12.35 12.87 13.07
Foreign addressees 2.16 2.16 2.33 2.53
Consumer 11.00 11.43 12.08 12.21
Credit card 3.88 4.21 4.69 4.87
Installment and other 7.11 7.22 7.39 7.34
Real estate 24.80 24.43 25.01 25.06
In domestic offices 24.18 23.80 24.36 24.43
Construction and land
development 1.99 1.65 1.59 1.63
Farmland .57 .56 .56 .56
One- to four-family residential 13.49 13.74 14.42 14.43
Home equity 2.07 1.91 1.88 1.85
Other 11.42 11.84 12.54 12.57
Multifamily residential .79 .79 .81 .85
Nonfarm nonresidential 7.33 7.07 6.97 6.96
In foreign offices .62 .63 .65 .63
To depository institutions and
acceptances of other banks 1.13 1.47 1.92 2.33
Foreign governments .67 .41 .30 .26
Agricultural production .99 1.00 .96 .92
Other loans 3.50 3.29 3.11 3.32
Lease-financing receivables .99 1.03 1.19 1.51
LESS: Unearned income on loans -.21 -.16 -.14 -.12
LESS: Loss reserves (1) -1.51 -1.36 -1.26 -1.21
Securities 25.37 24.32 21.94 21.01
Investment account 22.50 21.60 19.39 18.20
Debt 22.50 21.21 18.98 17.75
U.S. Treasury n.a. 6.71 5.25 4.20
U.S. government agency and
corporation obligations n.a. 10.26 9.81 9.75
Government-backed mortgage
pools n.a. 4.70 4.47 4.80
Collateralized mortgage
obligations n.a. 3.19 2.67 2.11
Other n.a. 2.36 2.68 2.83
State and local government n.a. 2.01 1.80 1.68
Private mortgage-backed
securities n.a. .64 .62 .61
Other n.a. 1.56 1.49 1.51
Equity (2) n.a. .39 .41 .45
Trading account 2.87 2.71 2.55 2.81
Gross federal funds sold and reverse
RPs 4.27 3.82 3.93 3.82
Interest-bearing balances at
depositories 3.18 2.90 2.73 2.66
Non-interest-earning assets 10.94 12.89 13.03 12.62
Revaluation gains held in trading
accounts (3) n.a. 2.95 2.90 2.25
Other 10.94 9.94 10.12 10.38
Liabilities 92.15 92.12 91.99 91.73
Interest-bearing liabilities 73.92 71.86 71.86 71.62
Deposits 60.26 57.34 56.31 55.87
In foreign offices 8.32 9.39 10.28 10.01
In domestic offices 51.94 47.96 46.03 45.86
Other checkable deposits 8.24 7.80 6.63 4.75
Savings (including MMDAs) 20.91 19.60 17.48 18.71
Small-denomination time
deposits 16.98 15.33 16.15 15.97
Large-denomination time
deposits 5.81 5.23 5.77 6.42
Gross federal funds purchased and
RPs 7.47 7.60 7.71 7.18
Other 6.19 6.92 7.85 8.56
Non-interest-bearing liabilities 18.23 20.26 20.13 20.11
Demand deposits in domestic offices 13.86 13.49 12.68 12.82
Revaluation losses held in trading
accounts (3) n.a. 2.69 2.88 2.14
Other 4.37 4.55 4.57 5.14
Capital account 7.85 7.88 8.01 8.27
MEMO
Commercial real estate loans 10.63 9.94 9.83 9.92
Other real estate owned .63 .36 .19 .14
Managed liabilities 28.28 29.61 32.08 32.73
Average net consolidated assets
(billions of dollars) 3,566 3,863 4,148 4,376
Effective interest
rate (percent) (4)
Rates earned 7.61 7.61 8.33 8.14
Interest-earning assets 7.71 7.70 8.40 8.22
Taxable equivalent 8.69 8.62 9.25 9.00
Loans and leases, gross 8.08 8.32 8.93 8.56
Net of loss provisions 6.12 5.97 6.51 6.46
Securities 6.36 6.20 6.73 6.66
Taxable equivalent 6.11 5.80 6.35 6.39
Investment account
U.S. Treasury securities and U.S.
government agency obligations
(excluding MBS) n.a. n.a. n.a. n.a.
Mortgage-backed securities n.a. n.a. n.a. n.a.
Other n.a. n.a. n.a. n.a.
Trading account 6.16 7.41 7.73 6.86
Gross federal funds sold and reverse
RPs 3.04 4.26 5.63 5.21
Interest-bearing balances at
depositories 6.61 5.71 6.84 6.20
Rates paid
Interest-bearing liabilities 4.01 4.01 4.99 4.82
Interest-bearing deposits 3.65 3.53 4.47 4.34
In foreign offices 6.82 5.59 6.12 5.54
In domestic offices 3.14 3.14 4.11 4.07
Other checkable deposits 1.99 1.85 2.06 2.04
Savings (including MMDAs) 2.50 2.58 3.19 3.00
Large time deposits (5) 4.00 4.09 5.47 5.39
Other time deposits (5) 4.19 4.17 5.44 5.40
Gross federal funds purchased and RPs 3.07 4.18 5.65 5.12
Other interest-bearing liabilities 8.02 7.25 7.47 6.93
Income and expense as a
percentage of average net
consolidated assets
Gross interest income 6.86 6.65 7.29 7.16
Taxable equivalent 6.94 6.73 7.35 7.21
Loans 5.00 4.91 5.48 5.47
Securities 1.37 1.25 1.23 1.16
Gross federal funds sold and reverse
RPs .13 .17 .23 .21
Other .36 .33 .35 .32
Gross interest expense 2.96 2.87 3.57 3.43
Deposits 2.23 2.05 2.54 2.46
Gross federal funds purchased and RPs .24 .32 .44 .38
Other .50 .50 .58 .59
Net interest income 3.90 3.78 3.72 3.73
Taxable equivalent 3.98 3.86 3.79 3.78
Loss provisioning (6) .47 .28 .30 .37
Non-interest income 2.13 2.00 2.02 2.18
Service charges on deposits .42 .40 .39 .39
Fiduciary activities .31 .31 .31 .33
Trading revenue .26 .16 .15 .17
Interest rate exposures n.a. n.a. n.a. .09
Foreign exchange rate exposures n.a. n.a. n.a. .06
Other commodity and equity
exposures n.a. n.a. n.a. .02
Other 1.14 1.13 1.17 1.29
Non-interest expense 3.94 3.75 3.64 3.71
Salaries, wages, and employee
benefits 1.64 1.58 1.54 1.55
Occupancy .52 .49 .48 .48
Other 1.78 1.68 1.62 1.69
Net non-interest expense 1.81 1.75 1.62 1.53
Gains on investment account securities .09 .01 .01 .03
Income before taxes and extraordinary
items 1.70 1.73 1.81 1.85
Taxes .56 .58 .63 .65
Extraordinary items, net of income
taxes .06 * * *
Net income 1.20 1.15 1.18 1.20
Cash dividends declared .62 .73 .75 .90
Retained income .58 .42 .43 .30
MEMO: Return on equity 15.32 14.63 14.69 14.53
Item 1997 1998 1999
Balance sheet
items as a percentage
of average net
consolidated assets
Interest-earning assets 87.15 86.77 87.05
Loans and leases, net 58.69 58.33 59.36
Commercial and industrial 15.78 16.37 17.07
U.S. addressees 13.18 13.62 14.43
Foreign addressees 2.60 2.75 2.64
Consumer 11.44 10.36 9.71
Credit card 4.55 3.96 3.51
Installment and other 6.89 6.39 6.20
Real estate 25.02 24.87 25.44
In domestic offices 24.41 24.30 24.87
Construction and land
development 1.73 1.86 2.18
Farmland .55 .55 .56
One- to four-family residential 14.42 14.26 14.10
Home equity 1.94 1.89 1.76
Other 12.48 12.37 12.34
Multifamily residential .83 .82 .88
Nonfarm nonresidential 6.88 6.81 7.15
In foreign offices .61 .57 .57
To depository institutions and
acceptances of other banks 1.93 1.91 1.97
Foreign governments .18 .15 .16
Agricultural production .90 .89 .83
Other loans 2.80 2.78 2.75
Lease-financing receivables 1.87 2.14 2.53
LESS: Unearned income on loans -.09 -.07 -.06
LESS: Loss reserves (1) -1.13 -1.07 -1.04
Securities 20.41 20.38 20.40
Investment account 17.25 17.49 18.34
Debt 16.75 16.94 17.73
U.S. Treasury 3.38 2.71 2.14
U.S. government agency and
corporation obligations 9.74 10.28 10.85
Government-backed mortgage
pools 4.94 5.17 5.24
Collateralized mortgage
obligations 1.94 2.13 2.15
Other 2.86 2.99 3.46
State and local government 1.59 1.57 1.62
Private mortgage-backed
securities .50 .67 .88
Other 1.54 1.71 2.24
Equity (2) .50 .55 .61
Trading account 3.16 2.90 2.06
Gross federal funds sold and reverse
RPs 5.18 5.37 4.61
Interest-bearing balances at
depositories 2.86 2.69 2.68
Non-interest-earning assets 12.85 13.23 12.95
Revaluation gains held in trading
accounts (3) 2.59 2.95 2.57
Other 10.26 10.28 10.38
Liabilities 91.57 91.51 91.51
Interest-bearing liabilities 71.36 71.32 72.51
Deposits 55.01 54.66 54.79
In foreign offices 10.02 10.15 10.46
In domestic offices 44.99 44.51 44.33
Other checkable deposits 3.62 3.11 2.81
Savings (including MMDAs) 19.12 19.91 21.00
Small-denomination time
deposits 15.17 14.15 13.10
Large-denomination time
deposits 7.08 7.33 7.42
Gross federal funds purchased and
RPs 8.13 7.99 7.97
Other 8.21 8.68 9.75
Non-interest-bearing liabilities 20.21 20.18 19.00
Demand deposits in domestic offices 12.16 11.00 9.78
Revaluation losses held in trading
accounts (3) 2.64 2.97 2.52
Other 5.42 6.21 6.70
Capital account 8.43 8.49 8.49
MEMO
Commercial real estate loans 9.99 10.12 10.87
Other real estate owned .11 .08 .06
Managed liabilities 34.09 34.94 36.58
Average net consolidated assets
(billions of dollars) 4,733 5,144 5,439
Effective interest
rate (percent) (4)
Rates earned 8.15 7.99 7.70
Interest-earning assets 8.22 8.06 7.76
Taxable equivalent 9.01 8.84 8.48
Loans and leases, gross 8.50 8.30 7.97
Net of loss provisions 6.54 6.45 6.27
Securities 6.73 6.63 6.46
Taxable equivalent 6.50 6.38 6.25
Investment account
U.S. Treasury securities and U.S.
government agency obligations
(excluding MBS) n.a. n.a. n.a.
Mortgage-backed securities n.a. n.a. n.a.
Other n.a. n.a. n.a.
Trading account 6.75 6.85 6.47
Gross federal funds sold and reverse
RPs 5.45 5.29 4.78
Interest-bearing balances at
depositories 6.23 6.32 5.95
Rates paid
Interest-bearing liabilities 4.92 4.88 4.47
Interest-bearing deposits 4.39 4.31 3.87
In foreign offices 5.44 5.66 4.91
In domestic offices 4.16 4.01 3.63
Other checkable deposits 2.25 2.29 2.08
Savings (including MMDAs) 2.93 2.79 2.49
Large time deposits (5) 5.45 5.22 4.92
Other time deposits (5) 5.54 5.48 5.09
Gross federal funds purchased and RPs 5.17 5.19 4.73
Other interest-bearing liabilities 6.94 6.89 6.48
Income and expense
as a percentage of
average net
consolidated assets
Gross interest income 7.15 6.98 6.73
Taxable equivalent 7.20 7.03 6.78
Loans 5.40 5.27 5.12
Securities 1.11 1.10 1.14
Gross federal funds sold and reverse
RPs .29 .29 .23
Other .35 .32 .24
Gross interest expense 3.48 3.46 3.22
Deposits 2.48 2.43 2.20
Gross federal funds purchased and RPs .43 .43 .39
Other .56 .59 .63
Net interest income 3.67 3.52 3.52
Taxable equivalent 3.72 3.57 3.57
Loss provisioning (6) .41 .41 .39
Non-interest income 2.23 2.40 2.65
Service charges on deposits .39 .38 .40
Fiduciary activities .35 .37 .38
Trading revenue .17 .15 .19
Interest rate exposures .08 .05 .07
Foreign exchange rate exposures .08 .09 .09
Other commodity and equity
exposures * .01 .03
Other 1.32 1.49 1.69
Non-interest expense 3.61 3.77 3.76
Salaries, wages, and employee
benefits 1.53 1.55 1.58
Occupancy .47 .47 .48
Other 1.62 1.75 1.70
Net non-interest expense 1.38 1.37 1.11
Gains on investment account securities .04 .06 *
Income before taxes and extraordinary
items 1.92 1.80 2.02
Taxes .68 .62 .72
Extraordinary items, net of income
taxes * .01 *
Net income 1.25 1.19 1.31
Cash dividends declared .90 .80 .96
Retained income .35 .39 .35
MEMO: Return on equity 14.84 14.06 15.40
Item 2000 2001 2002
Balance sheet items
as a percentage of
average net
consolidated assets
Interest-earning assets 87.17 86.53 86.46
Loans and leases, net 60.52 58.99 57.87
Commercial and industrial 17.17 16.09 14.08
U.S. addressees 14.67 13.70 12.05
Foreign addressees 2.49 2.39 2.04
Consumer 9.38 9.23 9.35
Credit card 3.52 3.63 3.78
Installment and other 5.87 5.61 5.57
Real estate 27.04 27.10 28.39
In domestic offices 26.50 26.60 27.91
Construction and land
development 2.51 2.85 2.98
Farmland .56 .55 .56
One- to four-family residential 14.96 14.67 15.40
Home equity 1.96 2.18 2.79
Other 13.00 12.49 12.61
Multifamily residential .99 .97 1.02
Nonfarm nonresidential 7.48 7.56 7.95
In foreign offices .54 .50 .48
To depository institutions and
acceptances of other banks 1.87 1.83 1.87
Foreign governments .12 .10 .09
Agricultural production .78 .75 .70
Other loans 2.58 2.34 2.06
Lease-financing receivables 2.65 2.62 2.47
LESS: Unearned income on loans -.05 -.04 -.05
LESS: Loss reserves (1) -1.02 -1.04 -1.11
Securities 20.02 19.54 21.27
Investment account 17.59 16.82 18.30
Debt 16.93 16.49 17.99
U.S. Treasury 1.66 .85 .79
U.S. government agency and
corporation obligations 10.31 10.08 11.46
Government-backed mortgage
pools 4.75 5.13 6.09
Collateralized mortgage
obligations 1.92 1.95 2.35
Other 3.63 2.99 3.02
State and local government 1.52 1.49 1.49
Private mortgage-backed
securities .95 1.08 1.25
Other 2.48 2.98 3.01
Equity (2) .66 .34 .31
Trading account 2.43 2.72 2.97
Gross federal funds sold and reverse
RPs 4.12 5.11 4.81
Interest-bearing balances at
depositories 2.52 2.90 2.52
Non-interest-earning assets 12.83 13.47 13.54
Revaluation gains held in trading
accounts (3) 2.29 2.37 2.42
Other 10.54 11.10 11.12
Liabilities 91.58 91.24 90.85
Interest-bearing liabilities 73.30 72.46 71.22
Deposits 54.67 54.60 53.90
In foreign offices 10.92 10.18 8.92
In domestic offices 43.75 44.43 44.98
Other checkable deposits 2.46 2.36 2.39
Savings (including MMDAs) 20.64 22.29 24.93
Small-denomination time
deposits 12.49 11.59 10.13
Large-denomination time
deposits 8.16 8.19 7.52
Gross federal funds purchased and
RPs 7.83 7.95 7.77
Other 10.79 9.90 9.54
Non-interest-bearing liabilities 18.28 18.78 19.63
Demand deposits in domestic offices 8.62 8.00 7.66
Revaluation losses held in trading
accounts (3) 2.29 2.21 2.09
Other 7.37 8.58 9.88
Capital account 8.42 8.76 9.15
MEMO
Commercial real estate loans 11.58 12.08 12.56
Other real estate owned .05 .05 .06
Managed liabilities 38.82 37.41 35.05
Average net consolidated assets
(billions of dollars) 5,905 6,333 6,633
Effective interest
rate (percent) (4)
Rates earned 8.23 7.37 6.09
Interest-earning assets 8.27 7.45 6.18
Taxable equivalent 9.01 8.17 6.92
Loans and leases, gross 8.33 7.16 5.88
Net of loss provisions 6.48 6.09 4.99
Securities 6.65 6.27 5.15
Taxable equivalent 6.45 6.06 5.05
Investment account
U.S. Treasury securities and U.S.
government agency obligations
(excluding MBS) n.a. 5.76 4.43
Mortgage-backed securities n.a. 6.47 5.45
Other n.a. 5.59 4.74
Trading account 6.63 6.34 4.59
Gross federal funds sold and reverse
RPs 5.56 3.87 1.93
Interest-bearing balances at
depositories 6.48 4.01 2.79
Rates paid
Interest-bearing liabilities 5.17 4.16 2.55
Interest-bearing deposits 4.45 3.62 2.12
In foreign offices 5.61 3.95 2.38
In domestic offices 4.18 3.55 2.07
Other checkable deposits 2.34 1.96 1.06
Savings (including MMDAs) 2.86 2.19 1.13
Large time deposits (5) 5.78 5.05 3.38
Other time deposits (5) 5.69 5.44 3.74
Gross federal funds purchased and RPs 5.77 3.84 1.88
Other interest-bearing liabilities 6.97 5.93 4.32
Income and expense
as a percentage of
average net
consolidated assets
Gross interest income 7.19 6.40 5.29
Taxable equivalent 7.23 6.44 5.33
Loans 5.54 4.93 4.08
Securities 1.15 1.00 .90
Gross federal funds sold and reverse
RPs .23 .20 .09
Other .27 .24 .18
Gross interest expense 3.76 2.98 1.80
Deposits 2.56 2.09 1.24
Gross federal funds purchased and RPs .45 .31 .15
Other .75 .58 .41
Net interest income 3.43 3.42 3.50
Taxable equivalent 3.47 3.46 3.54
Loss provisioning (6) .50 .68 .68
Non-interest income 2.58 2.51 2.53
Service charges on deposits .40 .42 .45
Fiduciary activities .38 .35 .33
Trading revenue .21 .20 .16
Interest rate exposures .08 .10 .08
Foreign exchange rate exposures .09 .07 .07
Other commodity and equity
exposures .04 .03 .01
Other 1.59 1.55 1.59
Non-interest expense 3.65 3.56 3.46
Salaries, wages, and employee
benefits 1.51 1.49 1.52
Occupancy .45 .44 .44
Other 1.69 1.63 1.50
Net non-interest expense 1.07 1.04 .93
Gains on investment account securities -.04 .07 .10
Income before taxes and extraordinary
items 1.81 1.77 1.98
Taxes .63 .59 .65
Extraordinary items, net of income
taxes * -.01 *
Net income 1.18 1.17 1.33
Cash dividends declared .89 .87 1.01
Retained income .29 .30 .31
MEMO: Return on equity 13.96 13.39 14.51
* 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 allocated transfer risk reserves.
(2.) As in the Call Report, equity securities are combined with "other
debt securities" before 1989.
(3.) 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.
(4.) When possible, based on the average of quarterly balance sheet
data reported on schedule RC-K of the quarterly Call Reports.
(5.) Before 1997, large time open accounts included in other time
deposits.
(6.) Includes provisions for allocated transfer risk.
B. Ten largest banks by assets
Item 1993 1994 1995 1996
Balance sheet items as a
percentage of average net
consolidated assets
Interest-earning assets 84.90 77.26 77.12 80.12
Loans and leases, net 55.57 49.91 50.05 53.51
Commercial and industrial 18.65 16.43 16.16 17.17
U.S. addressees 10.75 9.16 8.66 9.59
Foreign addressees 7.90 7.27 7.50 7.59
Consumer 7.33 6.59 6.60 6.22
Credit card 2.50 2.28 1.96 1.23
Installment and other 4.83 4.31 4.65 4.99
Real estate 18.54 16.21 15.82 16.53
In domestic offices 15.99 13.80 13.48 14.44
Construction and land
development 1.59 .84 .58 .51
Farmland .07 .06 .06 .06
One- to four-family residential 10.29 9.69 9.62 10.43
Home equity 1.60 1.40 1.40 1.53
Other 8.68 8.29 8.22 8.90
Multifamily residential .53 .41 .38 .38
Nonfarm nonresidential 3.51 2.79 2.83 3.05
In foreign offices 2.55 2.41 2.35 2.09
To depository institutions and
acceptances of other banks 2.47 3.49 5.04 6.14
Foreign governments 2.46 1.27 .90 .69
Agricultural production .27 .25 .21 .23
Other loans 6.71 6.32 5.76 6.34
Lease-financing receivables 1.30 1.14 1.14 1.59
LESS: Unearned income on loans -.21 -.16 -.14 -.11
LESS: Loss reserves (1) -1.94 -1.63 -1.45 -1.30
Securities 22.74 20.61 19.53 19.83
Investment account 12.45 11.68 10.65 10.60
Debt 12.45 10.10 9.03 8.94
U.S. Treasury n.a. 2.06 2.03 1.93
U.S. government agency and
corporation obligations n.a. 5.08 4.46 4.59
Government-backed mortgage
pools n.a. 2.79 2.89 3.58
Collateralized mortgage
obligations n.a. 2.22 1.50 .95
Other n.a. .06 .08 .06
State and local government n.a. .61 .49 .39
Private mortgage-backed
securities n.a. .43 .32 .30
Other n.a. 3.03 2.97 3.01
Equity (2) n.a. .39 .38 .38
Trading account 10.30 8.93 8.88 9.23
Gross federal funds sold and reverse
RPs 2.71 2.68 3.20 3.10
Interest-bearing balances at
depositories 3.88 4.05 4.34 3.68
Non-interest-earning assets 15.10 22.74 22.88 19.88
Revaluation gains held in trading
accounts (3) n.a. 11.23 10.77 7.63
Other 15.10 11.51 12.11 12.25
Liabilities 93.24 93.42 93.59 93.04
Interest-bearing liabilities 71.56 64.33 63.37 64.45
Deposits 52.91 48.20 47.49 47.87
In foreign offices 25.51 26.10 28.36 26.41
In domestic offices 27.41 22.10 19.12 21.46
Other checkable deposits 3.45 2.91 2.30 1.61
Savings (including MMDAs) 15.33 12.70 10.56 12.31
Small-denomination time
deposits 5.09 3.98 4.04 4.68
Large-denomination time
deposits 3.53 2.51 2.23 2.86
Gross federal funds purchased and
RPs 6.70 5.83 6.17 5.88
Other 11.94 10.29 9.71 10.69
Non-interest-bearing liabilities 21.68 29.09 30.22 28.59
Demand deposits in domestic offices 11.27 10.15 8.88 9.73
Revaluation losses held in trading
accounts (3) n.a. 10.22 10.68 7.27
Other 10.41 10.51 10.66 11.59
Capital account 6.76 6.58 6.41 6.96
MEMO
Commercial real estate loans 6.46 4.65 4.40 4.65
Other real estate owned 1.02 .58 .27 .18
Managed liabilities 49.23 46.21 47.94 47.39
Average net consolidated assets
(billions of dollars) 818 949 1,051 1,189
Effective interest rate
(percent) (4)
Rates earned
Interest-earning assets 8.16 8.15 8.20 7.72
Taxable equivalent 8.20 8.18 8.22 7.74
Loans and leases, gross 9.07 8.89 8.84 8.32
Net of loss provisions 8.23 8.66 8.88 8.31
Securities 6.68 7.09 7.40 6.80
Taxable equivalent 6.67 7.19 7.47 6.85
Investment account 6.88 6.57 7.04 6.70
U.S. Treasury securities and U.S.
government agency obligations
(excluding MBS) n.a. n.a. n.a. n.a.
Mortgage-backed securities n.a. n.a. n.a. n.a.
Other n.a. n.a. n.a. n.a.
Trading account 6.45 7.79 7.83 6.90
Gross federal funds sold and reverse
RPs 3.02 4.52 5.20 4.92
Interest-bearing balances at
depositories 8.34 7.27 7.15 6.71
Rates paid
Interest-bearing liabilities 5.60 5.43 5.88 5.44
Interest-bearing deposits 4.50 4.32 4.99 4.57
In foreign offices 6.87 6.04 6.07 5.62
In domestic offices 2.36 2.35 3.42 3.32
Other checkable deposits 1.28 1.10 1.29 1.32
Savings (including MMDAs) 2.14 2.35 3.11 2.76
Large time deposits (5) 3.55 3.12 3.73 4.62
Other time deposits (5) 3.01 2.80 5.08 4.58
Gross federal funds purchased and RPs 3.26 4.05 5.22 4.93
Other interest-bearing liabilities 11.16 10.87 9.80 8.86
Income and expense as a
percentage of average net
consolidated assets
Gross interest income 7.22 6.37 6.42 6.26
Taxable equivalent 7.25 6.40 6.43 6.27
Loans 5.22 4.49 4.44 4.48
Securities .86 .77 .75 .71
Gross federal funds sold and reverse
RPs .11 .15 .21 .18
Other 1.04 .97 1.00 .88
Gross interest expense 4.06 3.52 3.74 3.52
Deposits 2.48 2.15 2.43 2.26
Gross federal funds purchased and RPs .24 .24 .35 .31
Other 1.35 1.13 .95 .95
Net interest income 3.16 2.86 2.68 2.73
Taxable equivalent 3.19 2.88 2.70 2.75
Loss provisioning (6) .64 .26 .11 .11
Non-interest income 2.99 2.33 2.16 2.34
Service charges on deposits .30 .26 .25 .28
Fiduciary activities .39 .36 .30 .31
Trading revenue .91 .53 .46 .52
Interest rate exposures n.a. n.a. n.a. .30
Foreign exchange rate exposures n.a. n.a. n.a. .17
Other commodity and equity
exposures n.a. n.a. n.a. .05
Other 1.38 1.18 1.15 1.23
Non-interest expense 4.13 3.56 3.32 3.57
Salaries, wages, and employee
benefits 1.88 1.65 1.58 1.57
Occupancy .66 .55 .50 .50
Other 1.59 1.36 1.24 1.50
Net non-interest expense 1.14 1.23 1.16 1.23
Gains on investment account securities .13 .02 .03 .04
Income before taxes and extraordinary
items 1.50 1.39 1.44 1.44
Taxes .53 .48 .55 .52
Extraordinary items, net of income
taxes .16 * * *
Net income 1.13 .91 .88 .92
Cash dividends declared .28 .58 .57 .70
Retained income .85 .33 .31 .21
MEMO: Return on equity 16.75 13.86 13.78 13.21
Item 1997 1998 1999
Balance sheet items
as a percentage of
average net
consolidated assets
Interest-earning assets 81.84 81.25 81.49
Loans and leases, net 50.91 50.76 53.37
Commercial and industrial 16.90 18.07 19.20
U.S. addressees 10.24 11.76 13.14
Foreign addressees 6.66 6.31 6.06
Consumer 6.40 6.04 5.94
Credit card 1.34 1.30 1.36
Installment and other 5.06 4.74 4.58
Real estate 17.42 16.51 16.96
In domestic offices 15.69 15.08 15.55
Construction and land
development .68 .77 .90
Farmland .09 .09 .10
One- to four-family residential 11.02 10.33 10.77
Home equity 1.70 1.72 1.54
Other 9.31 8.61 9.22
Multifamily residential .39 .38 .43
Nonfarm nonresidential 3.52 3.51 3.35
In foreign offices 1.73 1.43 1.41
To depository institutions and
acceptances of other banks 4.20 4.05 4.34
Foreign governments .45 .35 .38
Agricultural production .31 .28 .26
Other loans 4.15 3.74 3.96
Lease-financing receivables 2.24 2.81 3.40
LESS: Unearned income on loans -.07 -.06 -.05
LESS: Loss reserves (1) -1.08 -1.01 -1.03
Securities 20.00 19.72 18.34
Investment account 10.97 12.12 13.08
Debt 9.42 10.58 11.38
U.S. Treasury 1.56 1.70 1.98
U.S. government agency and
corporation obligations 5.34 6.31 6.35
Government-backed mortgage
pools 4.26 5.13 5.03
Collateralized mortgage
obligations .93 .93 .79
Other .15 .26 .52
State and local government .51 .47 .45
Private mortgage-backed
securities .32 .60 .57
Other 2.81 2.57 3.22
Equity (2) .42 .47 .51
Trading account 9.03 7.60 5.25
Gross federal funds sold and reverse
RPs 7.56 7.81 6.64
Interest-bearing balances at
depositories 3.37 2.96 3.14
Non-interest-earning assets 18.16 18.75 18.51
Revaluation gains held in trading
accounts (3) 7.36 7.62 6.66
Other 10.80 11.13 11.85
Liabilities 92.61 92.58 92.28
Interest-bearing liabilities 65.83 65.81 66.87
Deposits 47.36 47.65 48.79
In foreign offices 22.18 20.17 21.04
In domestic offices 25.18 27.48 27.76
Other checkable deposits 1.21 .99 .72
Savings (including MMDAs) 14.26 15.83 16.84
Small-denomination time
deposits 5.82 6.03 5.66
Large-denomination time
deposits 3.89 4.62 4.54
Gross federal funds purchased and
RPs 10.26 9.78 8.84
Other 8.20 8.37 9.24
Non-interest-bearing liabilities 26.78 26.77 25.41
Demand deposits in domestic offices 8.98 8.46 7.83
Revaluation losses held in trading
accounts (3) 7.53 7.67 6.51
Other 10.27 10.65 11.06
Capital account 7.39 7.42 7.72
MEMO
Commercial real estate loans 5.45 5.61 5.69
Other real estate owned .13 .09 .06
Managed liabilities 46.02 44.42 45.49
Average net consolidated assets
(billions of dollars) 1,514 1,820 1,935
Effective interest
rate (percent) (4)
Rates earned
Interest-earning assets 7.55 7.54 7.35
Taxable equivalent 7.60 7.57 7.39
Loans and leases, gross 8.25 8.21 7.99
Net of loss provisions 8.10 7.77 7.65
Securities 6.78 6.83 6.58
Taxable equivalent 6.85 6.89 6.65
Investment account 6.76 6.78 6.59
U.S. Treasury securities and U.S.
government agency obligations
(excluding MBS) n.a. n.a. n.a.
Mortgage-backed securities n.a. n.a. n.a.
Other n.a. n.a. n.a.
Trading account 6.81 6.92 6.56
Gross federal funds sold and reverse
RPs 5.45 5.20 4.52
Interest-bearing balances at
depositories 6.91 7.16 7.22
Rates paid
Interest-bearing liabilities 5.41 5.29 4.79
Interest-bearing deposits 4.54 4.40 3.82
In foreign offices 5.52 5.83 4.99
In domestic offices 3.69 3.39 3.04
Other checkable deposits 1.97 1.67 1.44
Savings (including MMDAs) 2.68 2.45 2.11
Large time deposits (5) 5.17 4.53 4.36
Other time deposits (5) 5.45 5.21 4.95
Gross federal funds purchased and RPs 5.02 5.18 4.53
Other interest-bearing liabilities 9.13 8.85 8.61
Income and expense as a
percentage of average
net consolidated assets
Gross interest income 6.31 6.21 6.01
Taxable equivalent 6.33 6.22 6.03
Loans 4.31 4.27 4.35
Securities .73 .81 .85
Gross federal funds sold and reverse
RPs .45 .42 .30
Other .82 .70 .51
Gross interest expense 3.55 3.48 3.16
Deposits 2.26 2.20 1.97
Gross federal funds purchased and RPs .54 .54 .40
Other .75 .74 .79
Net interest income 2.76 2.73 2.84
Taxable equivalent 2.79 2.75 2.86
Loss provisioning (6) .16 .31 .26
Non-interest income 2.12 2.15 2.55
Service charges on deposits .32 .33 .37
Fiduciary activities .34 .32 .31
Trading revenue .43 .33 .46
Interest rate exposures .23 .10 .17
Foreign exchange rate exposures .20 .20 .19
Other commodity and equity
exposures * .03 .09
Other 1.04 1.17 1.41
Non-interest expense 3.24 3.47 3.45
Salaries, wages, and employee
benefits 1.45 1.45 1.57
Occupancy .47 .47 .50
Other 1.33 1.54 1.38
Net non-interest expense 1.12 1.32 .90
Gains on investment account securities .08 .11 .03
Income before taxes and extraordinary
items 1.56 1.22 1.71
Taxes .58 .44 .66
Extraordinary items, net of income
taxes * * *
Net income .98 .78 1.05
Cash dividends declared .82 .53 .79
Retained income .15 .25 .26
MEMO: Return on equity 13.22 10.53 13.58
Item 2000 2001 2002
Balance sheet items
as a percentage of
average net
consolidated assets
Interest-earning assets 82.23 81.74 81.68
Loans and leases, net 55.22 53.86 53.60
Commercial and industrial 19.87 18.82 16.16
U.S. addressees 13.95 13.42 11.70
Foreign addressees 5.92 5.41 4.47
Consumer 5.43 6.17 7.82
Credit card 1.34 1.64 2.90
Installment and other 4.09 4.53 4.92
Real estate 19.82 19.23 20.78
In domestic offices 18.48 18.05 19.70
Construction and land
development .98 1.27 1.42
Farmland .11 .11 .12
One- to four-family residential 13.37 12.41 13.51
Home equity 1.61 1.78 2.35
Other 11.76 10.63 11.17
Multifamily residential .60 .51 .55
Nonfarm nonresidential 3.42 3.76 4.09
In foreign offices 1.34 1.18 1.08
To depository institutions and
acceptances of other banks 3.78 3.23 3.20
Foreign governments .28 .20 .20
Agricultural production .23 .28 .23
Other loans 3.75 3.51 2.94
Lease-financing receivables 3.07 3.43 3.44
LESS: Unearned income on loans -.04 -.04 -.08
LESS: Loss reserves (1) -.97 -.97 -1.12
Securities 18.98 17.81 20.54
Investment account 13.71 12.14 14.36
Debt 11.97 11.30 13.62
U.S. Treasury 1.96 .68 .59
U.S. government agency and
corporation obligations 6.59 6.84 8.68
Government-backed mortgage
pools 4.88 4.99 6.38
Collateralized mortgage
obligations .93 1.11 1.52
Other .78 .74 .79
State and local government .51 .55 .59
Private mortgage-backed
securities .51 .58 .93
Other 3.47 3.22 3.34
Equity (2) .68 .26 .22
Trading account 5.26 5.67 6.18
Gross federal funds sold and reverse
RPs 5.02 6.38 5.26
Interest-bearing balances at
depositories 3.01 3.69 2.28
Non-interest-earning assets 17.77 18.26 18.32
Revaluation gains held in trading
accounts (3) 5.66 5.47 5.40
Other 12.11 12.78 12.93
Liabilities 92.36 92.14 91.52
Interest-bearing liabilities 67.81 66.76 65.43
Deposits 49.27 49.09 48.97
In foreign offices 21.62 19.22 16.26
In domestic offices 27.66 29.88 32.71
Other checkable deposits .74 .90 .95
Savings (including MMDAs) 16.73 19.24 22.82
Small-denomination time
deposits 5.38 5.11 4.72
Large-denomination time
deposits 4.80 4.63 4.22
Gross federal funds purchased and
RPs 8.89 9.04 8.83
Other 9.65 8.62 7.63
Non-interest-bearing liabilities 24.56 25.38 26.09
Demand deposits in domestic offices 7.28 7.50 7.40
Revaluation losses held in trading
accounts (3) 5.69 5.10 4.63
Other 11.59 12.78 14.07
Capital account 7.64 7.86 8.48
MEMO
Commercial real estate loans 5.87 6.68 6.92
Other real estate owned .04 .04 .03
Managed liabilities 46.84 43.41 38.89
Average net consolidated assets
(billions of dollars) 2,234 2,527 2,785
Effective interest
rate (percent) (4)
Rates earned
Interest-earning assets 7.77 6.83 5.81
Taxable equivalent 7.78 6.90 5.89
Loans and leases, gross 8.46 7.52 6.54
Net of loss provisions 7.92 6.56 5.32
Securities 6.48 6.36 5.14
Taxable equivalent 6.55 6.44 5.21
Investment account 6.40 6.23 5.30
U.S. Treasury securities and U.S.
government agency obligations
(excluding MBS) n.a. 5.02 3.74
Mortgage-backed securities n.a. 6.42 5.55
Other n.a. 6.34 5.30
Trading account 6.70 6.66 4.75
Gross federal funds sold and reverse
RPs 4.93 3.86 2.20
Interest-bearing balances at
depositories 7.43 3.73 3.40
Rates paid
Interest-bearing liabilities 5.37 4.09 2.55
Interest-bearing deposits 4.40 3.27 1.95
In foreign offices 5.67 4.02 2.59
In domestic offices 3.51 2.85 1.68
Other checkable deposits 1.61 1.67 .93
Savings (including MMDAs) 2.43 1.92 1.02
Large time deposits (5) 5.32 4.40 3.26
Other time deposits (5) 5.53 5.15 3.55
Gross federal funds purchased and RPs 5.47 3.81 2.02
Other interest-bearing liabilities 8.15 7.00 5.39
Income and expense as a
percentage of average
net consolidated assets
Gross interest income 6.39 5.56 4.78
Taxable equivalent 6.41 5.58 4.80
Loans 4.74 4.14 3.58
Securities .88 .72 .73
Gross federal funds sold and reverse
RPs .25 .25 .12
Other .51 .43 .34
Gross interest expense 3.60 2.69 1.65
Deposits 2.33 1.74 1.06
Gross federal funds purchased and RPs .49 .35 .18
Other .78 .59 .41
Net interest income 2.78 2.87 3.13
Taxable equivalent 2.80 2.89 3.15
Loss provisioning (6) .38 .59 .73
Non-interest income 2.54 2.23 2.32
Service charges on deposits .40 .44 .48
Fiduciary activities .27 .29 .26
Trading revenue .48 .43 .32
Interest rate exposures .20 .21 .15
Foreign exchange rate exposures .18 .14 .14
Other commodity and equity
exposures .11 .08 .03
Other 1.39 1.07 1.26
Non-interest expense 3.31 3.13 3.15
Salaries, wages, and employee
benefits 1.46 1.38 1.41
Occupancy .47 .45 .46
Other 1.39 1.30 1.28
Net non-interest expense .77 .90 .84
Gains on investment account securities -.03 .08 .13
Income before taxes and extraordinary
items 1.60 1.46 1.69
Taxes .60 .48 .57
Extraordinary items, net of income
taxes * -.01 *
Net income 1.00 .97 1.12
Cash dividends declared .86 .67 1.05
Retained income .13 .31 .07
MEMO: Return on equity 13.04 12.38 13.24
* 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 allocated transfer risk reserves.
(2.) As in the Call Report, equity securities are
combined with "other debt securities" before 1989.
(3.) 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.
(4.) When possible, based on the average of quarterly
balance sheet data reported on schedule RC-K of the
quarterly Call Reports.
(5.) Before 1997, large time open accounts included
in other time deposits.
(6.) Includes provisions for allocated transfer risk.
C. Banks ranked 11 through 100 by assets
Item 1993 1994 1995 1996
Balance sheet items as a
percentage of average
net consolidated assets
Interest-earning assets 88.81 88.58 88.71 88.26
Loans and leases, net 57.33 58.56 62.68 64.24
Commercial and industrial 18.03 18.03 19.26 18.95
U.S. addressees 17.05 16.99 18.10 17.71
Foreign addressees .98 1.04 1.16 1.24
Consumer 11.47 12.62 14.23 15.67
Credit card 5.23 5.99 7.34 8.26
Installment and other 6.24 6.63 6.89 7.40
Real estate 22.11 22.26 23.25 23.26
In domestic offices 22.01 22.17 23.10 23.10
Construction and land
development 2.08 1.63 1.50 1.55
Farmland .13 .14 .13 .13
One- to four-family residential 12.30 12.98 14.16 14.15
Home equity 2.54 2.33 2.19 2.08
Other 9.76 10.65 11.97 12.07
Multifamily residential .71 .71 .71 .89
Nonfarm nonresidential 6.79 6.72 6.54 6.37
In foreign offices .10 .09 .15 .16
To depository institutions and
acceptances of other banks 1.34 1.52 1.61 1.53
Foreign governments .30 .28 .20 .20
Agricultural production .29 .29 .26 .28
Other loans 4.01 3.45 3.29 3.27
Lease-financing receivables 1.47 1.60 1.96 2.41
LESS: Unearned income on loans -.11 -.07 -.07 -.06
LESS: Loss reserves (1) -1.60 -1.41 -1.32 -1.27
Securities 21.97 21.19 18.64 16.87
Investment account 20.60 19.82 17.88 16.06
Debt 20.60 18.57 16.60 14.70
U.S. Treasury n.a. 6.86 4.82 3.34
U.S. government agency and
corporation obligations n.a. 9.38 9.40 9.12
Government-backed mortgage
pools n.a. 5.40 5.06 5.42
Collateralized mortgage
obligations n.a. 3.04 2.82 2.16
Other n.a. .94 1.51 1.54
State and local government n.a. 1.20 1.11 .99
Private mortgage-backed
securities n.a. .95 1.02 .96
Other n.a. 1.22 1.16 1.21
Equity (2) n.a. .32 .37 .44
Trading account 1.37 1.38 .76 .80
Gross federal funds sold and reverse
RPs 4.98 5.11 4.52 4.26
Interest-bearing balances at
depositories 4.53 3.72 2.87 2.89
Non-interest-earning assets 11.19 11.42 11.29 11.74
Revaluation gains held in trading
accounts (3) n.a. .60 .50 .51
Other 11.19 10.81 10.78 11.23
Liabilities 92.56 92.47 92.23 92.02
Interest-bearing liabilities 73.38 72.86 74.05 73.14
Deposits 54.22 53.03 52.32 51.81
In foreign offices 6.78 8.05 8.12 7.52
In domestic offices 47.43 44.98 44.20 44.30
Other checkable deposits 7.21 6.91 5.62 3.06
Savings (including MMDAs) 20.6 20.13 18.78 20.76
Small-denomination time
deposits 14.19 13.26 14.24 14.09
Large-denomination time
deposits 5.44 4.68 5.55 6.39
Gross federal funds purchased and
RPs 11.93 11.48 11.37 10.00
Other 7.23 8.34 10.36 11.32
Non-interest-bearing liabilities 19.18 19.62 18.18 18.89
Demand deposits in domestic offices 15.38 15.27 14.26 14.47
Revaluation losses held in trading
accounts (3) n.a. .57 .49 .49
Other 3.80 3.89 3.43 3.93
Capital account 7.44 7.53 7.77 7.98
MEMO
Commercial real estate loans 10.29 9.69 9.42 9.38
Other real estate owned .47 .25 .13 .08
Managed liabilities 31.76 32.89 35.68 35.60
Average net consolidated assets
(billions of dollars) 1,082 1,204 1,338 1,450
Effective interest rate
(percent) (4)
Rates earned
Interest-earning assets 7.35 7.29 8.31 8.16
Taxable equivalent 7.45 7.37 8.37 8.23
Loans and leases, gross 8.25 8.22 9.10 8.88
Net of loss provisions 7.66 7.87 8.67 8.21
Securities 6.13 5.75 6.38 6.49
Taxable equivalent 6.32 5.92 6.56 6.66
Investment account 6.22 5.75 6.35 6.49
U.S. Treasury securities and U.S.
government agency obligations
(excluding MBS) n.a. n.a. n.a. n.a.
Mortgage-backed securities n.a. n.a. n.a. n.a.
Other n.a. n.a. n.a. n.a.
Trading account 4.74 5.75 7.27 6.53
Gross federal funds sold and reverse
RPs 3.11 4.31 5.91 5.31
Interest-bearing balances at
depositories 6.50 4.69 6.78 5.82
Rates paid
Interest-bearing liabilities 3.76 3.72 4.94 4.70
Interest-bearing deposits 3.51 3.25 4.35 4.15
In foreign offices 7.37 4.60 6.30 5.29
In domestic offices 2.98 3.03 4.01 3.96
Other checkable deposits 1.70 1.62 1.89 1.78
Savings (including MMDAs) 2.33 2.46 3.10 2.91
Large time deposits (5) 4.30 4.21 5.70 5.50
Other time deposits (5) 4.06 4.18 5.35 5.26
Gross federal funds purchased and RPs 3.04 4.28 5.86 5.19
Other interest-bearing liabilities 5.97 5.24 6.43 5.95
Income and expense as a
percentage of average net
consolidated assets
Gross interest income 6.58 6.46 7.40 7.24
Taxable equivalent 6.64 6.51 7.45 7.28
Loans 4.84 4.91 5.79 5.80
Securities 1.26 1.13 1.13 1.03
Gross federal funds sold and reverse
RPs .15 .21 .27 .23
Other .32 .21 .21 .18
Gross interest expense 2.74 2.67 3.62 3.39
Deposits 1.93 1.73 2.29 2.18
Gross federal funds purchased and RPs .38 .51 .67 .55
Other .43 .43 .66 .66
Net interest income 3.84 3.79 3.78 3.84
Taxable equivalent 3.91 3.85 3.84 3.89
Loss provisioning (6) .47 .32 .39 .54
Non-interest income 2.29 2.25 2.38 2.61
Service charges on deposits .46 .45 .44 .44
Fiduciary activities .38 .39 .40 .43
Trading revenue .14 .08 .09 .08
Interest rate exposures n.a. n.a. n.a. .03
Foreign exchange rate exposures n.a. n.a. n.a. .04
Other commodity and equity
exposures n.a. n.a. n.a. .01
Other 1.32 1.33 1.45 1.67
Non-interest expense 3.95 3.86 3.79 3.85
Salaries, wages, and employee
benefits 1.52 1.50 1.47 1.51
Occupancy .47 .47 .47 .48
Other 1.95 1.89 1.85 1.86
Net non-interest expense 1.65 1.61 1.41 1.24
Gains on investment account securities .09 -.01 .02 .02
Income before taxes and extraordinary
items 1.81 1.85 2.01 2.09
Taxes .56 .63 .70 .75
Extraordinary items, net of income
taxes * * * *
Net income 1.25 1.22 1.31 1.34
Cash dividends declared .76 .86 .85 1.07
Retained income .49 .36 .46 .26
MEMO: Return on equity 16.86 16.27 16.84 16.78
Item 1997 1998 1999
Balance sheet items
as a percentage of
average net
consolidated assets
Interest-earning assets 87.50 87.91 88.47
Loans and leases, net 63.89 64.42 64.28
Commercial and industrial 19.01 18.92 19.40
U.S. addressees 17.78 17.59 18.18
Foreign addressees 1.22 1.33 1.22
Consumer 15.62 14.53 13.57
Credit card 8.50 7.67 6.78
Installment and other 7.12 6.86 6.79
Real estate 22.99 24.60 24.81
In domestic offices 22.85 24.42 24.63
Construction and land
development 1.69 2.03 2.43
Farmland .14 .17 .19
One- to four-family residential 13.88 14.86 14.15
Home equity 2.22 2.17 2.08
Other 11.65 12.69 12.07
Multifamily residential .93 1.00 1.02
Nonfarm nonresidential 6.21 6.36 6.82
In foreign offices .15 .18 .19
To depository institutions and
acceptances of other banks 1.30 1.09 .93
Foreign governments .09 .06 .06
Agricultural production .29 .33 .33
Other loans 3.18 3.35 2.99
Lease-financing receivables 2.70 2.75 3.32
LESS: Unearned income on loans -.05 -.04 -.04
LESS: Loss reserves (1) -1.24 -1.16 -1.11
Securities 15.80 16.67 17.80
Investment account 15.07 16.13 17.29
Debt 13.61 14.52 15.53
U.S. Treasury 2.81 2.25 1.70
U.S. government agency and
corporation obligations 8.98 9.93 10.58
Government-backed mortgage
pools 5.17 4.98 5.12
Collateralized mortgage
obligations 2.13 2.83 2.89
Other 1.68 2.12 2.56
State and local government .88 .92 .99
Private mortgage-backed
securities .73 .96 1.35
Other 1.18 1.53 2.02
Equity (2) .49 .55 .65
Trading account .73 .54 .51
Gross federal funds sold and reverse
RPs 4.38 3.57 3.34
Interest-bearing balances at
depositories 3.43 3.24 3.06
Non-interest-earning assets 12.50 12.09 11.53
Revaluation gains held in trading
accounts (3) .69 .75 .57
Other 11.81 11.34 10.96
Liabilities 91.85 91.63 91.65
Interest-bearing liabilities 72.60 73.40 74.95
Deposits 51.45 51.51 51.51
In foreign offices 7.85 8.15 7.97
In domestic offices 43.60 43.36 43.55
Other checkable deposits 1.95 1.75 1.60
Savings (including MMDAs) 21.08 21.41 22.47
Small-denomination time
deposits 13.43 12.84 11.86
Large-denomination time
deposits 7.15 7.36 7.62
Gross federal funds purchased and
RPs 9.36 9.48 9.78
Other 11.79 12.41 13.67
Non-interest-bearing liabilities 19.24 18.23 16.70
Demand deposits in domestic offices 14.17 12.40 10.52
Revaluation losses held in trading
accounts (3) .68 .76 .58
Other 4.39 5.07 5.59
Capital account 8.15 8.37 8.35
MEMO
Commercial real estate loans 9.44 10.11 11.00
Other real estate owned .06 .04 .03
Managed liabilities 36.60 38.09 39.81
Average net consolidated assets
(billions of dollars) 1,604 1,745 1,880
Effective interest
rate (percent) (4)
Rates earned 8.31 8.10 7.84
Interest-earning assets 8.36 8.17 7.88
Taxable equivalent 9.03 8.82 8.50
Loans and leases, gross 8.27 8.15 7.81
Net of loss provisions 6.55 6.31 6.32
Securities 6.70 6.46 6.46
Taxable equivalent 6.57 6.33 6.34
Investment account
U.S. Treasury securities and U.S.
government agency obligations
(excluding MBS) n.a. n.a. n.a.
Mortgage-backed securities n.a. n.a. n.a.
Other n.a. n.a. n.a.
Trading account 6.05 5.86 5.58
Gross federal funds sold and reverse
RPs 5.45 5.46 5.12
Interest-bearing balances at
depositories 576 5.67 4.81
Rates paid
Interest-bearing liabilities 4.79 4.76 4.38
Interest-bearing deposits 4.22 4.15 3.76
In foreign offices 5.23 5.22 4.70
In domestic offices 4.04 3.96 3.60
Other checkable deposits 2.01 2.41 2.03
Savings (including MMDAs) 2.84 2.76 2.49
Large time deposits (5) 5.47 5.32 4.96
Other time deposits (5) 5.43 5.35 5.03
Gross federal funds purchased and RPs 5.29 5.22 4.87
Other interest-bearing liabilities 5.85 5.81 5.41
Income and expense as
a percentage of
average net
consolidated assets
Gross interest income 7.26 7.16 6.99
Taxable equivalent 7.30 7.20 7.02
Loans 5.87 5.79 5.57
Securities .98 1.00 1.10
Gross federal funds sold and reverse
RPs .22 .19 .18
Other .19 .18 .14
Gross interest expense 3.41 3.45 3.26
Deposits 2.23 2.23 2.02
Gross federal funds purchased and RPs .51 .15 .51
Other .68 .71 .73
Net interest income 3.85 3.71 3.72
Taxable equivalent 3.89 3.75 3.76
Loss provisioning (6) .60 .53 .54
Non-interest income 2.76 3.07 3.35
Service charges on deposits .44 .42 .42
Fiduciary activities .44 .49 .48
Trading revenue .08 .09 .08
Interest rate exposures .02 .03 .02
Foreign exchange rate exposures .05 .06 .06
Other commodity and equity
exposures * * *
Other 1.79 2.07 2.37
Non-interest expense 3.85 4.03 4.11
Salaries, wages, and employee
benefits 1.51 1.53 1.53
Occupancy .46 .46 .45
Other 1.88 2.04 2.13
Net non-interest expense 1.10 .96 .76
Gains on investment account securities .02 .03 -.01
Income before taxes and extraordinary
items 2.18 2.24 2.41
Taxes .77 .79 .87
Extraordinary items, net of income
taxes * * *
Net income 1.42 1.46 1.54
Cash dividends declared .93 .96 1.16
Retained income .48 .50 .38
MEMO: Return on equity 17.36 17.38 18.48
Item 2000 2001 2002
Balance sheet items
as a percentage of
average net
consolidated assets
Interest-earning assets 88.78 88.22 88.48
Loans and leases, net 64.97 62.27 60.13
Commercial and industrial 18.20 15.85 13.29
U.S. addressees 17.65 15.37 12.96
Foreign addressees .55 .48 .33
Consumer 13.80 13.20 12.79
Credit card 6.98 6.97 6.57
Installment and other 6.82 6.23 6.22
Real estate 26.23 27.31 28.96
In domestic offices 26.13 27.22 28.90
Construction and land
development 3.00 3.31 3.36
Farmland .22 .23 .22
One- to four-family residential 14.52 15.52 17.06
Home equity 2.49 2.90 3.89
Other 12.03 12.61 13.17
Multifamily residential 1.11 1.16 1.20
Nonfarm nonresidential 7.28 7.00 7.05
In foreign offices .09 .09 .06
To depository institutions and
acceptances of other banks 1.05 1.40 1.44
Foreign governments .03 .03 .02
Agricultural production .37 .32 .27
Other loans 2.57 2.03 1.79
Lease-financing receivables 3.87 3.28 2.75
LESS: Unearned income on loans -.03 -.02 -.02
LESS: Loss reserves (1) -1.12 -1.13 -1.17
Securities 17.33 19.01 20.30
Investment account 16.11 17.71 19.16
Debt 14.19 16.72 18.20
U.S. Treasury 1.12 .67 .74
U.S. government agency and
corporation obligations 9.71 10.09 11.45
Government-backed mortgage
pools 4.31 5.19 6.00
Collateralized mortgage
obligations 2.55 2.42 2.79
Other 2.84 2.48 2.65
State and local government .96 .99 .97
Private mortgage-backed
securities 1.66 2.01 2.13
Other 2.06 3.56 3.53
Equity (2) .60 .39 .34
Trading account 1.22 1.30 1.14
Gross federal funds sold and reverse
RPs 3.76 4.07 4.71
Interest-bearing balances at
depositories 2.71 2.88 3.33
Non-interest-earning assets 11.22 11.78 11.52
Revaluation gains held in trading
accounts (3) .41 .55 .47
Other 10.81 11.23 11.05
Liabilities 91.56 91.14 90.77
Interest-bearing liabilities 76.44 75.96 74.75
Deposits 51.60 51.97 50.57
In foreign offices 7.35 6.86 6.10
In domestic offices 44.26 45.11 44.47
Other checkable deposits 1.32 1.20 1.17
Savings (including MMDAs) 22.35 24.37 26.50
Small-denomination time
deposits 11.80 10.67 8.78
Large-denomination time
deposits 8.78 8.87 8.02
Gross federal funds purchased and
RPs 9.28 9.72 9.67
Other 15.56 14.27 14.51
Non-interest-bearing liabilities 15.12 15.18 16.02
Demand deposits in domestic offices 8.62 7.17 6.31
Revaluation losses held in trading
accounts (3) .41 .52 .44
Other 6.09 7.49 9.27
Capital account 8.44 8.86 9.23
MEMO
Commercial real estate loans 12.07 12.06 12.23
Other real estate owned .03 .04 .05
Managed liabilities 41.94 40.78 39.48
Average net consolidated assets
(billions of dollars) 2,030 2,129 2,123
Effective interest
rate (percent) (4)
Rates earned 8.47 7.54 6.01
Interest-earning assets 8.49 7.59 6.09
Taxable equivalent 9.15 8.27 6.81
Loans and leases, gross 8.27 6.97 5.61
Net of loss provisions 6.64 5.94 4.78
Securities 6.77 6.07 4.90
Taxable equivalent 6.66 6.02 4.85
Investment account
U.S. Treasury securities and U.S.
government agency obligations
(excluding MBS) n.a. 5.83 4.28
Mortgage-backed securities n.a. 6.58 5.33
Other n.a. 5.10 4.20
Trading account 6.25 4.83 3.59
Gross federal funds sold and reverse
RPs 6.06 3.85 1.68
Interest-bearing balances at
depositories 5.49 4.38 2.46
Rates paid
Interest-bearing liabilities 5.22 4.15 2.40
Interest-bearing deposits 4.42 3.60 1.96
In foreign offices 5.38 3.67 1.70
In domestic offices 4.26 3.60 1.99
Other checkable deposits 2.57 2.32 .94
Savings (including MMDAs) 2.94 2.30 1.08
Large time deposits (5) 5.88 5.11 3.37
Other time deposits (5) 5.73 5.42 3.67
Gross federal funds purchased and RPs 6.02 3.86 1.73
Other interest-bearing liabilities 6.36 5.30 3.53
Balance sheet items
as a percentage of
average net
consolidated assets
Gross interest income 7.56 6.72 5.33
Taxable equivalent 7.59 6.75 5.36
Loans 6.07 5.30 4.17
Securities 1.09 1.06 .90
Gross federal funds sold and reverse
RPs .22 .15 .08
Other .18 .15 .11
Gross interest expense 3.96 3.14 1.77
Deposits 2.41 2.01 1.09
Gross federal funds purchased and RPs .56 .38 .17
Other .98 .75 .50
Net interest income 3.60 3.58 3.56
Taxable equivalent 3.63 3.61 3.60
Loss provisioning (6) .68 .91 .80
Non-interest income 3.14 3.30 3.26
Service charges on deposits .42 .42 .42
Fiduciary activities .52 .42 .42
Trading revenue .08 .08 .08
Interest rate exposures .02 .04 .04
Foreign exchange rate exposures .05 .03 .04
Other commodity and equity
exposures * * *
Other 2.13 2.38 2.33
Non-interest expense 3.97 3.91 3.69
Salaries, wages, and employee
benefits 1.44 1.47 1.49
Occupancy .43 .42 .40
Other 2.10 2.03 1.79
Net non-interest expense .83 .61 .43
Gains on investment account securities -.05 .09 .10
Income before taxes and extraordinary
items 2.04 2.15 .83
Taxes .70 .74 .09
Extraordinary items, net of income
taxes * * *
Net income 1.33 1.40 1.60
Cash dividends declared .94 .96 .99
Retained income .39 .44 .61
MEMO: Return on equity 15.79 15.80 17.38
* 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 allocated transfer risk reserves.
(2.) As in the Call Report, equity securities are
combined with "other debt securities" before 1989.
(3.) 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.
(4.) When possible, based on the average of quarterly
balance sheet data reported on schedule RC-K of the
quarterly Call Reports.
(5.) Before 1997, large time open accounts included
in other time deposits.
(6.) Includes provisions for allocated transfer risk.
D. Banks ranked 101 through 1,00 by assets
Item 1993 1994 1995 1996
Balance sheet items as a
percentage of average net
consolidated assets
Interest-earning assets 90.45 90.90 90.97 91.10
Loans and leases, net 57.93 59.75 62.19 62.63
Commercial and industrial 12.19 12.07 12.70 12.79
U.S. addressees 12.03 11.91 12.54 12.61
Foreign addressees .16 .16 .16 .18
Consumer 14.82 15.84 16.27 15.88
Credit card 5.63 6.05 6.32 6.66
Installment and other 9.19 9.79 9.95 9.22
Real estate 28.61 29.42 30.81 31.37
In domestic offices 28.58 29.39 30.79 31.34
Construction and land
development 2.26 2.08 2.21 2.38
Farmland .34 .36 .40 .46
One- to four-family residential 15.16 16.25 17.49 17.34
Home equity 2.51 2.33 2.36 2.30
Other 12.66 13.92 15.13 15.03
Multifamily residential 1.07 1.13 1.21 1.29
Nonfarm nonresidential 9.75 9.57 9.48 9.87
In foreign offices .02 .03 .02 .02
To depository institutions and
acceptances of other banks .47 .42 .36 .50
Foreign governments .03 .02 .02 .02
Agricultural production .56 .62 .69 .71
Other loans 2.13 1.98 1.78 1.68
Lease-financing receivables .77 .83 .90 1.01
LESS: Unearned income on loans -.21 -.15 -.12 -.10
LESS: Loss reserves (1) -1.44 -1.30 -1.22 -1.22
Securities 25.92 25.72 23.08 22.67
Investment account 25.63 25.40 22.88 22.55
Debt 25.63 23.94 21.32 20.71
U.S. Treasury n.a. 8.17 6.48 5.61
U.S. government agency and
corporation obligations n.a. 12.76 12.23 12.66
Government-backed mortgage
pools n.a. 5.64 5.42 5.69
Collateralized mortgage
obligations n.a. 4.34 3.56 3.12
Other n.a. 2.79 3.25 3.85
State and local government n.a. 2.29 2.13 2.24
Private mortgage-backed
securities n.a. .73 .68 .76
Other n.a. .99 .89 .76
Equity (2) n.a. .43 .47 .52
Trading account .28 .31 .20 .12
Gross federal funds sold and reverse
RPs 4.49 3.64 3.92 3.87
Interest-bearing balances at
depositories 2.11 1.79 1.78 1.93
Non-interest-earning assets 9.55 9.10 9.03 8.90
Revaluation gains held in trading
accounts (3) n.a. .02 .05 .02
Other 9.55 9.08 8.99 8.88
Liabilities 91.85 91.62 91.36 91.06
Interest-bearing liabilities 74.42 74.77 75.00 75.06
Deposits 63.05 60.38 59.67 59.98
In foreign offices 1.43 1.69 1.71 1.33
In domestic offices 61.62 58.69 57.96 58.65
Other checkable deposits 9.94 9.70 8.54 6.21
Savings (including MMDAs) 24.06 22.92 20.75 22.49
Small-denomination time
deposits 20.78 19.29 21.11 21.61
Large-denomination time
deposits 6.84 6.78 7.56 8.34
Gross federal funds purchased and
RPs 7.43 8.45 8.31 8.19
Other 3.94 5.94 7.02 6.88
Non-interest-bearing liabilities 17.43 16.85 16.36 16.00
Demand deposits in domestic offices 15.07 14.58 14.07 13.84
Revaluation losses held in trading
accounts (3) n.a. .02 .05 .02
Other 2.36 2.26 2.24 2.14
Capital account 8.15 8.38 8.64 8.94
MEMO
Commercial real estate loans 13.37 13.05 13.19 13.83
Other real estate owned .57 .28 .17 .13
Managed liabilities 19.68 22.89 24.62 24.78
Average net consolidated assets
(billions of dollars) 978 1,031 1,092 1,075
Effective interest rate
(percent) (4)
Rates earned
Interest-earning assets 7.43 7.58 8.44 8.41
Taxable equivalent 7.55 7.68 8.53 8.50
Loans and leases, gross 8.57 8.64 9.45 9.38
Net of loss provisions 7.96 8.28 8.95 8.76
Securities 5.83 5.68 6.24 6.34
Taxable equivalent 6.10 5.93 6.50 6.60
Investment account 5.84 5.68 6.24 6.34
U.S. Treasury securities and U.S.
government agency obligations
(excluding MBS) n.a. n.a. n.a. n.a.
Mortgage-backed securities n.a. n.a. n.a. n.a.
Other n.a. n.a. n.a. n.a.
Trading account 4.74 5.29 5.55 5.94
Gross federal funds sold and reverse
RPs 3.02 4.05 5.45 5.29
Interest-bearing balances at
depositories 3.52 4.28 6.07 5.69
Rates paid
Interest-bearing liabilities 3.33 3.57 4.65 4.58
Interest-bearing deposits 3.26 3.31 4.26 4.27
In foreign offices 3.35 4.31 5.94 5.72
In domestic offices 3.26 3.28 4.21 4.23
Other checkable deposits 2.02 1.86 2.02 1.96
Savings (including MMDAs) 2.58 2.64 3.24 3.11
Large time deposits (5) 3.90 4.23 5.62 5.48
Other time deposits (5) 4.40 4.40 5.53 5.57
Gross federal funds purchased and RPs 2.95 4.12 5.61 5.16
Other interest-bearing liabilities 4.44 4.93 6.32 5.90
Income and expense as a
percentage of average net
consolidated assets
Gross interest income 6.74 6.90 7.69 7.68
Taxable equivalent 6.84 6.99 7.78 7.75
Loans 5.06 5.26 5.99 5.99
Securities 1.48 1.45 1.43 1.42
Gross federal funds sold and reverse
RPs .14 .14 .21 .20
Other .06 .06 .07 .06
Gross interest expense 2.46 2.65 3.46 3.40
Deposits 2.07 2.01 2.56 2.57
Gross federal funds purchased and RPs .22 .35 .46 .43
Other .17 .29 .44 .40
Net interest income 4.28 4.25 4.24 4.27
Taxable equivalent 4.37 4.34 4.32 4.35
Loss provisioning (6) .47 .32 .43 .50
Non-interest income 1.84 1.86 1.84 1.88
Service charges on deposits .45 .42 .42 .41
Fiduciary activities .29 .28 .27 .29
Trading revenue .03 .02 .03 .02
Interest rate exposures n.a. n.a. n.a. .01
Foreign exchange rate exposures n.a. n.a. n.a. .01
Other commodity and equity
exposures n.a. n.a. n.a. *
Other 1.08 1.14 1.12 1.16
Non-interest expense 3.92 3.78 3.68 3.69
Salaries, wages, and employee
benefits 1.51 1.49 1.44 1.44
Occupancy .48 .46 .45 .45
Other 1.92 1.83 1.79 1.80
Net non-interest expense 2.08 1.92 1.84 1.81
Gains on investment account securities .06 -.05 -.01 .02
Income before taxes and extraordinary
items 1.78 1.96 1.96 1.98
Taxes .61 .67 .67 .69
Extraordinary items, net of income
taxes .04 * * *
Net income 1.21 1.29 1.28 1.29
Cash dividends declared .79 .81 .87 1.04
Retained income .43 .48 .41 .25
MEMO: Return on equity 14.91 15.40 14.82 14.45
Item 1997 1998 1999
Balance sheet items
as a percentage of
average net
consolidated assets
Interest-earning assets 91.32 91.36 91.68
Loans and leases, net 62.22 61.13 61.49
Commercial and industrial 12.43 12.48 12.64
U.S. addressees 12.19 12.16 12.32
Foreign addressees .23 .32 .32
Consumer 14.03 12.28 10.79
Credit card 5.52 4.48 3.37
Installment and other 8.52 7.80 7.41
Real estate 33.23 33.94 35.90
In domestic offices 33.21 33.92 35.88
Construction and land
development 2.69 2.88 3.49
Farmland .53 .56 .58
One- to four-family residential 18.14 18.19 18.26
Home equity 2.30 2.15 1.99
Other 15.84 16.05 16.27
Multifamily residential 1.29 1.26 1.44
Nonfarm nonresidential 10.56 11.03 12.12
In foreign offices .02 .02 .02
To depository institutions and
acceptances of other banks .59 .53 .46
Foreign governments .02 .03 .03
Agricultural production .74 .80 .78
Other loans 1.47 1.30 1.25
Lease-financing receivables .99 .99 .78
LESS: Unearned income on loans -.10 -.09 -.08
LESS: Loss reserves (1) -1.18 -1.13 -1.06
Securities 23.45 24.26 25.17
Investment account 23.35 24.15 25.09
Debt 20.92 21.15 21.70
U.S. Treasury 4.96 3.92 2.53
U.S. government agency and
corporation obligations 13.97 15.13 16.29
Government-backed mortgage
pools 6.22 6.46 6.72
Collateralized mortgage
obligations 3.01 3.22 3.52
Other 4.73 5.44 6.05
State and local government 2.44 2.70 2.91
Private mortgage-backed
securities .59 .65 1.00
Other .78 1.06 1.60
Equity (2) .61 .69 .77
Trading account .10 .11 .08
Gross federal funds sold and reverse
RPs 3.60 4.17 3.35
Interest-bearing balances at
depositories 2.05 1.80 1.68
Non-interest-earning assets 8.68 8.64 8.32
Revaluation gains held in trading
accounts (3) * * .01
Other 8.68 8.63 8.31
Liabilities 90.78 90.55 90.90
Interest-bearing liabilities 75.19 75.42 76.76
Deposits 61.47 62.40 61.94
In foreign offices 1.23 1.31 1.20
In domestic offices 60.25 61.09 60.74
Other checkable deposits 4.96 4.23 3.75
Savings (including MMDAs) 23.59 25.65 27.35
Small-denomination time
deposits 22.03 21.22 19.61
Large-denomination time
deposits 9.66 9.99 10.03
Gross federal funds purchased and
RPs 7.09 6.16 6.90
Other 6.62 6.86 7.92
Non-interest-bearing liabilities 15.60 15.13 14.15
Demand deposits in domestic offices 13.15 11.90 10.19
Revaluation losses held in trading
accounts (3) .01 .01 .01
Other 2.44 3.22 3.95
Capital account 9.22 9.45 9.10
MEMO
Commercial real estate loans 14.77 15.38 17.28
Other real estate owned .11 .09 .08
Managed liabilities 24.66 24.46 26.32
Average net consolidated assets
(billions of dollars) 968 935 972
Effective interest
rate (percent) (4)
Rates earned
Interest-earning assets 8.49 8.32 7.83
Taxable equivalent 8.59 8.44 7.92
Loans and leases, gross 9.48 9.37 8.74
Net of loss provisions 8.76 8.76 8.26
Securities 6.43 6.31 6.03
Taxable equivalent 6.69 6.57 6.29
Investment account 6.43 6.30 6.03
U.S. Treasury securities and U.S.
government agency obligations
(excluding MBS) n.a. n.a. n.a.
Mortgage-backed securities n.a. n.a. n.a.
Other n.a. n.a. n.a.
Trading account 6.37 6.84 7.33
Gross federal funds sold and reverse
RPs 5.42 5.31 4.98
Interest-bearing balances at
depositories 5.44 5.76 5.07
Rates paid
Interest-bearing liabilities 4.66 4.60 4.19
Interest-bearing deposits 4.34 4.28 3.84
In foreign offices 5.42 5.55 5.07
In domestic offices 4.32 4.25 3.82
Other checkable deposits 2.16 2.15 1.99
Savings (including MMDAs) 3.08 2.97 2.65
Large time deposits (5) 5.56 5.51 5.17
Other time deposits (5) 5.57 5.64 5.11
Gross federal funds purchased and RPs 5.21 5.14 4.83
Other interest-bearing liabilities 6.09 6.00 5.36
Income and expense as
a percentage of
average net
consolidated assets
Gross interest income 7.75 7.63 7.19
Taxable equivalent 7.83 7.71 7.27
Loans 6.00 5.85 5.47
Securities 1.50 1.50 1.51
Gross federal funds sold and reverse
RPs .19 .22 .17
Other .06 .06 .04
Gross interest expense 3.47 3.44 3.20
Deposits 2.70 2.71 2.44
Gross federal funds purchased and RPs .37 .32 .34
Other .40 .41 .42
Net interest income 4.28 4.19 3.99
Taxable equivalent 4.36 4.27 4.07
Loss provisioning (6) .56 .48 .39
Non-interest income 2.08 2.25 2.31
Service charges on deposits .40 .39 .38
Fiduciary activities .32 .37 .38
Trading revenue .01 .02 .02
Interest rate exposures .01 .01 .01
Foreign exchange rate exposures * * *
Other commodity and equity
exposures * * *
Other 1.34 1.47 1.53
Non-interest expense 3.73 3.86 3.70
Salaries, wages, and employee
benefits 1.50 1.57 1.56
Occupancy .46 .47 .47
Other 1.76 1.83 1.68
Net non-interest expense 1.65 1.61 1.39
Gains on investment account securities .02 .04 -.01
Income before taxes and extraordinary
items 2.10 2.14 2.19
Taxes .73 .73 .74
Extraordinary items, net of income
taxes * .06 .01
Net income 1.37 1.46 1.46
Cash dividends declared 1.09 1.01 1.06
Retained income .28 .45 .40
MEMO: Return on equity 14.90 15.49 16.11
Item 2000 2001 2002
Balance sheet items
as a percentage of
average net
consolidated assets
Interest-earning assets 91.50 91.16 91.37
Loans and leases, net 62.15 62.48 61.48
Commercial and industrial 12.95 13.04 12.38
U.S. addressees 12.60 12.65 12.07
Foreign addressees .36 .39 .31
Consumer 10.19 9.76 8.14
Credit card 3.27 3.61 2.66
Installment and other 6.92 6.14 5.48
Real estate 36.93 37.65 38.92
In domestic offices 36.91 37.63 38.90
Construction and land
development 4.15 4.90 5.40
Farmland .65 .67 .73
One- to four-family residential 17.17 16.19 15.39
Home equity 2.10 2.20 2.51
Other 15.06 13.98 12.88
Multifamily residential 1.58 1.69 1.83
Nonfarm nonresidential 13.36 14.18 15.55
In foreign offices .02 .02 .03
To depository institutions and
acceptances of other banks .37 .38 .37
Foreign governments .03 .03 .02
Agricultural production .82 .85 .86
Other loans 1.22 1.22 1.18
Lease-financing receivables .75 .74 .76
LESS: Unearned income on loans -.08 -.07 -.06
LESS: Loss reserves (1) -1.04 -1.12 -1.10
Securities 24.34 22.80 23.86
Investment account 24.25 22.69 23.80
Debt 20.30 20.57 21.80
U.S. Treasury 1.81 1.32 1.22
U.S. government agency and
corporation obligations 15.56 14.69 15.87
Government-backed mortgage
pools 6.22 6.26 6.57
Collateralized mortgage
obligations 3.04 3.08 3.70
Other 6.30 5.35 5.60
State and local government 2.91 2.90 2.89
Private mortgage-backed
securities .99 .93 .99
Other 2.19 2.42 2.33
Equity (2) .79 .43 .50
Trading account .09 .11 .06
Gross federal funds sold and reverse
RPs 3.40 4.19 4.14
Interest-bearing balances at
depositories 1.60 1.68 1.89
Non-interest-earning assets 8.50 8.84 8.63
Revaluation gains held in trading
accounts (3) .02 .01 .01
Other 8.49 8.84 8.63
Liabilities 90.95 90.32 89.94
Interest-bearing liabilities 77.43 77.01 76.35
Deposits 62.68 63.11 62.82
In foreign offices 1.28 1.24 .88
In domestic offices 61.40 61.87 61.94
Other checkable deposits 3.32 3.26 3.32
Savings (including MMDAs) 27.03 27.67 30.17
Small-denomination time
deposits 19.44 18.80 16.83
Large-denomination time
deposits 11.61 12.14 11.62
Gross federal funds purchased and
RPs 6.30 5.76 5.28
Other 8.45 8.14 8.25
Non-interest-bearing liabilities 13.52 13.31 13.58
Demand deposits in domestic offices 8.97 8.23 8.05
Revaluation losses held in trading
accounts (3) * .01 .01
Other 4.55 5.07 5.52
Capital account 9.05 9.68 10.06
MEMO
Commercial real estate loans 19.32 21.03 23.06
Other real estate owned .07 .08 .10
Managed liabilities 28.01 27.75 26.57
Average net consolidated assets
(billions of dollars) 987 1,002 1,022
Effective interest
rate (percent) (4)
Rates earned
Interest-earning assets 8.51 7.83 6.43
Taxable equivalent 8.58 7.95 6.55
Loans and leases, gross 9.44 8.76 7.36
Net of loss provisions 8.74 7.88 6.61
Securities 6.46 5.97 4.98
Taxable equivalent 6.71 6.25 5.24
Investment account 6.45 5.97 4.98
U.S. Treasury securities and U.S.
government agency obligations
(excluding MBS) n.a. 5.85 4.55
Mortgage-backed securities n.a. 6.33 5.48
Other n.a. 5.40 4.53
Trading account 9.30 6.60 3.79
Gross federal funds sold and reverse
RPs 6.16 3.92 1.75
Interest-bearing balances at
depositories 5.77 3.94 1.79
Rates paid
Interest-bearing liabilities 4.93 4.11 2.56
Interest-bearing deposits 4.46 3.82 2.29
In foreign offices 6.13 4.45 2.14
In domestic offices 4.43 3.81 2.30
Other checkable deposits 2.27 1.81 1.06
Savings (including MMDAs) 3.07 2.22 1.18
Large time deposits (5) 6.01 5.27 3.36
Other time deposits (5) 5.74 5.52 3.80
Gross federal funds purchased and RPs 5.95 3.84 1.86
Other interest-bearing liabilities 6.45 5.41 4.21
Income and expense as
a percentage of
average net
consolidated assets
Gross interest income 7.80 7.16 5.88
Taxable equivalent 7.88 7.24 5.95
Loans 5.97 5.59 4.59
Securities 1.58 1.33 1.16
Gross federal funds sold and reverse
RPs .21 .16 .07
Other .04 .04 .02
Gross interest expense 3.79 3.14 1.94
Deposits 2.87 2.48 1.50
Gross federal funds purchased and RPs .38 .22 .10
Other .54 .44 .34
Net interest income 4.01 4.02 3.94
Taxable equivalent 4.08 4.10 4.02
Loss provisioning (6) .53 .65 .54
Non-interest income 2.36 2.35 2.38
Service charges on deposits .36 .39 .41
Fiduciary activities .44 .40 .35
Trading revenue .01 * *
Interest rate exposures .01 -.01 *
Foreign exchange rate exposures * * *
Other commodity and equity
exposures * * *
Other 1.55 1.57 1.62
Non-interest expense 3.84 3.88 3.74
Salaries, wages, and employee
benefits 1.59 1.61 1.65
Occupancy .47 .46 .45
Other 1.79 1.81 1.65
Net non-interest expense 1.49 1.53 1.36
Gains on investment account securities -.04 .05 .04
Income before taxes and extraordinary
items 1.95 1.89 2.08
Taxes .67 .65 .69
Extraordinary items, net of income
taxes * .01 *
Net income 1.28 1.25 1.40
Cash dividends declared .92 1.32 1.20
Retained income .36 -.08 .20
MEMO: Return on equity 14.11 12.87 13.88
* 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 allocated transfer risk reserves.
(2.) As in the Call Report, equity securities are
combined with "other debt securities" before 1989.
(3.) 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.
(4.) When possible, based on the average of quarterly
balance sheet data reported on schedule RC-K of the
quarterly Call Reports.
(5.) Before 1997, large time open accounts included
in other time deposits.
(6.) Includes provisions for allocated transfer risk.
E. Banks not ranked among the 1,000 largest by assets
Item 1993 1994 1995 1996
Balance sheet items as a
percentage of average net
consolidated assets
Interest-earning assets 92.43 92.48 92.48 92.45
Loans and leases, net 52.95 54.64 56.61 57.38
Commercial and industrial 9.24 9.31 9.65 9.98
U.S. addressees 9.20 9.26 9.59 9.91
Foreign addressees .04 .05 .06 .07
Consumer 9.18 9.38 9.54 9.42
Credit card .92 .96 1.01 1.04
Installment and other 8.26 8.42 8.53 8.38
Real estate 31.10 32.19 33.55 34.10
In domestic offices 31.09 32.19 33.55 34.10
Construction and land
development 1.93 2.14 2.38 2.61
Farmland 2.20 2.34 2.48 2.55
One- to four-family residential 16.82 16.94 17.45 17.48
Home equity 1.27 1.21 1.20 1.20
Other 15.56 15.73 16.26 16.28
Multifamily residential .84 .93 .95 .92
Nonfarm nonresidential 9.30 9.83 10.28 10.54
In foreign offices * * * *
To depository institutions and
acceptances of other banks .16 .17 .19 .21
Foreign governments .02 .01 * *
Agricultural production 3.58 3.89 3.95 3.92
Other loans .82 .77 .72 .69
Lease-financing receivables .18 .20 .22 .23
LESS: Unearned income on loans -.36 -.31 -.30 -.27
LESS: Loss reserves (1) -.97 -.95 .93 -.90
Securities 33.08 32.90 30.51 29.53
Investment account 33.01 32.86 30.48 29.50
Debt 33.01 30.64 27.92 26.51
U.S. Treasury n.a. 10.75 9.19 7.86
U.S. government agency and
corporation obligations n.a. 15.24 15.13 15.67
Government-backed mortgage
pools n.a. 4.73 4.19 4.21
Collateralized mortgage
obligations n.a. 3.05 2.76 2.46
Other n.a. 7.46 8.18 9.00
State and local government n.a. 5.00 4.69 4.62
Private mortgage-backed
securities n.a. .26 .20 .18
Other n.a. .96 .81 .68
Equity (2) n.a. .43 .45 .49
Trading account .07 .04 .03 .03
Gross federal funds sold and reverse
RPs 4.67 3.42 3.91 4.03
Interest-bearing balances at
depositories 1.74 1.52 1.45 1.51
Non-interest-earning assets 7.57 7.52 7.52 7.55
Revaluation gains held in trading
accounts (3) n.a. * * *
Other 7.57 7.52 7.52 7.55
Liabilities 90.63 90.43 90.04 89.82
Interest-bearing liabilities 76.88 76.19 75.74 75.59
Deposits 74.54 73.14 72.70 72.47
In foreign offices .08 .09 .11 .10
In domestic offices 74.45 73.05 72.59 72.37
Other checkable deposits 13.16 13.31 12.37 11.75
Savings (including MMDAs) 23.55 23.23 20.41 19.58
Small-denomination time
deposits 30.09 28.83 30.92 31.28
Large-denomination time
deposits 7.66 7.68 8.89 9.76
Gross federal funds purchased and
RPs 1.44 1.89 1.78 1.71
Other .90 1.16 1.25 1.41
Non-interest-bearing liabilities 13.74 14.24 14.30 14.23
Demand deposits in domestic offices 12.82 13.34 13.23 13.12
Revaluation losses held in trading
accounts (3) n.a. * * *
Other .93 .90 1.07 1.10
Capital account 9.37 9.57 9.96 10.18
MEMO
Commercial real estate loans 12.21 13.02 13.72 14.18
Other real estate owned .52 .35 .25 .20
Managed liabilities 10.09 10.83 12.05 12.99
Average net consolidated assets
(billions of dollars) 687 679 666 661
Effective interest rate
(percent) (4)
Rates earned 7.62 7.57 8.38 8.36
Interest-earning assets 7.78 7.72 8.53 8.50
Taxable equivalent 9.13 9.00 9.80 9.75
Loans and leases, gross 8.78 8.80 9.54 9.47
Net of loss provisions 5.94 5.61 6.10 6.15
Securities 6.33 5.99 6.49 6.52
Taxable equivalent 5.95 5.61 6.10 6.14
Investment account
U.S. Treasury securities and U.S.
government agency obligations
(excluding MBS) n.a. n.a. n.a. n.a.
Mortgage-backed securities n.a. n.a. n.a. n.a.
Other n.a. n.a. n.a. n.a.
Trading account 4.83 6.03 6.12 6.47
Gross federal funds sold and reverse
RPs 2.95 4.08 5.95 5.34
Interest-bearing balances at
depositories 4.53 4.64 5.88 5.63
Rates paid
Interest-bearing liabilities 3.54 3.49 4.46 4.49
Interest-bearing deposits 3.53 3.44 4.39 4.44
In foreign offices 2.91 3.92 5.73 5.34
In domestic offices 3.53 3.44 4.39 4.44
Other checkable deposits 2.42 2.29 2.50 2.41
Savings (including MMDAs) 2.91 2.83 3.32 3.26
Large time deposits (5) 3.96 4.12 5.55 5.48
Other time deposits (5) 4.39 4.28 5.51 5.61
Gross federal funds purchased and RPs 3.17 4.12 5.61 5.12
Other interest-bearing liabilities 4.68 4.98 6.45 5.77
Income and expense as
a percentage of average
net consolidated assets
Gross interest income 7.06 7.01 7.78 7.77
Taxable equivalent 7.20 7.15 7.91 7.89
Loans 4.92 4.99 5.63 5.68
Securities 1.96 1.84 1.86 1.80
Gross federal funds sold and reverse
RPs .14 .15 .25 .24
Other .05 .04 .04 .04
Gross interest expense 2.72 2.65 3.37 3.39
Deposits 2.64 2.52 3.19 3.22
Gross federal funds purchased and RPs .04 .07 .10 .08
Other .04 .06 .08 .08
Net interest income 4.34 4.36 4.41 4.38
Taxable equivalent 4.48 4.50 4.54 4.50
Loss provisioning (6) .27 .19 .24 .25
Non-interest income 1.25 1.30 1.38 1.42
Service charges on deposits .45 .44 .44 .44
Fiduciary activities .16 .17 .22 .19
Trading revenue .01 * .01 *
Interest rate exposures n.a. n.a. n.a. *
Foreign exchange rate exposures n.a. n.a. n.a. *
Other commodity and equity
exposures n.a. n.a. n.a. *
Other .64 .69 .71 .79
Non-interest expense 3.74 3.78 3.80 3.70
Salaries, wages, and employee
benefits 1.73 1.75 1.79 1.77
Occupancy .49 .49 .50 .49
Other 1.53 1.55 1.51 1.44
Net non-interest expense 2.49 2.48 2.42 2.28
Gains on investment account securities .07 -.03 * .01
Income before taxes and extraordinary
items 1.65 1.66 1.75 1.85
Taxes .51 .51 .55 .59
Extraordinary items, net of income
taxes .05 * * *
Net income 1.19 1.15 1.20 1.26
Cash dividends declared .56 .57 .62 .64
Retained income .63 .58 .58 .62
MEMO: Return on equity 12.67 12.03 12.05 12.37
Item 1997 1998 1999
Balance sheet items
as a percentage of
average net
consolidated assets
Interest-earning assets 92.44 92.64 92.55
Loans and leases, net 58.75 59.11 59.75
Commercial and industrial 10.16 10.33 10.64
U.S. addressees 10.08 10.25 10.55
Foreign addressees .08 .08 .08
Consumer 8.98 8.46 8.15
Credit card .85 .70 .68
Installment and other 8.14 7.76 7.47
Real estate 35.55 36.04 36.84
In domestic offices 35.54 36.04 36.84
Construction and land
development 2.82 3.02 3.28
Farmland 2.69 2.83 2.95
One- to four-family residential 18.16 18.04 17.66
Home equity 1.24 1.21 1.17
Other 16.92 16.84 16.49
Multifamily residential .95 .93 .98
Nonfarm nonresidential 10.92 11.21 11.97
In foreign offices * * *
To depository institutions and
acceptances of other banks .20 .14 .14
Foreign governments * * .01
Agricultural production 4.05 4.28 4.06
Other loans .67 .67 .67
Lease-financing receivables .25 .24 .26
LESS: Unearned income on loans -.24 -.20 -.15
LESS: Loss reserves (1) -.87 -.86 -.87
Securities 28.25 26.70 26.92
Investment account 28.21 26.66 26.88
Debt 24.58 22.30 21.82
U.S. Treasury 6.70 5.05 3.34
U.S. government agency and
corporation obligations 15.58 15.43 16.89
Government-backed mortgage
pools 4.01 3.90 3.95
Collateralized mortgage
obligations 2.19 2.02 2.00
Other 9.38 9.51 10.94
State and local government 4.60 4.80 4.96
Private mortgage-backed
securities .19 .16 .26
Other .61 .68 .89
Equity (2) .52 .54 .53
Trading account .03 .04 .03
Gross federal funds sold and reverse
RPs 3.95 5.13 4.17
Interest-bearing balances at
depositories 1.49 1.72 1.71
Non-interest-earning assets 7.56 7.36 7.45
Revaluation gains held in trading
accounts (3) * * *
Other 7.56 7.36 7.45
Liabilities 89.63 89.54 89.75
Interest-bearing liabilities 75.47 75.35 75.90
Deposits 72.05 71.77 71.41
In foreign offices .09 .07 .07
In domestic offices 71.96 71.70 71.34
Other checkable deposits 11.39 11.18 11.07
Savings (including MMDAs) 18.98 19.01 19.69
Small-denomination time
deposits 31.09 30.42 29.07
Large-denomination time
deposits 10.50 11.10 11.50
Gross federal funds purchased and
RPs 1.67 1.49 1.79
Other 1.74 2.09 2.70
Non-interest-bearing liabilities 14.16 14.19 13.86
Demand deposits in domestic offices 13.09 13.08 12.80
Revaluation losses held in trading
accounts (3) * * *
Other 1.06 1.10 1.06
Capital account 10.37 10.46 10.25
MEMO
Commercial real estate loans 14.80 15.26 16.33
Other real estate owned .16 .13 .11
Managed liabilities 14.02 14.76 16.08
Average net consolidated assets
(billions of dollars) 647 644 651
Effective interest
rate (percent) (4)
Rates earned 8.49 8.33 8.05
Interest-earning assets 8.63 8.48 8.18
Taxable equivalent 9.80 9.69 9.28
Loans and leases, gross 9.49 9.34 8.89
Net of loss provisions 6.26 6.04 5.88
Securities 6.65 6.46 6.29
Taxable equivalent 6.26 6.04 5.89
Investment account
U.S. Treasury securities and U.S.
government agency obligations
(excluding MBS) n.a. n.a. n.a.
Mortgage-backed securities n.a. n.a. n.a.
Other n.a. n.a. n.a.
Trading account 6.33 5.26 3.60
Gross federal funds sold and reverse
RPs 5.51 5.35 4.96
Interest-bearing balances at
depositories 5.62 5.67 5.69
Rates paid
Interest-bearing liabilities 4.60 4.60 4.28
Interest-bearing deposits 4.53 4.53 4.21
In foreign offices 4.77 5.08 4.34
In domestic offices 4.53 4.53 4.21
Other checkable deposits 2.46 2.45 2.28
Savings (including MMDAs) 3.36 3.39 3.21
Large time deposits (5) 5.53 5.53 5.21
Other time deposits (5) 5.66 5.63 5.24
Gross federal funds purchased and RPs 5.23 4.99 4.73
Other interest-bearing liabilities 6.31 6.45 5.63
Income and expense
as a percentage
of average net
consolidated assets
Gross interest income 7.90 7.75 7.48
Taxable equivalent 8.02 7.87 7.60
Loans 5.86 5.80 5.62
Securities 1.76 1.59 1.58
Gross federal funds sold and reverse
RPs .24 .29 .22
Other .04 .06 .06
Gross interest expense 3.48 3.46 3.26
Deposits 3.28 3.25 3.03
Gross federal funds purchased and RPs .08 .07 .08
Other .11 .13 .15
Net interest income 4.42 4.28 4.22
Taxable equivalent 4.54 4.41 4.35
Loss provisioning (6) .27 .29 .31
Non-interest income 1.42 1.52 1.44
Service charges on deposits .44 .42 .42
Fiduciary activities .20 .23 .26
Trading revenue * * *
Interest rate exposures * * *
Foreign exchange rate exposures * * *
Other commodity and equity
exposures * * *
Other .77 .86 .75
Non-interest expense 3.69 3.74 3.73
Salaries, wages, and employee
benefits 1.80 1.82 1.82
Occupancy .49 .49 .49
Other 1.40 1.43 1.42
Net non-interest expense 2.28 2.23 2.29
Gains on investment account securities .01 .02 *
Income before taxes and extraordinary
items 1.89 1.79 1.62
Taxes .59 .53 .46
Extraordinary items, net of income
taxes * * *
Net income 1.30 1.26 1.15
Cash dividends declared .74 .82 .68
Retained income .56 .44 .48
MEMO: Return on equity 12.53 12.02 11.25
Item 2000 2001 2002
Balance sheet items
as a percentage of
average net
consolidated assets
Interest-earning assets 92.52 92.26 92.22
Loans and leases, net 62.31 62.65 62.72
Commercial and industrial 11.09 11.09 10.71
U.S. addressees 11.02 11.01 10.65
Foreign addressees .07 .08 .06
Consumer 7.97 7.42 6.77
Credit card .58 .57 .49
Installment and other 7.39 6.85 6.28
Real estate 39.30 40.29 41.52
In domestic offices 39.30 40.29 41.51
Construction and land
development 3.70 4.23 4.51
Farmland 3.06 3.04 3.08
One- to four-family residential 18.43 18.24 17.91
Home equity 1.28 1.38 1.62
Other 17.15 16.86 16.29
Multifamily residential 1.04 1.06 1.16
Nonfarm nonresidential 13.06 13.71 14.86
In foreign offices * * *
To depository institutions and
acceptances of other banks .12 .12 .10
Foreign governments .01 * *
Agricultural production 3.85 3.75 3.64
Other loans .69 .67 .65
Lease-financing receivables .27 .27 .30
LESS: Unearned income on loans -.11 -.09 -.07
LESS: Loss reserves (1) -.88 -.88 -.90
Securities 25.40 22.83 23.34
Investment account 25.38 22.82 23.33
Debt 19.43 19.67 20.41
U.S. Treasury 2.12 1.33 1.04
U.S. government agency and
corporation obligations 16.95 15.29 16.07
Government-backed mortgage
pools 3.47 3.80 4.54
Collateralized mortgage
obligations 1.70 1.94 2.30
Other 11.78 9.55 9.23
State and local government 4.64 4.51 4.56
Private mortgage-backed
securities .23 .28 .27
Other .88 1.12 1.12
Equity (2) .56 .30 .27
Trading account .02 .01 .01
Gross federal funds sold and reverse
RPs 3.22 5.00 4.26
Interest-bearing balances at
depositories 1.59 1.77 1.90
Non-interest-earning assets 7.48 7.74 7.78
Revaluation gains held in trading
accounts (3) * * *
Other 7.48 7.74 7.78
Liabilities 89.89 89.60 89.71
Interest-bearing liabilities 76.05 76.01 76.00
Deposits 70.54 70.92 70.50
In foreign offices .05 .06 .05
In domestic offices 70.48 70.86 70.44
Other checkable deposits 10.57 10.18 10.42
Savings (including MMDAs) 19.03 19.15 20.99
Small-denomination time
deposits 28.42 28.06 25.90
Large-denomination time
deposits 12.47 13.47 13.13
Gross federal funds purchased and
RPs 2.06 1.56 1.51
Other 3.45 3.53 4.00
Non-interest-bearing liabilities 13.84 13.59 13.71
Demand deposits in domestic offices 12.64 12.15 12.24
Revaluation losses held in trading
accounts (3) * * *
Other 1.20 1.44 1.47
Capital account 10.11 10.40 10.28
MEMO
Commercial real estate loans 17.92 19.15 20.67
Other real estate owned .11 .12 .14
Managed liabilities 18.07 18.68 18.79
Average net consolidated assets
(billions of dollars) 655 675 704
Effective interest
rate (percent) (4)
Rates earned 8.49 7.97 6.83
Interest-earning assets 8.59 8.11 6.96
Taxable equivalent 9.55 9.09 7.90
Loans and leases, gross 9.13 8.64 7.47
Net of loss provisions 6.15 5.93 5.04
Securities 6.55 6.35 5.45
Taxable equivalent 6.15 5.93 5.04
Investment account
U.S. Treasury securities and U.S.
government agency obligations
(excluding MBS) n.a. 5.98 4.81
Mortgage-backed securities n.a. 6.45 5.48
Other n.a. 5.31 4.91
Trading account 4.01 6.43 4.80
Gross federal funds sold and reverse
RPs 6.26 3.85 1.65
Interest-bearing balances at
depositories 6.40 4.56 2.68
Rates paid
Interest-bearing liabilities 4.80 4.43 2.93
Interest-bearing deposits 4.67 4.34 2.80
In foreign offices 5.13 3.82 1.49
In domestic offices 4.67 4.34 2.80
Other checkable deposits 2.47 1.97 1.16
Savings (including MMDAs) 3.56 2.84 1.73
Large time deposits (5) 5.92 5.55 3.62
Other time deposits (5) 5.70 5.62 3.90
Gross federal funds purchased and RPs 5.69 4.03 1.85
Other interest-bearing liabilities 6.22 5.86 5.34
Income and expense
as a percentage
of average net
consolidated assets
Gross interest income 7.86 7.40 6.35
Taxable equivalent 7.97 7.50 6.46
Loans 6.02 5.78 5.06
Securities 1.58 1.33 1.16
Gross federal funds sold and reverse
RPs .21 .20 .08
Other .05 .05 .03
Gross interest expense 3.64 3.36 2.23
Deposits 3.31 3.09 1.99
Gross federal funds purchased and RPs .12 .06 .03
Other .21 .21 .21
Net interest income 4.22 4.04 4.12
Taxable equivalent 4.33 4.15 4.22
Loss provisioning (6) .35 .36 .34
Non-interest income 1.32 1.34 1.40
Service charges on deposits .43 .44 .45
Fiduciary activities .21 .25 .27
Trading revenue .01 * *
Interest rate exposures * * *
Foreign exchange rate exposures * * *
Other commodity and equity
exposures * * *
Other .68 .65 .68
Non-interest expense 3.59 3.56 3.54
Salaries, wages, and employee
benefits 1.78 1.79 1.83
Occupancy .47 .47 .47
Other 1.33 1.30 1.24
Net non-interest expense 2.27 2.22 2.15
Gains on investment account securities -.01 .04 .05
Income before taxes and extraordinary
items 1.59 1.50 1.66
Taxes .45 .41 .43
Extraordinary items, net of income
taxes * * -.01
Net income 1.15 1.09 1.21
Cash dividends declared .79 .66 .68
Retained income .36 .43 .53
MEMO: Return on equity 11.38 10.49 11.81
* 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 allocated transfer risk reserves.
(2.) As in the Call Report, equity securities are
combined with "other debt securities" before 1989.
(3.) 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.
(4.) When possible, based on the average of quarterly
balance sheet data reported on schedule RC-K of the
quarterly Call Reports.
(5.) Before 1997, large time open accounts included
in other time deposits.
(6.) Includes provisions for allocated transfer risk.
A.2. Report of income, all U.S. banks, 1993-2002
Millions of dollars
Item 1993 1994 1995 1996
Gross interest income 244,742 257,065 302,376 313,248
Taxable equivalent 247,620 259,822 305,012 315,708
Loans 178,425 189,764 227,220 239,401
Securities 48,678 48,299 51,030 50,634
Gross federal funds sold and
reverse repurchase
agreements 4,796 6,415 9,744 9,272
Other 12,843 12,587 14,382 13,944
Gross interest expense 105,615 110,850 147,960 150,101
Deposits 79,503 79,106 105,331 107,517
Gross federal funds purchased
and repurchase agreements 8,442 12,476 18,424 16,780
Other 17,669 19,269 24,205 25,806
Net interest income 139,127 146,215 154,416 163,147
Taxable equivalent 142,005 148,972 157,052 165,607
Loss provisioning 16,841 10,991 12,632 16,211
Non-interest income 75,847 77,224 83,851 95,308
Service charges on deposits 14,898 15,281 16,057 17,051
Fiduciary activities 11,199 12,124 12,889 14,296
Trading revenue 9,238 6,249 6,337 7,525
Other 40,513 43,572 48,567 56,436
Non-interest expense 140,523 144,905 151,141 162,456
Salaries, wages, and employee
benefits 58,507 60,904 64,014 67,800
Occupancy 18,578 18,978 19,760 20,889
Other 63,439 65,023 67,366 73,766
Net non-interest expense 64,676 67,681 67,290 67,148
Gains on investment account
securities 3,054 -568 481 1,123
Income before taxes 60,662 66,974 74,977 80,911
Taxes 19,861 22,429 26,222 28,448
Extraordinary items, net of
income taxes 2,085 -17 28 88
Net income 42,886 44,528 48,783 52,551
Cash dividends declared 22,068 28,165 31,106 39,419
Retained income 20,816 16,362 17,678 13,131
Item 1997 1998 1999
Gross interest income 338,216 359,174 366,172
Taxable equivalent 340,648 361,638 368,799
Loans 255,492 270,940 278,573
Securities 52,659 56,596 62,115
Gross federal funds sold and
reverse repurchase
agreements 13,658 14,999 12,327
Other 16,406 16,637 13,155
Gross interest expense 164,511 177,999 174,901
Deposits 117,350 125,216 119,664
Gross federal funds purchased
and repurchase agreements 20,439 22,182 21,130
Other 26,721 30,600 34,106
Net interest income 173,705 181,175 191,271
Taxable equivalent 176,137 183,639 193,898
Loss provisioning 19,176 21,220 21,121
Non-interest income 105,628 123,444 144,121
Service charges on deposits 18,558 19,769 21,497
Fiduciary activities 16,584 19,268 20,502
Trading revenue 8,018 7,705 10,478
Other 62,468 76,701 91,644
Non-interest expense 170,880 193,696 204,406
Salaries, wages, and employee
benefits 72,310 79,503 86,150
Occupancy 22,074 24,160 25,864
Other 76,495 90,034 92,392
Net non-interest expense 65,252 70,252 60,285
Gains on investment account
securities 1,825 3,090 250
Income before taxes 91,101 92,794 110,116
Taxes 31,973 31,878 39,233
Extraordinary items, net of
income taxes 56 506 169
Net income 59,184 61,421 71,052
Cash dividends declared 42,752 41,205 51,955
Retained income 16,433 20,215 19,097
Item 2000 2001 2002
Gross interest income 424,440 405,332 351,066
Taxable equivalent 427,076 408,016 353,822
Loans 327,385 312,484 270,732
Securities 67,676 63,128 59,416
Gross federal funds sold and
reverse repurchase
agreements 13,549 12,656 6,232
Other 15,831 17,065 14,686
Gross interest expense 222,112 188,898 119,084
Deposits 151,182 132,495 82,064
Gross federal funds purchased
and repurchase agreements 26,860 19,602 9,934
Other 44,072 36,800 27,086
Net interest income 202,328 216,434 231,982
Taxable equivalent 204,964 219,118 234,738
Loss provisioning 29,788 43,313 45,180
Non-interest income 152,324 159,275 167,771
Service charges on deposits 23,719 26,892 29,658
Fiduciary activities 22,220 21,970 21,636
Trading revenue 12,446 12,547 10,709
Other 93,939 97,866 105,767
Non-interest expense 215,795 225,219 229,298
Salaries, wages, and employee
benefits 89,030 94,275 100,574
Occupancy 26,764 27,959 29,394
Other 100,001 102,986 99,329
Net non-interest expense 63,471 65,944 61,527
Gains on investment account
securities -2,290 4,627 6,475
Income before taxes 106,778 111,805 131,621
Taxes 37,333 37,236 43,430
Extraordinary items, net of
income taxes -31 -324 -95
Net income 69,413 74,244 88,096
Cash dividends declared 52,547 54,944 67,292
Retained income 16,866 19,299 20,804
1. Annual rates of growth of balance sheet items, 1993-2002
Percent
Item 1993 1994 1995 1996
Assets 5.68 8.06 7.55 6.10
Interest-earning assets 6.43 5.29 7.77 5.79
Loans and leases (net) 6.05 9.83 10.53 8.12
Commercial and industrial .52 9.33 12.26 7.24
Real estate 6.13 7.90 8.32 5.45
Booked in domestic offices 6.17 7.64 8.47 5.51
One- to four-family
residential 11.08 10.09 10.05 4.66
Other .22 4.35 6.24 6.75
Booked in foreign offices 4.67 18.35 2.81 3.18
Consumer 9.06 16.01 9.50 4.90
Other loans and leases 9.98 5.29 14.23 22.28
Loan-loss reserves and
unearned income -5.82 -2.21 .25 -0.06
Securities 12.26 -4.14 .57 .86
Investment account 8.11 -1.73 -1.58 -1.10
U.S. Treasury n.a. n.a. -19.21 -14.28
U.S. government agency and
corporation obligations n.a. n.a. 6.43 3.63
Other n.a. n.a. 4.20 1.83
Trading account 51.84 -20.46 18.51 14.44
Other -8.10 3.30 8.60 1.04
Non-interest-earning assets -.30 31.61 6.06 8.29
Liabilities 5.12 8.31 7.17 5.96
Core deposits 1.49 -0.17 3.96 4.13
Transaction deposits 5.47 -.32 -3.09 -3.44
Savings and small time deposits -.85 -.07 8.37 8.35
Managed liabilities (1) 12.30 17.58 10.44 9.66
Deposits booked in foreign
offices 15.06 30.89 5.13 4.27
Large time -9.21 8.72 19.61 21.17
Subordinated notes and
debentures 10.82 9.23 6.61 17.74
Other managed liabilities 22.18 12.91 11.24 8.21
Other 15.30 79.17 20.46 2.60
Equity capital 12.58 5.24 12.00 7.74
MEMO
Commercial real estate loans (2) -.60 4.01 6.34 7.67
Mortgage-backed securities n.a. n.a. .67 2.06
Item 1997 1998 1999 2000
Assets 9.23 8.25 5.43 8.77
Interest-earning assets 8.67 8.29 5.83 8.73
Loans and leases (net) 5.33 8.90 8.03 9.35
Commercial and industrial 12.02 12.94 7.88 8.54
Real estate 9.30 7.99 12.22 10.74
Booked in domestic offices 9.52 7.97 12.36 11.02
One- to four-family
residential 9.67 6.36 9.70 9.28
Other 9.32 10.29 16.06 13.31
Booked in foreign offices ..34 8.79 6.28 -1.62
Consumer -2.19 .99 -1.47 8.06
Other loans and leases -7.91 14.06 6.69 7.81
Loan-loss reserves and
unearned income -0.50 3.47 2.36 8.04
Securities 8.85 8.40 5.11 6.36
Investment account 8.66 12.06 6.68 2.85
U.S. Treasury -8.86 -25.17 -1.89 -32.72
U.S. government agency and
corporation obligations 14.18 17.00 1.83 3.75
Other 11.20 26.99 20.90 13.39
Trading account 10.00 -13.32 -6.93 37.16
Other 38.55 3.80 -8.37 10.30
Non-interest-earning assets 13.03 7.97 2.81 9.01
Liabilities 9.12 8.13 5.57 8.59
Core deposits 4.52 7.04 .23 7.53
Transaction deposits -4.55 -1.41 -8.98 -1.31
Savings and small time deposits 9.03 10.73 3.80 10.54
Managed liabilities (1) 13.83 9.60 15.50 8.80
Deposits booked in foreign
offices 11.13 8.71 14.60 7.84
Large time 20.14 9.09 14.19 19.37
Subordinated notes and
debentures 21.05 17.00 5.07 13.98
Other managed liabilities 12.23 9.88 17.69 3.92
Other 23.79 8.59 -6.39 15.43
Equity capital 10.44 9.59 3.93 10.68
MEMO
Commercial real estate loans (2) 10.12 11.37 15.42 12.16
Mortgage-backed securities 14.15 22.12 -3.34 3.29
MEMO:
Dec.
2,002
Item 2001 2002 (billions
of
dollars)
Assets 5.12 7.18 6,954
Interest-earning assets 3.95 7.51 5,998
Loans and leases (net) 1.84 5.87 4,002
Commercial and industrial -6.72 -7.29 904
Real estate 7.94 14.45 2,049
Booked in domestic offices 8.01 14.86 2,018
One- to four-family
residential 5.69 19.89 1,152
Other 10.95 8.80 866
Booked in foreign offices 3.97 -7.41 31
Consumer 4.25 6.46 649
Other loans and leases -1.93 -0.34 477
Loan-loss reserves and
unearned income 13.15 5.64 79
Securities 7.17 16.18 1,518
Investment account 8.82 13.52 1,308
U.S. Treasury -40.27 41.92 63
U.S. government agency and
corporation obligations 12.84 17.92 822
Other 12.01 2.97 422
Trading account -3.72 36.03 210
Other 13.00 -2.88 478
Non-interest-earning assets 12.89 5.16 956
Liabilities 4.46 7.12 6,321
Core deposits 10.55 7.57 3,422
Transaction deposits 10.19 -5.09 701
Savings and small time deposits 10.66 11.40 2,720
Managed liabilities (1) -2.70 5.32 2,427
Deposits booked in foreign
offices -10.96 4.49 658
Large time -3.65 5.08 571
Subordinated notes and
debentures 9.56 -.60 94
Other managed liabilities 2.54 6.48 1,105
Other 3.04 13.62 472
Equity capital 12.31 7.87 633
MEMO
Commercial real estate loans (2) 12.86 6.88 865
Mortgage-backed securities 28.97 15.53 691
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.
2. Exposure of banks to selected economies at year-end relative
to tier 1 capital, by bank size, 1998-2002
Percent
Latin
Eastern Europe America
Selected
Bank and year Asian All Russia All
countries (1)
All
1998 15.49 3.49 .43 42.93
1999 14.37 2.85 .37 39.00
2000 13.17 4.35 .49 37.88
2001 12.09 4.29 .60 54.06
2002 11.44 5.53 1.06 38.90
Money center and other
large banks
1998 24.02 5.61 .68 64.20
1999 20.73 4.25 .55 53.90
2000 19.98 6.83 .77 54.98
2001 17.88 6.47 .91 79.08
2002 16.96 8.17 1.63 57.32
Other
1998 2.08 .16 .00 9.51
1999 1.75 .08 .01 9.41
2000 1.41 .08 .00 8.35
2001 1.07 .14 .00 6.45
2002 1.03 .65 .00 5.00
MEMO
Total exposure (billions
of dollars)
1998 37.87 8.53 1.05 104.96
1999 37.45 7.43 .95 101.63
2000 37.30 12.33 1.39 107.31
2001 36.32 12.88 1.80 162.39
2002 36.32 17.55 3.37 123.53
Latin America
Bank and year Mexico Argentina Brazil Total
All
1998 9.88 9.66 11.27 61.90
1999 9.50 9.40 10.49 56.22
2000 9.08 8.41 11.15 55.40
2001 25.97 6.61 12.99 70.44
2002 20.80 2.44 8.36 55.87
Money center and other
large banks
1998 14.10 15.19 17.04 93.83
1999 12.62 13.63 14.53 78.88
2000 12.69 12.68 16.40 81.79
2001 38.54 9.79 18.74 103.43
2002 31.14 3.65 12.38 82.45
Other
1998 3.24 .97 .00 11.75
1999 3.31 1.01 2.47 11.24
2000 2.84 1.04 2.08 9.84
2001 2.04 .57 2.05 7.66
2002 1.86 .02 .96 6.68
MEMO
Total exposure (billions
of dollars)
1998 24.15 23.62 27.55 151.36
1999 24.77 24.51 27.34 146.51
2000 25.71 23.82 31.59 156.94
2001 78.00 19.87 39.01 211.59
2002 66.15 7.75 26.55 177.40
NOTE: For definition of tier 1 capital, see text note 5. 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 2002, "all reporting" banks consisted of 74 institutions
with a total of $318 billion in tier 1 capital; of these institutions,
10 were "large" banks (5 money center banks and 5 other large banks)
with $206 billion in tier 1 capital, and the remaining 64 were "other"
banks with $112 billion in tier 1 capital. The average "other" bank at
year-end 2002 had $24 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.htm/
NOTE. 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 1998), 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. At the start of the fourth quarter of 2002, the approximate asset sizes of the banks in those groups were as follows: the ten largest banks, more than $87 billion; large banks, $6.7 billion to $85 billion; medium-sized banks, $376 million to $6.5 billion; and small banks, less than $376 million. Many of the data series reported here begin in 1985 because the Call Reports were significantly revised in 1984. Data for 1984 and earlier years are taken from the Federal Deposit Insurance Corporation, Statistics on Banking, 1999. The data reported here are also available on the Internet at http://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. Appendix table A.1, A-E, reports portfolio composition, income, and expense items, all as a percentage of overall net consolidated costs. Appendix table A.2 reports income statement data for all banks. (1.) This count of commercial banks, derived from Call Report data, may vary slightly from measures, such as those in the Federal Reserve's Annual Report, that are based on the definition of a bank given in the Bank Holding Company Act and implemented in the Federal Reserve's Regulation Y. (2.) Securitized loans outstanding for which banks retain servicing rights or provide recourse or other credit enhancements have been reported on bank Call Reports only since June 2001. Thus, 2002 is the first year for which the annual growth of those loans is available. Such securitized one- to four-family residential mortgage loans (excludes home equity loans) stood at $712 billion at the end of 2002; the amount compares with $937 billion held on balance sheet. For home equity loans, the respective values were $21 billion for securitized loans and $214 billion for loans held on balance sheet. Banks do not report securitized loans for which they neither retain servicing rights nor provide credit enhancements. (3.) Banks securitize a considerable share of the consumer loans they originate. At the end of 2002, securitized consumer loans on which banks retained servicing rights or provided credit enhancements stood at $353 billion, compared with $649 billion held on balance sheet. More than 90 percent of securitized consumer loans were credit card receivables. (4.) Most investment account holdings are in the available-for-sale subcategory, which is marked to market, and increases in their reported values due to declining interest rates accounted for about 2.2 percentage points of reported total securities growth in 2002. (5.) Tier 1 and tier 2 capital are regulatory measures. Tier 1 capital consists primarily of common equity (excluding intangible assets such as goodwill and excluding net unrealized gains on investment account 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. Total capital is tier 1 plus tier 2 capital. 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 0 to 1 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. (6.) Well-capitalized banks are those with a total capital ratio greater than 10 percent, a tier 1 ratio greater than 6 percent, a leverage ratio greater than 5 percent, and a composite CAMELS rating of 1 or 2. Each letter in the CAMELS stands for a key element of a bank's financial condition--Capital adequacy, Asset quality, Management, Earnings, Liquidity, and Sensitivity to market risks. The average margin by which banks remained well capitalized was computed as follows. Among the leverage, tier 1, and total capitalized 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 chart 12--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. (7.) In a credit default swap, the guarantor agrees, for an upfront or continuing premium or fee, to compensate the beneficiary by a specified amount upon the occurrence of a specified event, such as the default of the referenced obligor. (8.) The net interest margin rose particularly at the ten largest banks, boosted in part by the consolidation of Citigroup subsidiaries noted above. Even after adjusting for this consolidation, however, the net interest margin still rose noticeably at these largest banks. As noted above, the Citigroup consolidation had little effect on the performance of the 100 largest banks. (9.) Data limitations prevent a disaggregation of earnings between residential and commercial real estate loans. Commercial mortgages account for 49 percent of all real estate loans at small banks, compared with 42 percent for all other banks. RELATED ARTICLE: Commercial and industrial lending by size of bank and size of loan. The runoff in C&I loans in 2001 and 2002 occurred entirely at the 100 largest commercial banks (chart a). Growth of C&I loans at other banks (institutions not among the 100 largest banks), though slowing, continued to be positive over this period. This divergence between small and large banks contrasts sharply with their much more comparable behavior following the business-cycle peak in 1990. Data on small business loans, available annually since 1993, make it also possible to examine the pattern of business loan growth by size of borrower. (1) As with C&I loans at small banks, loans to small businesses continued to expand over 2001 and 2002, while loans to other, mostly large businesses contracted (chart b). Further insight is gleaned from an examination of business loan data disaggregated by both loan size and borrower size. This analysis reveals that the runoff of business loans at large banks in 2001 and 2002 was due entirely to loans to other--not small--businesses (chart c). At small banks, the slowdown in lending was about equally shared by both small and other businesses (chart c). [GRAPHICS OMITTED] The relative importance of supply and demand factors in explaining the changes of business lending by small and large banks and the implications for the supply of credit to large and small businesses in recent years are analyzed in this box. Demand Factors Over the 2001-02 period, sluggish capital expenditures and sharp inventory runoffs reduced the borrowing needs of firms and significantly depressed demand for C&I loans at both small and large banks. Dwindling merger and acquisition activity and access to the corporate bond market and other sources of external finance among larger firms amplified the reduction in C&I loan demand at large banks, as their bigger customers issued bonds in volume to lock in historically low long-term interest rates. Demand-side influences, therefore, appear to be a factor in the recent divergence in the growth rates of C&I loans at small and large banks as well as at small and large businesses. Supply Factors Measures of C&I loan pricing at large and small banks from the Survey of Terms of Business Lending (STBL STBL - Sprint Test Bed Labs STBL - Stable), however, indicate that differences in demand tell only part of the story (chart d). (2) Large commercial banks significantly raised the risk spread on large loans--measured as the loan rate less the rate on a market instrument of comparable maturity, a proxy for funding costs--during the recent period of cyclical weakness. At the same time, these banks lowered rates charged on small C&I loans slightly faster than the decline in estimated funding costs, a move that fostered a more hospitable borrowing environment for smaller firms. By contrast, small banks have increased risk spreads on small C&I loan originations over the past couple of years. The variability and lack of clear systematic movement in risk spreads on extensions of large loans at small banks during this period indicate that a relatively small number of large C&I loans originated at these institutions. [GRAPHIC OMITTED] Differences in the pricing of small C&I loans at large and small banks may reflect in part the greater diversification of small business loan portfolios--both across industries and across regions--at large institutions, brought about by the substantial number of mergers since the mid-1990s. By diluting the impact of idiosyncratic loan risk, the increasing diversification would allow large banks to price loans to small businesses more aggressively. The ability of small banks to remain competitive--despite the evidence of relative increases in their loan rates in recent years--may be due to their information advantage in establishing and maintaining local lending relationships. (3) The increased risk in making loans to larger firms likely explains the run-up in risk spreads on large business loans at large commercial banks. Recent corporate governance problems, for example, were concentrated among large corporations. Moreover, worsening corporate credit quality was most pronounced in the telecom, energy, and airline sectors, industries dominated by big firms that are unlikely to borrow from smaller banks. This interpretation is corroborated by the faster rise in recent years and higher level of delinquency rates on C&I loans at large banks than at small banks. Greater risk in underwriting big C&I loans would act to restrict loan supply at large banks and would exacerbate any contraction in C&I lending stemming from reduced loan demand. The modest narrowing of risk spreads for small loans at large banks, by contrast, would tend to promote borrowing by small businesses. Lending to Small Businesses by Large and Small Banks The growth of C&I loans to small businesses has been consistently stronger at small banks than at large banks (charts a and c). However, to prevent distortions to relative growth rates caused by the wave of bank consolidations since the mid-1990s, these growth rates have been adjusted for mergers between small and large banks. In fact, large banks have acquired a substantial volume of loans to small businesses through purchases of smaller banks. Indeed, Call Report data that have not been adjusted for mergers show that large banks' share of all small business loans has risen from less than one-third of outstandings in 1994 to about one-half in 2002. Thus, large banks have increased their share of the market for small business loans even though they have made relatively few such loans over and above what they have acquired through mergers. At the same time, loans to small businesses have become a growing share of business loans at small banks: In 2002, small business loans accounted for almost 60 percent of C&I loans outstanding at small banks, compared with about 48 percent in 1994. At large banks, by contrast, the share of small business loans as a fraction of their total C&I loan portfolio remained remarkably stable from 1994 to 2002, at around 16 percent. NOTE. Egon Zakrajsek, of the Division of Monetary Affairs, prepared this box material. (1.) Since 1993, domestic commercial banks have reported both their C&I and commercial real estate loans outstanding to small businesses in their June Call Reports. Both types of loans to small businesses are defined as follows: (1) loans with original amounts of $100,000 or less, (2) loans with original amounts between $100,000 and $250,000, and (3) loans with original amounts of between $250,000 and $1 million. For the purposes of this memo, the three loan size classes were aggregated into a single "C&I loans to small businesses" category; the remainder of the C&I loans outstanding--in the original amount of more than $1 million--compose the "C&I loans to other businesses" category. (2.) Because the STBL uses a stratified sample of the banking universe, the large bank category in the survey is not the same as the 100 largest banks. The STBL large bank category includes about forty of the largest institutions in terms of assets. (3.) The loan rate data exclude information of any lending fees that may be present and thus should be considered as indicative rather than definitive measures of lending costs. RELATED ARTICLE: Change in the accounting standards regarding goodwill. According to the Financial Accounting Standards Board (FASB), goodwill is an intangible asset that generally arises as the result of a corporate merger when the purchase price of a firm exceeds the difference between the fair value of the assets acquired and the liabilities assumed. (1) As the banking system has consolidated over the past decade, the amount of goodwill in the banking system has expanded rapidly, with an average annual growth rate of 32 percent (over the same period, assets expanded at an average annual rate of 6.8 percent). In 2002, goodwill was about $80 billion, or about 1.2 percent of total assets. In previous years, FASB considered goodwill to be a "wasting asset" that would gradually dissipate and hence required that it be amortized over its useful life, up to a maximum of forty years. The expense associated with amortizing goodwill was reported on banks' balance sheets as part of non-interest expense. According to its Statement of Financial Accounting Standards No. 142, however, FASB now considers goodwill to generally represent the intangible "synergies" of the combined institution. As such, goodwill may have an indefinite life, so FASB no longer requires that it be amortized unless it becomes impaired. Goodwill may become impaired when a change occurs in a company's financial circumstances such that the amount of goodwill carried by the company exceeds the current implied fair value of goodwill. The new treatment of goodwill became effective for banks in their first fiscal year occurring after December 15, 2001, and contributed significantly to the one-time sharp decline in non-interest expense reported in 2002. (1.) For mergers initiated before July 1, 2001, the FASB also allowed the use of a pooling-of-interest method of accounting. In a pooling of interests, the assets, liabilities, and retained earnings of each company are carried forward at their historical carrying amounts to the combined entity. In contrast to the purchase method, no goodwill is recorded in a pooling of interests. Operating results of both companies are combined for all periods before the consummation date, and previously issued financial statements are restated as though the companies had always been combined. Mark Carlson and Roberto Perli, of the Board's Division of Monetary Affairs, prepared this article. Thomas C. Allard assisted in developing the database discussed in this article and is responsible for maintaining it. Steve Piraino provided research assistance. |
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