Profits and balance sheet developments at U.S. commercial banks in 2004.U.S. commercial banks continued to be highly profitable in 2004. Return on assets and return on equity declined moderately from the previous year's levels, but they remained in the elevated range that has prevailed since the mid-1990s (chart 1). Banks' profitability and balance sheets benefited from a brisk expansion of the economy and supportive financial conditions during 2004. Although the Federal Reserve gradually raised its target for the federal funds Federal Funds Funds deposited to regional Federal Reserve Banks by commercial banks, including funds in excess of reserve requirements.Notes: These non-interest bearing deposits are lent out at the Fed funds rate to other banks unable to meet overnight reserve requirements. See also: Federal Reserve System, Federal Funds Rate, Federal Reserve Bank, Open Market Operations, Reserve Requirement rate
over the second half of the year, the stance of policy remained
accommodative (chart 2). Short-and intermediate-term interest rates rose
over the course of the year, but yields on longer-term Treasury
securities were little changed on net, and the Treasury yield curve
flattened noticeably. Interest rates on residential mortgages ended the
year a touch lower, on balance, and continued to support robust housing
activity. Risk spreads on corporate bonds--particularly high-yield
bonds--narrowed substantially.[GRAPHICS OMITTED] Favorable financial market conditions, accompanied by a stimulative fiscal policy and continued rapid growth in productivity, supported economic activity. Buoyant consumer spending on durable and nondurable goods reflected solid income growth, improvements in labor market conditions, and greater household wealth; the greater wealth, in turn, arose from gains in the stock market and continued sharp increases in house prices. Healthy profits and cash flows encouraged business investment in equipment and software, which rose smartly throughout the year. Businesses also added considerably to inventories for the first time since 2001. With the financial obligations ratio of households stabilizing below the peak reached at the end of 2002 and the debt burden for nonfinancial corporations continuing to fall, households and businesses had relatively strong financial positions overall during 2004. These economic and financial conditions were reflected in the changes in bank balance sheets over the year. The robust activity in the housing sector and generally low mortgage interest rates buoyed residential mortgage lending at banks despite the ebbing of the 2003 refinancing wave. Even though consumer spending was strong, consumer loans advanced at only a moderate pace and likely were restrained by the substitution of mortgage debt for higher-rate consumer credit. Strong cash flows and profits allowed many nonfinancial corporations to finance capital spending with internal funds and thus reduce their borrowing needs. Nonetheless, after three years of retrenchment, short-term business debt--consisting of commercial and industrial (C&I) loans from banks and commercial paper--rose last year to meet firms' greater need to fund accounts receivable, inventories, capital expenditures, and merger and acquisition activity. C&I loans also received a boost from the supply side, as banks reported easing their lending standards and terms throughout the year. Banks also reported easing their standards and terms on commercial real estate loans, and such loans increased despite soft conditions overall in that sector. Still-low interest rates fueled the growth of core deposits, but the rise was insufficient to fund the increase in bank assets. (1) As a result, banks relied more heavily on managed liabilities, which rose strongly last year. [GRAPHICS OMITTED] Economic and financial developments also strongly influenced banks' profitability in 2004. As the yield curve flattened markedly, the net interest margin narrowed a bit further. The net interest margin may also have been eroded by increased competition in the C&I loan market, which contributed to a narrowing of loan spreads over reference rates. Gains in non-interest income were less pronounced than in 2003. Despite contributions from fiduciary activities, loan-servicing fees, and securitization activities, the growth of non-interest income was restrained by weakness in investment banking revenue, a marked contraction in trading income, and a decline in gains from loan sales. Meanwhile, non-interest expense, which rose briskly, was boosted by provisions for litigation and expenses related to sizable mergers at a few large banks. However, the continued improvement in overall credit quality throughout the year allowed banks to trim their provisioning for loan and lease losses, and delinquency and charge-off rates for all loan categories trended down. Realized gains on investment-account securities declined last year but still contributed to income. Although more new commercial banks were chartered in 2004 than in 2003, merger activity increased, and the number of banks fell to 7,678 at year-end (chart 3). Some of the merger activity involved very large banks and thus contributed to an increase in the concentration of industry assets. The share of industry assets held by the 10 largest banks rose 3.9 percentage points, to 48.0 percent; the share held by the 100 largest banks rose 1.6 percentage points, to 76.9 percent. Three banks failed in 2004 with combined assets of just $151 million. [GRAPHIC OMITTED] Merger activity also continued at the bank holding company level, and the number of top-tier bank holding companies declined by 4 in 2004, to 5,148. As they did at the bank level, mergers drove up the concentration of assets at bank holding companies. The share of assets of all bank holding companies held by fifty large bank holding companies rose to about 77 percent. (2) The Gramm-Leach-Bliley Act of 1999 created the option for bank holding companies to become financial holding companies; as such, they are allowed to engage in activities related to securities underwriting, insurance sales and underwriting, and merchant banking. During 2004 the number of financial holding companies increased to 636, and by the end of the year, more than 80 percent of assets at bank holding companies were held by financial holding companies. BALANCE SHEET DEVELOPMENTS Total assets of U.S. commercial banks grew 10.8 percent in 2004, about 3 percentage points faster than the growth in total debt of the domestic nonfinancial sector and the fastest rate in more than a decade (table 1). Securities expanded 10.6 percent, and loans and leases advanced 11.2 percent. Reflecting the growth in both business and household spending last year, all major loan categories advanced for the first time since the late 1990s. Liabilities grew 9.5 percent last year. Low opportunity costs supported growth in core deposits, but the rate of increase was insufficient to meet the rise in assets. Remaining funding needs were met with a rapid expansion of managed liabilities--most notably large time deposits. Bank capital rose to 9.4 percent of average net consolidated assets in 2004, and that gain also helped fund asset growth. Capital expanded because of the growth in retained earnings as well as increases in goodwill resulting from significant merger activity. Goodwill and other intangible assets boost reported assets and capital but are not included in regulatory capital ratios. These ratios were little changed and thus remained in the very high ranges seen in recent years. Loans to Businesses The net financing gap--the difference between capital expenditures and internally generated funds of the U.S. nonfinancial sector--increased last year from the low point it had reached in the third quarter of 2003 (chart 4). (3) In addition, net bond issuance in 2004 was lower than in 2003. Firms relied more on commercial paper and bank loans to meet their funding needs; C&I loans grew 4.4 percent in 2004. [GRAPHIC OMITTED] Responses to the Federal Reserve's quarterly Senior Loan Officer Opinion Survey on Bank Lending Practices (BLPS BLPS - Base Level Personnel System BLPS - Boon Lay Primary School (Singapore)) suggest that both stronger demand and easier standards and terms contributed to the growth in business loans. The share of respondents reporting stronger demand for C&I loans rose significantly in the 2004 surveys and exceeded 40 percent in the January 2005 survey (chart 5). Reasons cited for increased demand included increases in inventories and accounts receivable, plant and equipment expenditures, and mergers and acquisitions. [GRAPHIC OMITTED] Small and medium-sized banks--which typically lend to smaller businesses--saw substantial increases in C&I loans in 2004 (13.6 percent for small banks and 9.9 percent for medium-sized banks). In contrast, C&I loans at the ten largest banks were essentially flat, but they had previously been in a period of sustained decline. This difference across bank sizes is consistent with data from the June 2004 Call Report, which show that small business loans (original amounts of $1 million or less) grew from mid-2003 to mid-2004, while larger C&I loans contracted. Throughout the year, larger net percentages of BLPS respondents reported increased demand for C&I loans from small borrowers (those with sales of less than $50 million) than from large- and medium-sized borrowers. Significant fractions of banks responding to the BLPS in 2004 reported also having eased C&I lending standards, in large part because of a firmer economic outlook (chart 5). Moreover, appreciable fractions of respondents reported throughout 2004 and into 2005 that they had eased C&I loan terms--including loan sizes, costs of credit lines, spreads, covenants, and collateralization requirements (data not shown in chart). This easing of loan terms is confirmed by results from the Federal Reserve's quarterly Survey of Terms of Business Lending, which show that banks extended C&I loans of increasing maturity and larger size throughout the year. Another factor influencing C&I lending terms, according to BLPS respondents, was increased competition from other banks and from nonbanks. (4) Commercial real estate (CRE) loans rose 13.8 percent in 2004. Growth rates of real-estate-secured loans for construction and land development and of loans secured by multifamily properties were particularly strong in the second half of the year as the economy improved. As in previous years, growth rates at medium-sized and small banks were more than twice those posted at larger banks (see box "Commercial Real Estate Loans"). Responses to the BLPS indicated that demand for CRE loans increased throughout the year, although the net percentage of banks reporting increases in demand dipped a bit in early 2005 (chart 6). Respondents also said that they had eased standards and terms on these loans over 2004. The reasons given for easing were similar to those for C&I loans, including more competition from other lenders and an improved economic outlook. [GRAPHIC OMITTED] Loans to Households Mortgage rates remained low over the course of 2004, and with income and employment advancing, the housing sector expanded strongly again. Against this favorable backdrop, residential mortgage loans grew 15.8 percent in 2004, the fifth consecutive year of gains and an even faster growth rate than in 2003. Residential mortgages, which are loans secured by one- to four-family residential properties and include first-lien mortgages and home equity loans, represent the largest share of bank loans to households. Much of the acceleration in residential mortgages resulted from growth in revolving home equity loans, which rose more than 40 percent. Mortgage loans grew especially fast early in the year, when long-term interest rates had declined to a very low level. The low rates generated a renewed flurry of refinancing activity (chart 7) that was accompanied by strong demand for mortgages to finance home purchases. As these rates backed up a bit in anticipation of monetary policy tightening, growth slowed somewhat but remained elevated through the end of the year. [GRAPHIC OMITTED] On net, BLPS respondents reported decreased demand for residential mortgages throughout the year (chart 8). Fluctuations over the course of the year in the percentage of banks reporting demand increases seemed to reflect changes in the trend of refinancing activity. (5) In the first half of 2004, the net percentage of banks reporting increased demand rose somewhat, but it dropped back a bit over the latter half of the year. [GRAPHICS OMITTED] Residential mortgages have expanded at a double-digit rate since 2002. Responses to special questions on the January 2005 BLPS indicate that several factors contributed to banks' increased holdings of residential mortgages over the previous three years. First, according to 75 percent of the respondents, many mortgages originated over this period had adjustable rates, making them relatively attractive to hold as assets. Second, sustained demand for mortgages had supported their returns. Finally, many banks noted that a widening of spreads between mortgages and mortgage-backed securities made the underlying loans more attractive to hold. Consumer loans at banks grew 10.1 percent last year. However, after adjustment for the effect of a large merger in the third quarter, the growth rate of consumer loans was a more moderate 5.8 percent. (6) Banks' standards and terms for consumer loans changed little on net last year according to the BLPS: Approximately the same proportion of banks tightened standards for credit card loans and other consumer loans as eased them (chart 9). Changes in terms reflected a similar trend, with a slight net percentage of domestic respondents having tightened credit card terms and a similarly slight net percentage having done so for other consumer loans (not shown in chart). Overall, demand for consumer loans reportedly moderated. [GRAPHIC OMITTED] Other Loans and Leases Banks' holdings of other loans and leases grew 3.6 percent in 2004. Although the rate marks a slowdown from 2003, growth in that year was heavily influenced by an accounting change that shifted into this category an estimated $42 billion in assets that were previously off-balance-sheet items. (7) A 5 percent rise in farm loans reversed a downward trend seen since 2001. Improved overall economic conditions strengthened the fiscal situation of many state and local governments and contributed to a slowing in the growth of loans to this sector from 16.8 percent in 2003 to a still-rapid 13.9 percent in 2004. Securities Banks expanded their securities holdings considerably again in 2004. Last year's 10.6 percent advance was more than 1 percentage point faster than the 2003 pace and about in line with total asset growth. Much of the growth reflected a substantial rise in securities held in trading accounts, which jumped 36.8 percent on the year; securities held in investment accounts advanced 6.2 percent. As a share of average net consolidated assets, securities holdings in 2004 increased for the third year in a row, to 22.6 percent (chart 10). [GRAPHIC OMITTED] Mortgage-backed securities in investment accounts, which grew 13 percent over the year, rose to a 10.4 percent share of bank assets at the end of the fourth quarter. As with mortgage loans, banks' holdings of mortgage-backed securities followed the swings of long-term interest rates. Banks accumulated mortgage-backed securities at a rapid clip in the first quarter; as longer-term interest rates rose in anticipation of the policy tightening, such holdings shrank in the second quarter, and they fell further in the third quarter. Growth returned strongly in the fourth quarter after rates declined. From a longer-term perspective, bank involvement in residential mortgage products has increased dramatically over the past twenty years. In 1985, residential mortgages accounted for 7.3 percent of average net consolidated assets, while agency pass-throughs--one type of mortgage-backed security available to investors at the time--were less than 1 percent. By the end of 1995, the share of residential mortgage products on banks' books had risen to 22.2 percent--14.4 percent in mortgages and 7.8 percent in securities. By the end of 2004, banks' asset share of these products had risen to more than 28 percent. Liabilities Commercial bank liabilities grew 9.5 percent last year, with all classes of liabilities posting increases. The 8.2 percent growth in core deposits outpaced the previous year's strong advance by about 1 percentage point, but it lagged the expansion in total assets. Some of the run-up in core deposits in the first half of the year was attributable to the decline in mortgage rates in the first quarter (chart 2). The drop in rates led to an increase in refinancing. When securitized mortgages are refinanced, the proceeds are held temporarily in a liquid deposit account before disbursement to the securities holders, thereby boosting deposits for a time; the slower pace of refinancing in the second half of the year diminished this effect to some extent. As a share of total liabilities, savings deposits grew during the four quarters of 2004, while the shares of transaction and small-denomination time deposits fell a bit (chart 11). [GRAPHIC OMITTED] With the growth of assets outstripping that of core deposits, banks relied more heavily on managed liabilities--defined as the sum of demand notes issued to the U.S. Treasury and other borrowed money, federal funds purchased and securities sold under repurchase agreements, subordinated notes and debentures, large time deposits, and deposits booked in foreign offices. This sum grew 12.1 percent last year, and its share of total liabilities rose to 39.2 percent. For all banks, large time deposits posted the fastest gain, 21.8 percent; at the ten largest banks, such deposits grew even more rapidly, 30.6 percent. Banks again expanded their use of Federal Home Loan Bank (FHLB) advances in 2004. (8) These loans grew approximately 3.7 percent last year, about the same rate as in 2003, but well below the growth rate of 17.2 percent in 2002. On average last year, FHLB advances equaled 8.6 percent of total managed liabilities at domestic banks--but the proportion was much higher at medium-sized banks (23.9 percent) and at small banks (22.1 percent). Capital Given the slower growth of liabilities relative to assets, equity capital at banks surged more than 23 percent in 2004. However, much of this increase reflected the effects of accounting for several large mergers, which boosted the value of goodwill. (9) Risk-weighted assets grew 10.5 percent; tier 1 capital (which excludes goodwill) grew 10.0 percent, and tier 2 capital advanced 6.7 percent. As a result, the tier 1 ratio was basically unchanged at about 10 percent, and the total ratio (tier 1 plus tier 2) ticked down slightly; the leverage ratio remained about constant (chart 12). (10) Thus, overall, the share of industry assets held by banks that were considered well capitalized for regulatory purposes remained largely unchanged from the very high level of 2003 at about 96 percent (chart 13). (11) The estimated average margin by which banks exceeded the well-capitalized standard declined slightly in 2004 (chart 13). (12) [GRAPHICS OMITTED] Derivatives The market for innovative financial products has continued to expand. Banks have increased their off-balance-sheet derivatives positions over the past decade, and this trend continued last year. At the end of 2004, the notional value of all derivatives contracts held by banks was more than $88 trillion, up about $19 trillion from the end of 2003. The ten largest banks held the lion's share of these contracts, which increased to 98 percent in 2004. The largest proportion of notional value for these contracts continues to be in interest rate derivatives. Investors use these contracts, in part, to hedge interest rate risk. The continued growth in holdings of mortgages and mortgage-backed securities--instruments whose prices are particularly sensitive to interest rates--likely contributed to an increase in hedging activity by banks' customers in interest rate derivatives markets. As intermediaries in such instruments, banks would therefore see their holdings rise. Credit derivatives are agreements in which default risks associated with a given borrower are transferred from a beneficiary to a protection provider. The market for credit derivatives continues to develop, and banks' holdings of credit derivatives surged in 2004, increasing at a rate not seen since the beginnings of the market for them, around 1998. Notional holdings still remain small, however, relative to those of some other types of derivatives (see box "Credit Derivatives"). The notional value of banks' holdings of foreign exchange contracts, equity derivatives, and commodity and other contracts--which constitute the remainder of banks' derivatives portfolios--advanced strongly in 2004. Foreign exchange contracts increased 21.0 percent, and equity and commodity contracts combined moved up 33.9 percent. The notional value of derivatives contracts is one measure of overall market activity; another measure, the fair value of these contracts--which measures the value of all contracts if settled at the reporting date--is substantially smaller. Moreover, banks' derivatives positions tend to be offsetting because of their activity as dealers. At the end of 2004, the gross positive fair value of banks' derivatives contracts totaled about $1.33 trillion and exceeded the negative fair value by $26 billion, up from $23 billion in 2003. Banks have had a positive net fair value in these contracts for the past five years. TRENDS IN PROFITABILITY The banking industry continued to be very profitable in 2004. (13) Although return on assets (ROA) and return on equity (ROE) were both slightly below the previous year's levels, they remained well within the high range prevailing since the mid-1990s. ROA, at 1.34 percent, was only 5 basis points below the previous year's record. ROE, which was damped by merger-related increases in reported equity, declined more than 1 percentage point but was still a healthy 14.23 percent. The fraction of banks with negative net income shrank for the third consecutive year, to 5.8 percent, and accounted for less than 1 percent of industry assets. The slight weakening in profitability occurred mainly at the 100 largest banks. The net interest margin declined a bit further at these banks, likely in part because of additional flattening of the yield curve; a possible further contributor was an intensification of competitive pressure in the C&I loan market. Gains in non-interest income were outpaced by a rise in non-interest expense. Income from fiduciary and securitization activities rose, but income from investment banking was essentially flat, gains from sales of loans fell, and trading revenue contracted sharply. An increase in nonrecurring charges--including merger-related expenses and litigation provisions at a few of the largest banks--contributed to the rise in non-interest expense. Partially compensating for these developments was the continued improvement in overall credit quality. This trend, which has been driven by the strengthening of household and business balance sheets and the ongoing economic expansion, has allowed banks to further reduce their provisions for loan and lease losses. Realized gains on investment account securities, even though not as strong as in 2003, continued to boost income. Unrealized gains on available-for-sale securities declined somewhat; in part, the drop probably reflected adjustments to securities portfolios resulting from the repositioning of interest rate risk, changes in market interest rates, and the realization of past gains through the sale of securities. Despite substantial earnings, banks--particularly the top ten--trimmed the share of profits paid out as dividends. As a result, retained earnings almost doubled as a share of net income and boosted equity capital. Industry equity was also augmented considerably by the revaluation of assets and liabilities that resulted from some large merger transactions, which in turn were accompanied by sizable increases in goodwill. Supported by solid profitability, bank holding company stocks again outperformed the S&P 500 during 2004 (chart 14). The spread of rates on subordinated debt over rates on comparable-maturity Treasury securities remained at very low levels in 2004 (chart 15). [GRAPHICS OMITTED] Interest Income and Expense Despite an increase in short-term market interest rates following the onset of monetary policy tightening in June of last year, the average rate paid on banks' liabilities and earned on banks' assets for 2004 as a whole moved lower. As the average rate earned declined more than the average rate paid, the industry's net interest margin narrowed for the second consecutive year, falling 12 basis points, to 3.66 percent (chart 16). Much of the narrowing came in the first half of 2004, however, and the net interest margin changed little over the second half of the year despite a considerable flattening of the yield curve. (14) [GRAPHIC OMITTED] The further narrowing of the net interest margin is also consistent with a reported increase of competitive pressure in the C&I loan market, which appears to have led some banks to trim spreads of loan rates over reference rates despite a pickup in loan demand (chart 17). In the October 2004 BLPS, banks were asked about the increase in competition in the C&I loan market. Respondents that had experienced greater competition during the year reported that the largest increase came from other U.S. commercial banks and that the second-largest increase, especially for the largest commercial banks, came from investment banks. About half of the respondents felt that the persistence of this shift in competition was not well established, but the majority of banks expressing an opinion indicated that the increase reflected a permanent change in the structure of the C&I loan market. In the January 2005 BLPS, banks were asked why nonbank lenders had become more aggressive competitors. Respondents pointed to the senior status of loans in bankruptcy and restructuring proceedings, increased liquidity in the secondary market, and a trend toward market-based pricing. [GRAPHIC OMITTED] The fall in the banking sector's net interest margin was driven by a decline of 25 basis points at the ten largest banks. These institutions rely on managed liabilities for their funding more than other banks do. (15) Because rates paid on these liabilities are more sensitive to changes in market interest rates than are rates paid on core deposits, the net interest margin at the ten largest banks was more adversely affected than that at other banks by the increase in short-term interest rates during 2004. The net interest margin at the ten largest banks was also eroded by continued runoffs of their C&I loans: Despite a pickup in business lending in the second half of the year, the share of interest-earning assets attributable to such loans fell from 15.9 percent to 12.6 percent over the year at the ten largest banks. The large drop was only partially offset by a shift toward higher-yielding loans, such as credit card loans. The ten largest banks also increased their share of interest-earning assets that consisted of investment-account securities (including mortgage-backed securities); because rates of return on securities are generally lower than those on loans (in particular, C&I loans), this shift contributed to the narrowing of the net interest margin. At large banks, the average rate earned on assets was essentially unchanged, and the average rate paid on liabilities ticked down relative to 2003. As a result, the net interest margin for such banks was little changed. Large banks did not experience runoffs of C&I loans, and they benefited from an increase in the share of credit card loans, the yields on which are higher than those on other loans and were higher in 2004 than in 2003. In addition, these institutions boosted the share of interest-earning assets that consisted of relatively high-yielding real estate loans by 1.7 percentage points, to 36.5 percent; the increase was equally distributed between residential and commercial real estate loans. As with large banks, the net interest margin was little changed at medium-sized and small banks; the decline in the average rate paid on liabilities was about in line with the fall in the average rate earned on assets. Relative to larger banks, medium-sized and small banks benefited from their greater reliance on core deposits, whose rates adjust slowly to changes in market rates. In addition, these banks further increased the share of commercial real estate loans in their portfolios. Investing in these assets, which appear to have relatively higher yields than residential real estate loans, allowed them to limit the decline in the overall rate of return on their assets. (16) Non-interest Income and Expense Non-interest income grew 2.6 percent in 2004, a notable slowing from the previous year's 8.9 percent rise. An 11 percent increase at the ten largest banks was partially offset by an almost 4 percent contraction at large banks and by smaller declines at medium-sized and small banks. As a share of total revenue (chart 18, top panel), non-interest income edged down but remained within the range maintained over the past few years following the strong uptrend of the 1980s (not shown) and 1990s. Deposit fees continued to grow about in line with total revenue (chart 18, bottom panel), although the ratio of fees to deposits moved down for the second consecutive year (chart 19). A 12 percent rise in fiduciary income was likely attributable, in part, to gains in equity prices, which pushed up the value of assets held in bank trusts. Trading revenue contracted 13 percent, however, as income from interest rate exposures dropped sharply at the 100 largest banks. Growth in the "other" component of non-interest income declined more than 9 percentage points, to 1.6 percent. Revenue from investment banking activities was almost flat, and gains from sales of loans fell sharply across the industry, probably in part because of reduced mortgage originations. Positive contributions included an 11.5 percent rise in loan servicing fees as well as an increase in securitization income. The remaining component of other non-interest income--which includes, among other things, safe deposit box rent, rent and other income from other real estate owned, and income and fees from automated teller machines--increased about 4 percent. [GRAPHICS OMITTED] The rate of growth of non-interest expense increased almost 3 percentage points, to 8.3 percent, in 2004, lifting the ratio of non-interest expense to total revenue roughly 2 percentage points, to 60 percent (chart 20). The cost of premises and fixed assets as a share of revenue was essentially unchanged, and the number of branches continued to grow at a modest pace. Salary and benefit expenses grew 6.3 percent, a slightly slower rate than in 2003, and their ratio to total revenue edged up only a few basis points. The number of bank employees expanded roughly 3 percent, a touch higher than in 2003, but the growth of salaries and benefits per employee, which was about 6 percent in 2003, decelerated to 3.3 percent last year, and was about flat at the ten largest banks. [GRAPHIC OMITTED] The moderation in the growth of salaries and benefits was more than offset by a brisk rise in other non-interest expense, which increased about 1.5 percentage points as a share of total revenue, to 26.2 percent. An increase in nonrecurring charges--including merger-related expenses and litigation provisions related to settlements of alleged failures of corporate governance and conflicts of interest--contributed to the rise in other non-interest expense. Non-interest expense also was reportedly boosted somewhat by increased costs for regulatory compliance as banks responded to the Bank Secrecy Act, the USA Patriot Act, and the Sarbanes-Oxley Act. Loan Performance and Loss Provisioning The ongoing economic expansion and a further strengthening of household and business balance sheets contributed to the continued improvement of credit quality in 2004 and allowed banks to reduce their provisions for loan and lease losses. The debt-service burden of businesses continued to decline, while the financial obligations ratio of households, although still high, was below the peak reached at the end of 2002 (chart 21). Presumably reflecting these developments, delinquency rates for all major loan categories moved down, with that for C&I loans posting the largest decline. Delinquency rates on both residential and commercial real estate loans moved down further. Net charge-off rates for nearly all types of loans fell, and those for real estate loans dropped to historically low levels. Nonetheless, total net charge-offs surpassed provisioning, and so total reserves for loan and lease losses fell last year. But with asset quality improving, the ratio of reserves to net charge-offs and to delinquent loans both rose. [GRAPHIC OMITTED] C&I Loans The delinquency rate on C&I loans continued to decline during 2004; by the end of the year, it had fallen 1 percentage point, to 1.9 percent, the lowest level since the first quarter of 1999 (chart 22). The decline was driven primarily by developments at the 100 largest banks, as the substantial increase in such delinquencies at those entities in the aftermath of the 2001 economic slowdown receded. The net charge-off rate on these loans fell sharply, reaching 0.3 percent in the fourth quarter, the lowest level since the first quarter of 1998. As with delinquency rates, the improvement occurred mostly at the 100 largest banks. [GRAPHIC OMITTED] Banks were asked in the October 2004 BLPS about their outlook for C&I loan quality over the next year. The majority of respondents indicated that loan quality was likely to stabilize around current levels if economic activity progressed in line with consensus forecasts, while the remaining banks, on net, expected credit quality to continue to improve. Commercial Real Estate Loans The credit quality of commercial real estate loans improved further in 2004, even though rents on office buildings continued to contract (albeit at a slower pace). Vacancy rates in the office sector declined in 2004, although they remained elevated, and vacancy rates on retail properties remained relatively low. The delinquency rate on these loans fell 29 basis points, to 1.1 percent last year (chart 22). The net charge-off rate on such loans moved down during 2004 and, by year-end, was near zero across the banking industry. Loans to Households The credit quality of loans to households continued to improve last year. The delinquency rate on residential real estate loans fell 39 basis points, to 1.4 percent, the lowest level since the beginning of the 1990s (chart 23). The improvement was presumably aided in part by the lower loan costs afforded by continued, although slowing, mortgage refinancing. Net charge-off rates on residential real estate loans averaged 10 basis points for the year, and remained in the range that had prevailed over the past several years. Losses were probably restrained in part by rising house prices, which boosted borrowers' equity stakes in their homes and made foreclosures less costly for banks. [GRAPHIC OMITTED] Tracking a decline in the household bankruptcy rate, the delinquency rate on credit card loans fell about 40 basis points, to 4.1 percent, in the fourth quarter of last year, the lowest level since the first quarter of 1996 (charts 23 and 24). The delinquency rate on other consumer loans fell as well, to 2.3 percent, in the fourth quarter (chart 23). On average in 2004, charge-off rates on credit card loans were down 75 basis points, to almost 5 percent, while charge-off rates on other consumer loans were essentially unchanged. [GRAPHIC OMITTED] Securitized Loans A decline in the delinquency rates on securitized loans on which banks retained servicing rights or provided credit enhancements--a large majority of these loans are to households--also pointed to an improvement in credit quality. The delinquency rate on securitized credit card receivables was 3.9 percent in the fourth quarter of 2004, down more than 70 basis points from the previous year and below the delinquency rate on loans held on banks' books. Despite an uptick in the fourth quarter, the delinquency rate on securitized residential real estate loans averaged 4 percent in 2004, about 50 basis points less than in 2003. The delinquency rate on securitized auto loans averaged 1 percent, about 40 basis points below the average rate in 2003. Loss Provisioning With the further improvement in overall credit quality in 2004, banks in all size classes continued to reduce provisions for loan and lease losses. The biggest reduction was at the ten largest banks, and a few of those institutions posted negative provisions for one or more quarters in 2004. The ratio of provisions for loan and lease losses to total revenue fell to the lowest level since the mid-1990s (chart 25), and the ratio of provisions to loans moved down for the third consecutive year. [GRAPHIC OMITTED] Net charge-offs exceeded provisioning in 2004, so reserves for loan and lease losses declined roughly 4 percent, and the ratio of such reserves to loans fell to 1.6 percent, the lowest level since the beginning of the 1990s (chart 26). Nonetheless, with the continued improvement in credit quality, the ratio of reserves to delinquent loans moved up about 10 percentage points, to 85 percent, the top end of its recent range. Reserves rose noticeably as a share of net charge-offs as well, surpassing the level that prevailed before the economic slowdown. [GRAPHIC OMITTED] INTERNATIONAL OPERATIONS OF U.S. COMMERCIAL BANKS The share of bank assets booked in foreign offices increased about 40 basis points, to 11.4 percent, in 2004. The dollar volume of exposure to selected East Asian countries about doubled, mostly because of the acquisition of a Korean bank by a large U.S. commercial bank (table 2, memo item). Exposure to eastern Europe expanded briskly, while exposure to India grew a bit less than in the previous year. A rise in exposure to Latin American countries after two years of contraction was mostly attributable to rising exposure to Brazil. As a share of tier 1 capital, exposure to selected East Asian countries surged, while exposure to Latin America fell a bit. The share of net income due to foreign operations rose almost 1 percentage point, to 7.9 percent (data not shown in table), but it continued to be well below the levels reached in the mid-1990s. As was the case domestically, lower provisioning for loan and lease losses was an important contributor to the gain in earnings from foreign operations. RECENT DEVELOPMENTS In the first few months of 2005, output grew at a moderate pace, and labor market conditions continued to improve gradually. Although oil prices and overall inflation pressures picked up during the first quarter, longer-term inflationary expectations remained well contained. Against this backdrop, the Federal Open Market Committee decided to raise its target for the federal funds rate 25 basis points at each of its first two meetings in 2005. Longer-term interest rates rose appreciably--the ten-year Treasury rate rose 24 basis points in the first quarter, and the rate on thirty-year fixed-rate mortgages rose 16 basis points. Data from the Federal Reserve's H.8 statistical release indicate that the growth of bank credit accelerated to a double-digit pace in the first three months of 2005 and that C&I lending and revolving home equity loans were particularly strong. Securities holdings also expanded rapidly, as domestically chartered banks continued to accumulate mortgage-backed securities in investment accounts. Core deposits were about flat, on balance, in early 2005. As a consequence, banks continued to ramp up large time deposits and other liabilities at a brisk rate. Profitability at large bank holding companies generally remained robust in the first quarter of 2005. Profits were boosted by hefty revenues from trading and mortgage servicing, while additional gains in asset quality allowed these institutions to reduce further their loan loss reserves. On the other hand, many institutions reported tighter net interest margins, and increased competition in the credit card market further squeezed profits for some issuers. Nonrecurring expenses also damped profitability in some cases. Despite banks' strong balance sheets and robust profitability in recent quarters, bank stock prices declined in the first quarter of 2005; the American Banker stock index of the 225 banks with the highest market value underperformed the S&P 500 stock index by almost 11 percent. In large part, the weakness in bank stocks likely reflected investor concerns about future profitability because of rising interest rates and a consequent slowing in the pace of the expansion. In contrast to 2004, merger activity was relatively quiet in the first part of 2005.
1. Annual rates of growth of balance sheet items, 1995-2004
Percent
Item 1995 1996 1997 1998
Assets 7.59 6.13 9.22 8.18
Interest-earning assets 7.82 5.82 8.66 8.20
Loans and leases (net) 10.61 8.17 5.32 8.76
Commercial and industrial 12.25 7.24 12.02 12.94
Real estate 8.28 5.45 9.30 7.99
Booked in domestic
offices 8.43 5.51 9.53 7.97
One- to four-family
residential 10.01 4.66 9.67 6.36
Other 6.21 6.75 9.32 10.29
Booked in foreign offices 2.81 3.18 .34 8.79
Consumer 10.01 5.12 -2.19 .34
Other loans and leases 14.22 22.28 -7.91 13.95
Loan-loss reserves and
unearned income .46 .04 -.45 3.11
Securities .56 .86 8.85 8.40
Investment account -1.58 -1.10 8.66 12.06
U.S. Treasury -19.21 -14.28 -8.85 -25.17
U.S. government agency
and corporation
obligations 6.42 3.63 14.18 17.00
Other 4.19 1.83 11.21 26.99
Trading account 18.51 14.44 10.00 -13.32
Other 8.61 1.06 38.54 3.79
Non-interest-earning assets 6.06 8.29 13.03 8.10
Liabilities 7.22 5.99 9.11 8.06
Core deposits 3.94 4.13 4.52 7.04
Transaction deposits -3.11 -3.44 -4.55 -1.41
Savings and small time deposits 8.35 8.35 9.04 10.73
Managed liabilities (1) 10.61 9.73 13.79 9.44
Deposits booked in foreign
offices 5.13 4.27 11.13 8.71
Large time 19.60 21.17 20.15 9.09
Subordinated notes and
debentures 6.61 17.74 21.05 17.00
Other managed liabilities 11.63 8.38 12.14 9.49
Federal Home Loan Bank
advances n.a. n.a. n.a. n.a.
Other 20.49 2.60 23.80 8.57
Equity capital 12.06 7.77 10.44 9.53
MEMO
Commercial real estate loans (2) 6.32 7.67 10.13 11.37
Mortgage-backed securities .66 2.06 14.16 22.12
Item 1999 2000 2001 2002
Assets 5.44 8.76 5.12 7.19
Interest-earning assets 5.83 8.66 3.95 7.54
Loans and leases (net) 8.03 9.24 1.82 5.90
Commercial and industrial 7.88 8.54 -6.73 -7.41
Real estate 12.22 10.74 7.94 14.43
Booked in domestic
offices 12.36 11.02 8.02 14.85
One- to four-family
residential 9.70 9.28 5.70 19.85
Other 16.06 13.31 10.95 8.81
Booked in foreign offices 6.28 -1.62 3.97 -7.41
Consumer -1.49 8.04 4.16 6.58
Other loans and leases 6.71 7.01 -2.02 -.02
Loan-loss reserves and
unearned income 2.34 7.99 13.15 5.74
Securities 5.11 6.36 7.22 16.20
Investment account 6.68 2.86 8.88 13.54
U.S. Treasury -1.89 -32.72 -40.27 41.92
U.S. government agency
and corporation
obligations 1.83 3.75 12.84 18.10
Other 20.90 13.39 12.18 2.72
Trading account -6.93 37.16 -3.72 36.02
Other -8.37 10.30 13.00 -2.92
Non-interest-earning assets 2.90 9.45 12.81 5.06
Liabilities 5.58 8.59 4.45 7.12
Core deposits .23 7.53 10.55 7.58
Transaction deposits -8.97 -1.31 10.20 -5.12
Savings and small time deposits 3.80 10.54 10.66 11.42
Managed liabilities (1) 15.54 8.79 -2.73 5.34
Deposits booked in foreign
offices 14.60 7.84 -10.96 4.49
Large time 14.19 19.37 -3.65 5.05
Subordinated notes and
debentures 5.07 13.98 9.56 -.59
Other managed liabilities 17.76 3.90 2.47 6.55
Federal Home Loan Bank
advances n.a. n.a. n.a. 17.21
Other -6.37 15.40 3.10 13.55
Equity capital 3.89 10.65 12.32 7.83
MEMO
Commercial real estate loans (2) 15.42 12.16 13.10 6.82
Mortgage-backed securities -3.34 3.29 29.05 15.56
MEMO:
Dec.
2004
(billions
of
Item 2003 2004 dollars)
Assets 7.19 10.77 8,258
Interest-earning assets 7.29 11.29 7,157
Loans and leases (net) 6.52 11.21 4,736
Commercial and industrial -4.56 4.40 899
Real estate 9.78 15.38 2,595
Booked in domestic
offices 9.68 15.05 2,547
One- to four-family
residential 10.05 15.79 1,468
Other 9.20 14.07 1,079
Booked in foreign offices 15.74 35.59 48
Consumer 9.31 10.12 782
Other loans and leases 8.30 3.64 533
Loan-loss reserves and
unearned income -2.68 -4.19 73
Securities 9.44 10.58 1,838
Investment account 8.70 6.15 1,510
U.S. Treasury 14.18 -15.86 61
U.S. government agency
and corporation
obligations 9.67 9.47 989
Other 5.98 3.01 461
Trading account 14.05 36.80 328
Other 6.83 14.31 584
Non-interest-earning assets 6.62 7.54 1,101
Liabilities 7.25 9.54 7,428
Core deposits 7.30 8.24 3,974
Transaction deposits 2.90 3.18 744
Savings and small time deposits 8.43 9.48 3,230
Managed liabilities (1) 6.97 12.06 2,911
Deposits booked in foreign
offices 12.63 16.84 865
Large time 1.43 21.82 705
Subordinated notes and
debentures 5.08 10.49 109
Other managed liabilities 6.62 4.42 1,232
Federal Home Loan Bank
advances 3.74 3.68 244
Other 8.38 6.06 543
Equity capital 6.61 23.16 830
MEMO
Commercial real estate loans (2) 8.99 13.81 1,075
Mortgage-backed securities 10.10 13.01 861
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 or 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, 1998-2004
Percent
Eastern
Europe
and
Russia
Selected
Bank and year Asian India All
countries (1)
All
1998 15.49 2.35 3.49
1999 14.37 2.39 2.85
2000 13.17 2.63 4.35
2001 12.09 2.55 4.29
2002 11.44 2.74 5.53
2003 11.15 3.86 5.44
2004 20.33 4.16 6.09
Money center and other large banks
1998 24.02 4.19 5.61
1999 20.73 3.56 4.25
2000 19.98 4.14 6.83
2001 17.88 3.86 6.47
2002 16.96 4.18 8.17
2003 16.98 5.93 8.41
2004 30.95 6.31 9.34
Other banks
1998 2.08 .05 .16
1999 1.75 .07 .08
2000 1.41 .03 .08
2001 1.07 .06 .14
2002 1.03 .08 .65
2003 .90 .24 .21
2004 .90 .21 .14
Memo
Total exposure (billions of dollars)
1998 37.87 5.43 8.53
1999 37.45 6.23 7.43
2000 37.30 7.46 12.33
2001 36.32 7.66 12.88
2002 36.32 8.70 17.55
2003 39.12 13.55 19.07
2004 79.57 16.27 23.85
Eastern
Europe
and
Russia Latin America
Bank and year Russia All Mexico
All
1998 .43 42.93 9.88
1999 .37 39.00 9.50
2000 .49 37.88 9.08
2001 .60 54.06 25.97
2002 1.06 38.90 20.80
2003 1.48 32.85 17.95
2004 1.54 31.78 16.65
Money center and other large banks
1998 .68 64.20 14.10
1999 .55 53.90 12.62
2000 .77 54.98 12.69
2001 .91 79.08 34.54
2002 1.63 57.32 31.14
2003 2.29 49.19 27.13
2004 2.36 46.96 24.99
Other banks
1998 .00 9.51 3.24
1999 .01 9.41 3.31
2000 .00 8.35 2.84
2001 .00 6.45 2.04
2002 .00 5.00 1.86
2003 .06 4.20 1.53
2004 .04 4.00 1.39
Memo
Total exposure (billions of dollars)
1998 1.05 104.69 24.15
1999 .95 101.63 24.77
2000 1.39 107.31 25.71
2001 1.80 162.39 78.00
2002 3.37 123.53 66.15
2003 5.20 115.23 62.98
2004 6.02 124.39 65.17
Latin America
Bank and year Argentina Brazil Total
All
1998 9.66 11.27 64.26
1999 9.40 10.49 58.61
2000 8.41 11.15 58.03
2001 6.61 2.99 72.99
2002 2.44 8.36 58.61
2003 1.73 6.77 53.30
2004 1.47 6.51 62.36
Money center and other large banks
1998 15.19 17.04 98.02
1999 13.63 14.53 82.44
2000 12.68 16.40 85.93
2001 9.79 18.74 107.29
2002 3.65 12.38 86.63
2003 2.64 10.02 80.51
2004 2.22 9.59 93.56
Other banks
1998 .97 .00 11.80
1999 1.01 2.47 11.31
2000 1.04 2.08 9.87
2001 .57 2.05 7.72
2002 .02 .96 6.76
2003 .13 1.05 5.55
2004 .09 .85 5.25
Memo
Total exposure (billions of dollars)
1998 23.62 27.55 156.52
1999 24.51 27.34 152.74
2000 23.82 31.59 164.40
2001 19.87 39.01 219.25
2002 7.75 26.55 186.10
2003 6.07 23.74 186.97
2004 5.75 25.46 244.07
NOTE. For the definition of tier 1 capital, see text note 10.
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.
The year-end 2004 data cover seventy banks with a total of $391.4
billion in tier 1 capital; of these institutions, five were money
center banks, with $195.9 billion in tier 1 capital, and four were
other large banks, with $57.2 billion in tier 1 capital; the
remaining sixty-one ("other") banks had $138.3 billion in tier 1
capital. The average "other" bank at year-end 2004 had $29 billion
in assets.
(1.) Indonesia, Korea, Malaysia, Philippines, and Thailand.
SOURCE. Federal Financial Institutions Examination Council Statistical
Release E.16, "Country Exposure Lending Survey," available at
www.ffiec.gov/E16.htm.
A.1. Portfolio composition, interest rates, and income and expense, all U.S. banks, 1995-2004
A. All banks
Item 1995 1996 1997 1998
Balance sheet items as a
percentage of average net
consolidated assets
Interest-earning assets 86.98 87.38 87.15 86.76
Loans and leases, net 58.39 59.91 58.72 58.33
Commercial and industrial 15.20 15.59 15.77 16.36
U.S. addressees 12.87 13.06 13.17 13.61
Foreign addressees 2.33 2.53 2.60 2.75
Consumer 12.12 12.27 11.50 10.41
Credit card 4.73 4.93 4.62 4.02
Installment and other 7.39 7.34 6.88 6.39
Real estate 25.00 25.04 25.00 24.85
In domestic offices 24.36 24.42 24.39 24.28
Construction and land
development 1.59 1.63 1.73 1.86
Farmland .56 .56 .55 .55
One- to four-family
residential 14.41 14.42 14.41 14.25
Home equity 1.88 1.85 1.94 1.89
Other 12.54 12.57 12.47 12.37
Multifamily residential .81 .85 .83 .82
Nonfarm nonresidential 6.97 6.96 6.88 6.80
In foreign offices .65 .63 .61 .57
To depository institutions
and acceptances
of other banks 1.92 2.33 1.93 1.91
Foreign governments .30 .26 .18 .15
Agricultural production .96 .92 .90 .89
Other loans 3.11 3.32 2.80 2.78
Lease-financing receivables 1.19 1.51 1.87 2.13
LESS: Unearned income on
loans -.14 -.12 -.09 -.07
LESS: Loss reserves (1) -1.27 -1.21 -1.13 -1.07
Securities 21.94 21.00 20.40 20.37
Investment account 19.38 18.19 17.23 17.48
Debt 18.97 17.74 16.74 16.93
U.S. Treasury 5.25 4.19 3.38 2.71
U.S. government agency
and corporation
obligations 9.81 9.74 9.73 10.28
Government-backed
mortgage pools 4.46 4.80 4.93 5.16
Collateralized
mortgage
obligations 2.67 2.11 1.93 2.12
Other 2.68 2.83 2.86 2.99
State and local
government 1.80 1.68 1.59 1.57
Private mortgage-
backed securities .62 .61 .50 .67
Other 1.49 1.51 1.54 1.70
Equity .41 .45 .50 .55
Trading account 2.55 2.81 3.16 2.90
Gross federal funds sold and
reverse RPs 3.93 3.81 5.18 5.37
Interest-bearing balances at
depositories 2.73 2.66 2.86 2.69
Non-interest-earning assets 13.02 12.62 12.85 13.24
Revaluation gains held in
trading accounts 2.90 2.24 2.59 2.95
Other 10.12 10.37 10.26 10.29
Liabilities 91.99 91.73 91.57 91.51
Interest-bearing liabilities 71.87 71.63 71.37 71.33
Deposits 56.28 55.83 54.96 54.62
In foreign offices 10.27 10.01 10.01 10.14
In domestic offices 46.01 45.83 44.95 44.48
Other checkable
deposits 6.63 4.75 3.61 3.11
Savings (including
MMDAs) 17.47 18.70 19.11 19.89
Small-denomination
time deposits 16.14 15.96 15.16 14.14
Large-denomination
time deposits 5.77 6.41 7.07 7.33
Gross federal funds
purchased and RPs 7.70 7.18 8.13 7.98
Other 7.88 8.62 8.27 8.73
Non-interest-bearing
liabilities 20.12 20.10 20.20 20.17
Demand deposits in
domestic offices 12.68 12.81 12.15 10.99
Revaluation losses held in
trading accounts 2.88 2.14 2.64 2.97
Other 4.57 5.14 5.41 6.21
Capital account 8.01 8.27 8.43 8.49
MEMO
Commercial real estate loans 9.83 9.91 9.98 10.11
Other real estate owned .19 .14 .11 .08
Managed liabilities 32.10 32.77 34.13 34.97
Federal Home Loan Bank
advances n.a. n.a. n.a. n.a.
Average net consolidated
assets (billions of dollars) 4,149 4,379 4,737 5,148
Effective interest rate
(percent) (2)
Rates earned
Interest-earning assets 8.33 8.16 8.17 8.02
Taxable equivalent 8.41 8.22 8.23 8.07
Loans and leases, gross 9.25 9.01 9.03 8.85
Net of loss provisions 8.93 8.56 8.50 8.30
Securities 6.51 6.46 6.54 6.45
Taxable equivalent 6.73 6.66 6.73 6.63
Investment account 6.35 6.39 6.50 6.38
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 7.73 6.86 6.75 6.85
Gross federal funds sold and
reverse RPs 5.63 5.21 5.45 5.29
Interest-bearing balances at
depositories 6.84 6.20 6.23 6.32
Rates paid
Interest-bearing liabilities 4.99 4.82 4.92 4.88
Interest-bearing deposits 4.47 4.34 4.39 4.31
In foreign offices 6.12 5.54 5.44 5.66
In domestic offices 4.11 4.07 4.16 4.01
Other checkable deposits 2.06 2.04 2.25 2.29
Savings (including
MMDAs) 3.19 3.00 2.93 2.79
Large time deposits (3) 5.47 5.39 5.45 5.22
Other time deposits (3) 5.44 5.40 5.54 5.48
Gross federal funds
purchased and RPs 5.65 5.12 5.17 5.19
Other interest-bearing
liabilities 7.45 6.92 6.94 6.89
Income and expense as a
percentage of average net
consolidated assets
Gross interest income 7.29 7.16 7.15 6.99
Taxable equivalent 7.35 7.22 7.21 7.04
Loans 5.48 5.48 5.41 5.27
Securities 1.23 1.16 1.11 1.10
Gross federal funds sold and
reverse RPs .23 .21 .29 .29
Other .35 .32 .35 .32
Gross interest expense 3.57 3.43 3.48 3.46
Deposits 2.54 2.46 2.48 2.43
Gross federal funds
purchased and RPs .44 .38 .43 .43
Other .58 .59 .57 .60
Net interest income 3.72 3.73 3.68 3.53
Taxable equivalent 3.79 3.79 3.73 3.57
Loss provisioning (4) .31 .37 .41 .42
Non-interest income 2.02 2.18 2.23 2.40
Service charges on deposits .39 .39 .39 .38
Fiduciary activities .31 .33 .35 .37
Trading revenue .15 .17 .17 .15
Interest rate exposures n.a. .09 .08 .05
Foreign exchange rate
exposures n.a. .06 .08 .09
Other commodity and equity
exposures n.a. .02 * .01
Other 1.17 1.29 1.32 1.49
Non-interest expense 3.64 3.71 3.61 3.77
Salaries, wages, and
employee benefits 1.54 1.55 1.53 1.55
Occupancy .48 .48 .47 .47
Other 1.62 1.69 1.62 1.75
Net non-interest expense 1.62 1.54 1.38 1.36
Gains on investment account
securities .01 .03 .04 .06
Income before taxes and
extraordinary items 1.81 1.85 1.92 1.81
Taxes .63 .65 .68 .62
Extraordinary items, net of
income taxes * * * .01
Net income 1.18 1.20 1.25 1.20
Cash dividends declared .75 .90 .90 .80
Retained income .43 .30 .35 .40
MEMO: Return on equity 14.69 14.51 14.83 14.08
Item 1999 2000 2001
Balance sheet items as a
percentage of average net
consolidated assets
Interest-earning assets 87.03 87.13 86.48
Loans and leases, net 59.34 60.48 58.95
Commercial and industrial 17.07 17.16 16.08
U.S. addressees 14.43 14.67 13.69
Foreign addressees 2.64 2.49 2.39
Consumer 9.71 9.38 9.23
Credit card 3.51 3.52 3.63
Installment and other 6.20 5.87 5.60
Real estate 25.44 27.04 27.10
In domestic offices 24.87 26.49 26.60
Construction and land
development 2.18 2.51 2.85
Farmland .56 .56 .55
One- to four-family
residential 14.10 14.96 14.67
Home equity 1.76 1.96 2.18
Other 12.34 13.00 12.49
Multifamily residential .88 .99 .97
Nonfarm nonresidential 7.15 7.48 7.56
In foreign offices .57 .54 .50
To depository institutions
and acceptances
of other banks 1.96 1.87 1.83
Foreign governments .16 .12 .10
Agricultural production .83 .78 .75
Other loans 2.75 2.58 2.34
Lease-financing receivables 2.52 2.63 2.58
LESS: Unearned income on
loans -.06 -.05 -.04
LESS: Loss reserves (1) -1.04 -1.02 -1.04
Securities 20.40 20.01 19.53
Investment account 18.33 17.59 16.82
Debt 17.73 16.93 16.48
U.S. Treasury 2.14 1.66 .85
U.S. government agency
and corporation
obligations 10.85 10.31 10.08
Government-backed
mortgage pools 5.24 4.75 5.13
Collateralized
mortgage
obligations 2.15 1.92 1.95
Other 3.46 3.63 2.99
State and local
government 1.62 1.52 1.49
Private mortgage-
backed securities .88 .95 1.09
Other 2.24 2.48 2.98
Equity .61 .66 .34
Trading account 2.06 2.43 2.72
Gross federal funds sold and
reverse RPs 4.61 4.12 5.11
Interest-bearing balances at
depositories 2.68 2.52 2.89
Non-interest-earning assets 12.97 12.87 13.52
Revaluation gains held in
trading accounts 2.57 2.28 2.37
Other 10.40 10.58 11.15
Liabilities 91.52 91.58 91.25
Interest-bearing liabilities 72.52 73.30 72.47
Deposits 54.78 54.66 54.59
In foreign offices 10.46 10.92 10.18
In domestic offices 44.32 43.74 44.42
Other checkable
deposits 2.81 2.46 2.36
Savings (including
MMDAs) 21.00 20.64 22.28
Small-denomination
time deposits 13.10 12.49 11.59
Large-denomination
time deposits 7.42 8.16 8.18
Gross federal funds
purchased and RPs 7.97 7.83 7.95
Other 9.76 10.81 9.92
Non-interest-bearing
liabilities 19.00 18.28 18.78
Demand deposits in
domestic offices 9.78 8.61 8.00
Revaluation losses held in
trading accounts 2.52 2.29 2.21
Other 6.70 7.37 8.57
Capital account 8.48 8.42 8.75
MEMO
Commercial real estate loans 10.87 11.58 12.09
Other real estate owned .06 .05 .05
Managed liabilities 36.59 38.83 37.42
Federal Home Loan Bank
advances n.a. n.a. 2.89
Average net consolidated
assets (billions of dollars) 5,439 5,906 6,334
Effective interest rate
(percent) (2)
Rates earned
Interest-earning assets 7.71 8.20 7.38
Taxable equivalent 7.76 8.26 7.43
Loans and leases, gross 8.47 9.00 8.16
Net of loss provisions 7.97 8.33 7.15
Securities 6.27 6.47 6.05
Taxable equivalent 6.46 6.65 6.23
Investment account 6.25 6.45 6.05
U.S. Treasury securities
and U.S. government
agency obligations
(excluding MBS) n.a. n.a. 5.76
Mortgage-backed
securities n.a. n.a. 6.45
Other n.a. n.a. 5.60
Trading account 6.47 6.63 6.08
Gross federal funds sold and
reverse RPs 4.78 5.56 3.86
Interest-bearing balances at
depositories 5.95 6.48 4.01
Rates paid
Interest-bearing liabilities 4.47 5.17 4.15
Interest-bearing deposits 3.87 4.45 3.61
In foreign offices 4.91 5.61 3.95
In domestic offices 3.63 4.17 3.54
Other checkable deposits 2.08 2.34 1.96
Savings (including
MMDAs) 2.49 2.86 2.19
Large time deposits (3) 4.92 5.78 5.04
Other time deposits (3) 5.09 5.69 5.43
Gross federal funds
purchased and RPs 4.73 5.77 3.84
Other interest-bearing
liabilities 6.48 6.97 5.92
Income and expense as a
percentage of average net
consolidated assets
Gross interest income 6.73 7.18 6.39
Taxable equivalent 6.78 7.22 6.43
Loans 5.12 5.53 4.92
Securities 1.14 1.15 1.00
Gross federal funds sold and
reverse RPs .23 .23 .20
Other .24 .27 .27
Gross interest expense 3.22 3.76 2.98
Deposits 2.20 2.56 2.09
Gross federal funds
purchased and RPs .39 .45 .31
Other .63 .75 .58
Net interest income 3.51 3.41 3.41
Taxable equivalent 3.56 3.46 3.45
Loss provisioning (4) .39 .50 .68
Non-interest income 2.66 2.59 2.53
Service charges on deposits .40 .40 .42
Fiduciary activities .38 .38 .35
Trading revenue .19 .21 .20
Interest rate exposures .07 .08 .10
Foreign exchange rate
exposures .09 .08 .07
Other commodity and equity
exposures .03 .04 .03
Other 1.69 1.61 1.56
Non-interest expense 3.76 3.66 3.57
Salaries, wages, and
employee benefits 1.58 1.51 1.49
Occupancy .48 .45 .44
Other 1.70 1.70 1.64
Net non-interest expense 1.11 1.07 1.04
Gains on investment account
securities * -.04 .07
Income before taxes and
extraordinary items 2.02 1.81 1.76
Taxes .72 .63 .59
Extraordinary items, net of
income taxes * * -.01
Net income 1.31 1.18 1.17
Cash dividends declared .96 .89 .87
Retained income .35 .29 .30
MEMO: Return on equity 15.39 13.97 13.34
Item 2002 2003 2004
Balance sheet items as a
percentage of average net
consolidated assets
Interest-earning assets 86.42 86.08 86.90
Loans and leases, net 57.83 56.88 56.98
Commercial and industrial 14.07 12.18 11.06
U.S. addressees 12.04 10.48 9.52
Foreign addressees 2.04 1.70 1.54
Consumer 9.35 9.06 9.18
Credit card 3.78 3.55 3.87
Installment and other 5.57 5.51 5.31
Real estate 28.39 29.91 30.78
In domestic offices 27.91 29.46 30.25
Construction and land
development 2.98 2.99 3.25
Farmland .56 .54 .54
One- to four-family
residential 15.40 16.96 17.42
Home equity 2.80 3.40 4.34
Other 12.60 13.57 13.09
Multifamily residential 1.02 1.05 1.06
Nonfarm nonresidential 7.95 7.91 7.97
In foreign offices .48 .46 .53
To depository institutions
and acceptances
of other banks 1.87 1.98 2.11
Foreign governments .09 .08 .08
Agricultural production .70 .63 .59
Other loans 2.06 2.00 2.35
Lease-financing receivables 2.44 2.11 1.79
LESS: Unearned income on
loans -.05 -.04 -.04
LESS: Loss reserves (1) -1.11 -1.04 -.91
Securities 21.27 21.89 22.57
Investment account 18.30 18.97 18.99
Debt 17.99 18.72 18.79
U.S. Treasury .78 .90 .89
U.S. government agency
and corporation
obligations 11.46 12.26 12.37
Government-backed
mortgage pools 6.09 6.75 7.13
Collateralized
mortgage
obligations 2.35 2.34 2.01
Other 3.02 3.17 3.22
State and local
government 1.49 1.48 1.41
Private mortgage-
backed securities 1.25 1.30 1.41
Other 3.01 2.78 2.72
Equity .31 .25 .20
Trading account 2.97 2.93 3.59
Gross federal funds sold and
reverse RPs 4.81 4.85 4.58
Interest-bearing balances at
depositories 2.51 2.45 2.76
Non-interest-earning assets 13.58 13.92 13.10
Revaluation gains held in
trading accounts 2.42 2.70 2.19
Other 11.16 11.22 10.91
Liabilities 90.85 90.96 90.57
Interest-bearing liabilities 71.20 70.48 71.58
Deposits 53.87 53.34 54.14
In foreign offices 8.92 8.90 9.72
In domestic offices 44.95 44.44 44.42
Other checkable
deposits 2.39 2.47 2.53
Savings (including
MMDAs) 24.92 26.12 27.14
Small-denomination
time deposits 10.13 8.65 7.63
Large-denomination
time deposits 7.51 7.19 7.13
Gross federal funds
purchased and RPs 7.77 7.75 7.24
Other 9.56 9.39 10.20
Non-interest-bearing
liabilities 19.66 20.48 18.98
Demand deposits in
domestic offices 7.67 7.27 6.58
Revaluation losses held in
trading accounts 2.09 2.30 1.95
Other 9.90 10.92 10.45
Capital account 9.15 9.04 9.43
MEMO
Commercial real estate loans 12.57 12.47 12.78
Other real estate owned .06 .06 .06
Managed liabilities 35.05 34.61 35.69
Federal Home Loan Bank
advances 3.17 3.19 3.07
Average net consolidated
assets (billions of dollars) 6,635 7,249 7,879
Effective interest rate
(percent) (2)
Rates earned
Interest-earning assets 6.11 5.30 5.11
Taxable equivalent 6.16 5.34 5.15
Loans and leases, gross 6.90 6.16 5.92
Net of loss provisions 5.85 5.48 5.48
Securities 4.96 3.96 3.89
Taxable equivalent 5.12 4.10 4.02
Investment account 5.04 4.00 3.96
U.S. Treasury securities
and U.S. government
agency obligations
(excluding MBS) 4.42 3.29 3.11
Mortgage-backed
securities 5.44 4.24 4.38
Other 4.74 4.08 3.76
Trading account 4.47 3.70 3.51
Gross federal funds sold and
reverse RPs 1.93 1.43 1.43
Interest-bearing balances at
depositories 2.79 2.09 1.98
Rates paid
Interest-bearing liabilities 2.54 1.87 1.77
Interest-bearing deposits 2.12 1.48 1.37
In foreign offices 2.38 1.64 1.77
In domestic offices 2.07 1.45 1.29
Other checkable deposits 1.06 .75 .77
Savings (including
MMDAs) 1.13 .74 .72
Large time deposits (3) 3.37 2.59 2.35
Other time deposits (3) 3.73 2.91 2.56
Gross federal funds
purchased and RPs 1.88 1.30 1.55
Other interest-bearing
liabilities 4.32 3.59 3.26
Income and expense as a
percentage of average net
consolidated assets
Gross interest income 5.28 4.55 4.44
Taxable equivalent 5.32 4.59 4.48
Loans 4.07 3.56 3.42
Securities .89 .74 .74
Gross federal funds sold and
reverse RPs .09 .07 .07
Other .22 .18 .21
Gross interest expense 1.79 1.30 1.26
Deposits 1.23 .87 .81
Gross federal funds
purchased and RPs .15 .10 .12
Other .41 .33 .33
Net interest income 3.48 3.25 3.18
Taxable equivalent 3.53 3.28 3.22
Loss provisioning (4) .68 .45 .30
Non-interest income 2.54 2.53 2.39
Service charges on deposits .45 .44 .42
Fiduciary activities .33 .31 .32
Trading revenue .16 .16 .13
Interest rate exposures .08 .06 .01
Foreign exchange rate
exposures .07 .07 .08
Other commodity and equity
exposures .01 .02 .04
Other 1.61 1.63 1.52
Non-interest expense 3.47 3.36 3.34
Salaries, wages, and
employee benefits 1.51 1.50 1.46
Occupancy .44 .43 .42
Other 1.52 1.43 1.46
Net non-interest expense .93 .82 .95
Gains on investment account
securities .10 .08 .05
Income before taxes and
extraordinary items 1.97 2.05 1.98
Taxes .65 .67 .63
Extraordinary items, net of
income taxes * .01 *
Net income 1.32 1.39 1.34
Cash dividends declared 1.01 1.07 .76
Retained income .30 .31 .59
MEMO: Return on equity 14.41 15.33 14.23
* In absolute value, less than .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.) When possible, based on the average of quarterly balance
sheet data reported on schedule RC-K of the quarterly Call Report.
(3.) Before 1997, large time open accounts included in other time
deposits.
(4.) Includes provisions for allocated transfer risk.
B. Ten largest banks by assets
Item 1995 1996 1997 1998
Balance sheet items as a
percentage of average net
consolidated assets
Interest-earning assets 77.12 80.12 81.84 81.25
Loans and leases, net 50.05 53.51 50.91 50.76
Commercial and industrial 16.16 17.17 16.90 18.07
U.S. addressees 8.66 9.59 10.24 11.76
Foreign addressees 7.50 7.59 6.66 6.31
Consumer 6.60 6.22 6.40 6.04
Credit card 1.96 1.23 1.34 1.30
Installment and other 4.65 4.99 5.06 4.74
Real estate 15.82 16.53 17.42 16.51
In domestic offices 13.48 14.44 15.69 15.08
Construction and land
development .58 .51 .68 .77
Farmland .06 .06 .09 .09
One- to four-family
residential 9.62 10.43 11.02 10.33
Home equity 1.40 1.53 1.70 1.72
Other 8.22 8.90 9.31 8.61
Multifamily residential .38 .38 .39 .38
Nonfarm nonresidential 2.83 3.05 3.52 3.51
In foreign offices 2.35 2.09 1.73 1.43
To depository institutions
and acceptances
of other banks 5.04 6.14 4.20 4.05
Foreign governments .90 .69 .45 .35
Agricultural production .21 .23 .31 .28
Other loans 5.76 6.34 4.15 3.74
Lease-financing receivables 1.14 1.59 2.24 2.81
LESS: Unearned income on
loans -.14 -.11 -.07 -.06
LESS: Loss reserves (1) -1.45 -1.30 -1.08 -1.01
Securities 19.53 19.83 20.00 19.72
Investment account 10.65 10.60 10.97 12.12
Debt 10.27 10.22 10.55 11.64
U.S. Treasury 2.03 1.93 1.56 1.70
U.S. government agency
and corporation
obligations 4.46 4.59 5.34 6.31
Government-backed
mortgage pools 2.89 3.58 4.26 5.13
Collateralized
mortgage
obligations 1.50 .95 .93 .93
Other .08 .06 .15 .26
State and local
government .49 .39 .51 .47
Private mortgage-
backed securities .32 .30 .32 .60
Other 2.97 3.01 2.81 2.57
Equity .38 .38 .42 .47
Trading account 8.88 9.23 9.03 7.60
Gross federal funds sold and
reverse RPs 3.20 3.10 7.56 7.81
Interest-bearing balances at
depositories 4.34 3.68 3.37 2.96
Non-interest-earning assets 22.88 19.88 18.16 18.75
Revaluation gains held in
trading accounts 10.77 7.63 7.36 7.62
Other 12.11 12.25 10.80 11.13
Liabilities 93.59 93.04 92.61 92.58
Interest-bearing liabilities 63.37 64.45 65.83 65.81
Deposits 47.49 47.87 47.36 47.65
In foreign offices 28.36 26.41 22.18 20.17
In domestic offices 19.12 21.46 25.18 27.48
Other checkable
deposits 2.30 1.61 1.21 .99
Savings (including
MMDAs) 10.56 12.31 14.26 15.83
Small-denomination
time deposits 4.04 4.68 5.82 6.03
Large-denomination
time deposits 2.23 2.86 3.89 4.62
Gross federal funds
purchased and RPs 6.17 5.88 10.26 9.78
Other 9.71 10.69 8.20 8.37
Non-interest-bearing
liabilities 30.22 28.59 26.78 26.77
Demand deposits in
domestic offices 8.88 9.73 8.98 8.46
Revaluation losses held in
trading accounts 10.68 7.27 7.53 7.67
Other 10.66 11.59 10.27 10.65
Capital account 6.41 6.96 7.39 7.42
MEMO
Commercial real estate loans 4.40 4.65 5.45 5.61
Other real estate owned .27 .18 .13 .09
Managed liabilities 47.94 47.39 46.02 44.42
Federal Home Loan Bank
advances n.a. n.a. n.a. n.a.
Average net consolidated
assets (billions of dollars) 1,051 1,189 1,514 1,820
Effective interest rate
(percent) (2)
Rates earned
Interest-earning assets 8.20 7.72 7.57 7.55
Taxable equivalent 8.22 7.74 7.60 7.57
Loans and leases, gross 8.84 8.32 8.25 8.21
Net of loss provisions 8.88 8.31 8.10 7.77
Securities 7.40 6.80 6.78 6.83
Taxable equivalent 7.47 6.85 6.85 6.89
Investment account 7.04 6.70 6.76 6.78
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 7.83 6.90 6.81 6.92
Gross federal funds sold and
reverse RPs 5.20 4.92 5.45 5.20
Interest-bearing balances at
depositories 7.15 6.71 6.91 7.16
Rates paid
Interest-bearing liabilities 5.88 5.44 5.41 5.29
Interest-bearing deposits 4.99 4.57 4.54 4.40
In foreign offices 6.07 5.62 5.52 5.83
In domestic offices 3.42 3.32 3.69 3.39
Other checkable deposits 1.29 1.32 1.97 1.67
Savings (including
MMDAs) 3.11 2.76 2.68 2.45
Large time deposits (3) 3.73 4.62 5.17 4.53
Other time deposits (3) 5.08 4.58 5.45 5.21
Gross federal funds
purchased and RPs 5.22 4.93 5.02 5.18
Other interest-bearing
liabilities 9.80 8.86 9.13 8.85
Income and expense as a
percentage of average net
consolidated assets
Gross interest income 6.42 6.26 6.31 6.21
Taxable equivalent 6.43 6.27 6.33 6.22
Loans 4.44 4.48 4.31 4.27
Securities .75 .71 .73 .81
Gross federal funds sold and
reverse RPs .21 .18 .45 .42
Other 1.00 .88 .82 .70
Gross interest expense 3.74 3.52 3.55 3.48
Deposits 2.43 2.26 2.26 2.20
Gross federal funds
purchased and RPs .35 .31 .54 .54
Other .95 .95 .75 .74
Net interest income 2.68 2.73 2.76 2.73
Taxable equivalent 2.70 2.75 2.79 2.75
Loss provisioning (4) .11 .11 .16 .31
Non-interest income 2.16 2.34 2.12 2.15
Service charges on deposits .25 .28 .32 .33
Fiduciary activities .30 .31 .34 .32
Trading revenue .46 .52 .43 .33
Interest rate exposures n.a. .30 .23 .10
Foreign exchange rate
exposures n.a. .17 .20 .20
Other commodity and equity
exposures n.a. .05 * .03
Other 1.15 1.23 1.04 1.17
Non-interest expense 3.32 3.57 3.24 3.47
Salaries, wages, and
employee benefits 1.58 1.57 1.45 1.45
Occupancy .50 .50 .47 .47
Other 1.24 1.50 1.33 1.54
Net non-interest expense 1.16 1.23 1.12 1.32
Gains on investment account
securities .03 .04 .08 .11
Income before taxes and
extraordinary items 1.44 1.44 1.56 1.22
Taxes .55 .52 .58 .44
Extraordinary items, net of
income taxes * * * *
Net income .88 .92 .98 .78
Cash dividends declared .57 .70 .82 .53
Retained income .31 .21 .15 .25
MEMO: Return on equity 13.78 13.21 13.22 10.53
Item 1999 2000 2001
Balance sheet items
as a percentage of
average net
consolidated assets
Interest-earning assets 81.49 82.23 81.74
Loans and leases, net 53.37 55.22 53.86
Commercial and industrial 19.20 19.87 18.82
U.S. addressees 13.14 13.95 13.42
Foreign addressees 6.06 5.92 5.41
Consumer 5.94 5.43 6.17
Credit card 1.36 1.34 1.64
Installment and other 4.58 4.09 4.53
Real estate 16.96 19.82 19.23
In domestic offices 15.55 18.48 18.05
Construction and land
development .90 .98 1.27
Farmland .10 .11 .11
One- to four-family
residential 10.77 13.37 12.41
Home equity 1.54 1.61 1.78
Other 9.22 11.76 10.63
Multifamily residential .43 .60 .51
Nonfarm nonresidential 3.35 3.42 3.76
In foreign offices 1.41 1.34 1.18
To depository institutions
and acceptances
of other banks 4.34 3.78 3.23
Foreign governments .38 .28 .20
Agricultural production .26 .23 .28
Other loans 3.96 3.75 3.51
Lease-financing receivables 3.40 3.07 3.43
LESS: Unearned income on
loans -.05 -.04 -.04
LESS: Loss reserves (1) -1.03 -.97 -.97
Securities 18.34 18.98 17.81
Investment account 13.08 13.71 12.14
Debt 12.57 13.03 11.88
U.S. Treasury 1.98 1.96 .68
U.S. government agency
and corporation
obligations 6.35 6.59 6.84
Government-backed
mortgage pools 5.03 4.88 4.99
Collateralized
mortgage
obligations .79 .93 1.11
Other .52 .78 .74
State and local
government .45 .51 .55
Private mortgage-
backed securities .57 .51 .58
Other 3.22 3.47 3.22
Equity .51 .68 .26
Trading account 5.25 5.26 5.67
Gross federal funds sold and
reverse RPs 6.64 5.02 6.38
Interest-bearing balances at
depositories 3.14 3.01 3.69
Non-interest-earning assets 18.51 17.77 18.26
Revaluation gains held in
trading accounts 6.66 5.66 5.48
Other 11.85 12.11 12.78
Liabilities 92.28 92.36 92.14
Interest-bearing liabilities 66.87 67.81 66.76
Deposits 48.79 49.27 49.09
In foreign offices 21.04 21.62 19.22
In domestic offices 27.76 27.66 29.88
Other checkable
deposits .72 .74 .90
Savings (including
MMDAs) 16.84 16.73 19.23
Small-denomination
time deposits 5.66 5.38 5.11
Large-denomination
time deposits 4.54 4.80 4.63
Gross federal funds
purchased and RPs 8.84 8.89 9.04
Other 9.24 9.65 8.62
Non-interest-bearing
liabilities 25.41 24.56 25.38
Demand deposits in
domestic offices 7.83 7.28 7.50
Revaluation losses held in
trading accounts 6.51 5.69 5.10
Other 11.06 11.59 12.79
Capital account 7.72 7.64 7.86
MEMO
Commercial real estate loans 5.69 5.87 6.68
Other real estate owned .06 .04 .04
Managed liabilities 45.49 46.84 43.41
Federal Home Loan Bank
advances n.a. n.a. .82
Average net consolidated
assets (billions of dollars) 1,935 2,234 2,527
Effective interest
rate (percent) (2)
Rates earned
Interest-earning assets 7.37 7.76 6.85
Taxable equivalent 7.39 7.78 6.87
Loans and leases, gross 7.99 8.46 7.52
Net of loss provisions 7.65 7.92 6.56
Securities 6.58 6.48 6.26
Taxable equivalent 6.65 6.55 6.34
Investment account 6.59 6.40 6.23
U.S. Treasury securities
and U.S. government
agency obligations
(excluding MBS) n.a. n.a. 5.01
Mortgage-backed
securities n.a. n.a. 6.42
Other n.a. n.a. 6.34
Trading account 6.56 6.70 6.33
Gross federal funds sold and
reverse RPs 4.52 4.93 3.86
Interest-bearing balances at
depositories 7.22 7.43 3.73
Rates paid
Interest-bearing liabilities 4.79 5.37 4.09
Interest-bearing deposits 3.82 4.40 3.27
In foreign offices 4.99 5.67 4.02
In domestic offices 3.04 3.51 2.85
Other checkable deposits 1.44 1.61 1.67
Savings (including
MMDAs) 2.11 2.43 1.92
Large time deposits (3) 4.36 5.32 4.40
Other time deposits (3) 4.95 5.53 5.14
Gross federal funds
purchased and RPs 4.53 5.47 3.81
Other interest-bearing
liabilities 8.61 8.15 7.00
Income and expense as
a percentage of
average net
consolidated assets
Gross interest income 6.01 6.39 5.56
Taxable equivalent 6.03 6.41 5.58
Loans 4.35 4.74 4.14
Securities .85 .88 .72
Gross federal funds sold and
reverse RPs .30 .25 .25
Other .51 .51 .44
Gross interest expense 3.16 3.60 2.69
Deposits 1.97 2.33 1.74
Gross federal funds
purchased and RPs .40 .49 .35
Other .79 .78 .59
Net interest income 2.84 2.78 2.87
Taxable equivalent 2.86 2.80 2.89
Loss provisioning (4) .26 .38 .59
Non-interest income 2.55 2.54 2.23
Service charges on deposits .37 .40 .44
Fiduciary activities .31 .27 .29
Trading revenue .46 .48 .43
Interest rate exposures .17 .20 .21
Foreign exchange rate
exposures .19 .18 .14
Other commodity and equity
exposures .09 .11 .08
Other 1.41 1.39 1.06
Non-interest expense 3.45 3.31 3.13
Salaries, wages, and
employee benefits 1.57 1.46 1.38
Occupancy .50 .47 .45
Other 1.38 1.39 1.30
Net non-interest expense .90 .77 .90
Gains on investment account
securities .03 -.03 .08
Income before taxes and
extraordinary items 1.71 1.60 1.46
Taxes .66 .60 .48
Extraordinary items, net of
income taxes * * -.01
Net income 1.05 1.00 .97
Cash dividends declared .79 .86 .66
Retained income .26 .13 .31
MEMO: Return on equity 13.58 13.04 12.34
Item 2002 2003 2004
Balance sheet items
as a percentage of
average net
consolidated assets
Interest-earning assets 81.68 81.39 83.54
Loans and leases, net 53.61 52.20 51.29
Commercial and industrial 16.16 12.98 10.53
U.S. addressees 11.69 9.40 7.48
Foreign addressees 4.47 3.59 3.06
Consumer 7.82 7.96 8.49
Credit card 2.90 2.81 3.19
Installment and other 4.92 5.15 5.30
Real estate 20.78 22.68 23.21
In domestic offices 19.70 21.74 22.21
Construction and land
development 1.42 1.36 1.40
Farmland .12 .10 .10
One- to four-family
residential 13.51 16.03 16.71
Home equity 2.35 2.96 4.04
Other 11.17 13.07 12.67
Multifamily residential .55 .47 .45
Nonfarm nonresidential 4.09 3.78 3.55
In foreign offices 1.08 .94 1.00
To depository institutions
and acceptances
of other banks 3.20 3.54 4.10
Foreign governments .20 .17 .16
Agricultural production .23 .19 .22
Other loans 2.94 2.87 3.31
Lease-financing receivables 3.44 2.87 2.10
LESS: Unearned income on
loans -.08 -.06 -.04
LESS: Loss reserves (1) -1.12 -1.02 -.80
Securities 20.54 21.22 22.95
Investment account 14.36 15.31 15.99
Debt 14.13 15.11 15.83
U.S. Treasury .59 .82 .86
U.S. government agency
and corporation
obligations 8.69 9.20 9.92
Government-backed
mortgage pools 6.38 7.59 8.64
Collateralized
mortgage
obligations 1.52 .91 .70
Other .79 .70 .58
State and local
government .59 .59 .57
Private mortgage-
backed securities .92 1.10 .95
Other 3.34 3.40 3.53
Equity .22 .20 .16
Trading account 6.18 5.91 6.96
Gross federal funds sold and
reverse RPs 5.26 5.79 6.37
Interest-bearing balances at
depositories 2.28 2.18 2.93
Non-interest-earning assets 18.32 18.61 16.46
Revaluation gains held in
trading accounts 5.40 5.79 4.45
Other 12.93 12.83 12.01
Liabilities 91.52 91.94 91.64
Interest-bearing liabilities 65.42 65.55 68.18
Deposits 48.96 49.11 51.26
In foreign offices 16.27 15.68 16.20
In domestic offices 32.70 33.43 35.05
Other checkable
deposits .95 1.02 1.22
Savings (including
MMDAs) 22.81 24.28 26.42
Small-denomination
time deposits 4.71 3.68 3.24
Large-denomination
time deposits 4.22 4.45 4.18
Gross federal funds
purchased and RPs 8.83 8.62 7.79
Other 7.63 7.82 9.13
Non-interest-bearing
liabilities 26.10 26.40 23.46
Demand deposits in
domestic offices 7.40 6.72 5.43
Revaluation losses held in
trading accounts 4.63 4.88 3.95
Other 14.07 14.80 14.08
Capital account 8.48 8.06 8.36
MEMO
Commercial real estate loans 6.92 6.31 5.99
Other real estate owned .03 .03 .03
Managed liabilities 38.89 38.60 39.33
Federal Home Loan Bank
advances .82 .84 .79
Average net consolidated
assets (billions of dollars) 2,785 3,148 3,654
Effective interest
rate (percent) (2)
Rates earned
Interest-earning assets 5.85 5.01 4.74
Taxable equivalent 5.87 5.03 4.77
Loans and leases, gross 6.54 5.78 5.53
Net of loss provisions 5.32 5.21 5.30
Securities 5.09 4.15 4.11
Taxable equivalent 5.16 4.21 4.17
Investment account 5.30 4.26 4.37
U.S. Treasury securities
and U.S. government
agency obligations
(excluding MBS) 3.74 2.62 2.92
Mortgage-backed
securities 5.55 4.51 4.83
Other 5.30 4.28 3.76
Trading account 4.60 3.87 3.52
Gross federal funds sold and
reverse RPs 2.20 1.66 1.47
Interest-bearing balances at
depositories 3.40 2.49 1.80
Rates paid
Interest-bearing liabilities 2.55 1.86 1.80
Interest-bearing deposits 1.95 1.36 1.30
In foreign offices 2.59 1.76 1.87
In domestic offices 1.68 1.20 1.08
Other checkable deposits .93 .80 .97
Savings (including
MMDAs) 1.02 .73 .71
Large time deposits (3) 3.26 2.36 2.14
Other time deposits (3) 3.55 2.86 2.61
Gross federal funds
purchased and RPs 2.02 1.39 1.71
Other interest-bearing
liabilities 5.39 4.26 3.69
Income and expense a
a percentage of
average net
consolidated assets
Gross interest income 4.78 4.06 3.95
Taxable equivalent 4.80 4.08 3.97
Loans 3.58 3.05 2.86
Securities .73 .63 .69
Gross federal funds sold and
reverse RPs .12 .10 .10
Other .35 .28 .30
Gross interest expense 1.65 1.20 1.22
Deposits 1.06 .75 .74
Gross federal funds
purchased and RPs .18 .13 .14
Other .41 .33 .33
Net interest income 3.13 2.86 2.73
Taxable equivalent 3.15 2.88 2.75
Loss provisioning (4) .73 .35 .16
Non-interest income 2.32 2.31 2.21
Service charges on deposits .48 .46 .45
Fiduciary activities .26 .26 .24
Trading revenue .32 .30 .22
Interest rate exposures .15 .12 .03
Foreign exchange rate
exposures .14 .14 .14
Other commodity and equity
exposures .03 .04 .06
Other 1.25 1.29 1.30
Non-interest expense 3.16 3.02 3.11
Salaries, wages, and
employee benefits 1.41 1.39 1.34
Occupancy .46 .45 .43
Other 1.28 1.18 1.33
Net non-interest expense .84 .71 .90
Gains on investment account
securities .13 .11 .08
Income before taxes and
extraordinary items 1.69 1.91 1.74
Taxes .57 .62 .55
Extraordinary items, net of
income taxes * * *
Net income 1.12 1.29 1.19
Cash dividends declared 1.05 .99 .65
Retained income .07 .30 .55
MEMO: Return on equity 13.24 16.01 14.28
* 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.) When possible, based on the average of quarterly balance
sheet data reported on schedule RC-K of the quarterly Call Report.
(3.) Before 1997, large time open accounts included in other time
deposits.
(4.) Includes provisions for allocated transfer risk.
C. Banks ranked 11 through 100 by assets
Item 1995 1996 1997 1998
Balance sheet items as a
percentage of average net
consolidated assets
Interest-earning assets 88.71 88.26 87.50 87.87
Loans and leases, net 62.68 64.24 63.89 64.38
Commercial and industrial 19.26 18.95 19.01 18.92
U.S. addressees 18.10 17.71 17.78 17.59
Foreign addressees 1.16 1.24 1.22 1.33
Consumer 14.23 15.67 15.62 14.52
Credit card 7.34 8.26 8.50 7.67
Installment and other 6.89 7.40 7.12 6.86
Real estate 23.25 23.26 22.99 24.59
In domestic offices 23.10 23.10 22.85 24.42
Construction and land
development 1.50 1.55 1.69 2.03
Farmland .13 .13 .14 .17
One- to four-family
residential 14.16 14.15 13.88 14.86
Home equity 2.19 2.08 2.22 2.17
Other 11.97 12.07 11.65 12.69
Multifamily residential .77 .89 .93 1.00
Nonfarm nonresidential 6.54 6.37 6.21 6.36
In foreign offices .15 .16 .15 .18
To depository institutions
and acceptances
of other banks 1.61 1.53 1.30 1.09
Foreign governments .20 .20 .09 .06
Agricultural production .26 .28 .29 .33
Other loans 3.29 3.27 3.18 3.35
Lease-financing receivables 1.96 2.41 2.70 2.72
LESS: Unearned income on
loans -.07 -.06 -.05 -.04
LESS: Loss reserves (1) -1.32 -1.27 -1.24 -1.16
Securities 18.64 16.87 15.80 16.66
Investment account 17.88 16.06 15.07 16.13
Debt 17.51 15.62 14.58 15.58
U.S. Treasury 4.82 3.34 2.81 2.25
U.S. government agency
and corporation
obligations 9.40 9.12 8.98 9.93
Government-backed
mortgage pools 5.06 5.42 5.17 4.98
Collateralized
mortgage
obligations 2.82 2.16 2.13 2.83
Other 1.51 1.54 1.68 2.12
State and local
government 1.11 .99 .88 .92
Private mortgage-
backed securities 1.02 .96 .73 .96
Other 1.16 1.21 1.18 1.53
Equity .37 .44 .49 .55
Trading account .76 .80 .73 .54
Gross federal funds sold and
reverse RPs 4.52 4.26 4.38 3.57
Interest-bearing balances at
depositories 2.87 2.89 3.43 3.24
Non-interest-earning assets 11.29 11.74 12.50 12.13
Revaluation gains held in
trading accounts .50 .51 .69 .75
Other 10.78 11.23 11.81 11.38
Liabilities 92.23 92.02 91.85 91.63
Interest-bearing liabilities 74.05 73.14 72.60 73.40
Deposits 52.32 51.81 51.45 51.50
In foreign offices 8.12 7.52 7.85 8.15
In domestic offices 44.20 44.30 43.60 43.35
Other checkable
deposits 5.62 3.06 1.95 1.75
Savings (including
MMDAs) 18.78 20.76 21.08 21.40
Small-denomination
time deposits 14.24 14.09 13.43 12.84
Large-denomination
time deposits 5.55 6.39 7.15 7.36
Gross federal funds
purchased and RPs 11.37 10.00 9.36 9.48
Other 10.36 11.32 11.79 12.43
Non-interest-bearing
liabilities 18.18 18.89 19.24 18.23
Demand deposits in
domestic offices 14.26 14.47 14.17 12.39
Revaluation losses held in
trading accounts .49 .49 .68 .76
Other 3.43 3.93 4.39 5.07
Capital account 7.77 7.98 8.15 8.37
MEMO
Commercial real estate loans 9.42 9.38 9.44 10.11
Other real estate owned .13 .08 .06 .04
Managed liabilities
Federal Home Loan Bank 35.68 35.60 36.60 38.11
advances n.a. n.a. n.a. n.a.
Average net consolidated
assets (billions of dollars) 1,338 1,450 1,604 1,745
Effective interest rate
(percent) (2)
Rates earned
Interest-earning assets 8.31 8.18 8.33 8.13
Taxable equivalent 8.37 8.23 8.36 8.17
Loans and leases, gross 9.10 8.88 9.03 8.82
Net of loss provisions 8.67 8.21 8.27 8.15
Securities 6.38 6.49 6.55 6.31
Taxable equivalent 6.56 6.66 6.70 6.46
Investment account 6.35 6.49 6.57 6.33
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 7.27 6.53 6.05 5.86
Gross federal funds sold and
reverse RPs 5.91 5.31 5.45 5.46
Interest-bearing balances at
depositories 6.78 5.82 5.76 5.67
Rates paid
Interest-bearing liabilities 4.94 4.70 4.79 4.77
Interest-bearing deposits 4.35 4.15 4.22 4.15
In foreign offices 6.30 5.29 5.23 5.22
In domestic offices 4.01 3.96 4.04 3.96
Other checkable deposits 1.89 1.78 2.01 2.41
Savings (including
MMDAs) 3.10 2.91 2.84 2.76
Large time deposits (3) 5.70 5.50 5.47 5.32
Other time deposits (3) 5.35 5.26 5.43 5.35
Gross federal funds
purchased and RPs 5.86 5.19 5.29 5.22
Other interest-bearing
liabilities 6.43 5.95 5.85 5.81
Income and expense as a
percentage of average net
consolidated assets
Gross interest income 7.40 7.24 7.26 7.16
Taxable equivalent 7.45 7.28 7.30 7.19
Loans 5.79 5.80 5.87 5.79
Securities 1.13 1.03 .98 1.00
Gross federal funds sold and
reverse RPs .27 .23 .22 .19
Other .21 .18 .19 .18
Gross interest expense 3.62 3.39 3.41 3.45
Deposits 2.29 2.18 2.23 2.23
Gross federal funds
purchased and RPs .67 .55 .51 .51
Other .66 .66 .68 .71
Net interest income 3.78 3.84 3.85 3.71
Taxable equivalent 3.84 3.89 3.89 3.74
Loss provisioning (4) .39 .54 .60 .54
Non-interest income 2.38 2.61 2.76 3.07
Service charges on deposits .44 .44 .44 .42
Fiduciary activities .40 .43 .44 .49
Trading revenue .09 .08 .08 .09
Interest rate exposures n.a. .03 .02 .03
Foreign exchange rate
exposures n.a. .04 .05 .06
Other commodity and equity
exposures n.a. .01 * *
Other 1.45 1.67 1.79 2.07
Non-interest expense 3.79 3.85 3.85 4.03
Salaries, wages, and
employee benefits 1.47 1.51 1.51 1.53
Occupancy .47 .48 .46 .46
Other 1.85 1.86 1.88 2.04
Net non-interest expense 1.41 1.24 1.10 .96
Gains on investment account
securities .02 .02 .02 .03
Income before taxes and
extraordinary items 2.01 2.09 2.18 2.24
Taxes .70 .75 .77 .78
Extraordinary items, net of
income taxes * * * *
Net income 1.31 1.34 1.42 1.45
Cash dividends declared .85 1.07 .93 .96
Retained income .46 .26 .48 .50
MEMO: Return on equity 16.84 16.78 17.36 17.38
Item 1999 2000 2001
Balance sheet items
as a percentage of
average net
consolidated assets
Interest-earning assets 88.41 88.67 88.08
Loans and leases, net 64.23 64.88 62.14
Commercial and industrial 19.40 18.19 15.84
U.S. addressees 18.18 17.64 15.36
Foreign addressees 1.22 .55 .48
Consumer 13.57 13.79 13.20
Credit card 6.78 6.97 6.97
Installment and other 6.79 6.82 6.23
Real estate 24.80 26.21 27.29
In domestic offices 24.62 26.12 27.21
Construction and land
development 2.43 3.00 3.31
Farmland .19 .22 .23
One- to four-family
residential 14.15 14.51 15.51
Home equity 2.08 2.49 2.90
Other 12.07 12.02 12.60
Multifamily residential 1.02 1.11 1.16
Nonfarm nonresidential 6.82 7.28 6.99
In foreign offices .19 .09 .09
To depository institutions
and acceptances
of other banks .93 1.05 1.40
Foreign governments .06 .03 .03
Agricultural production .33 .37 .32
Other loans 2.99 2.57 2.03
Lease-financing receivables 3.29 3.82 3.18
LESS: Unearned income on
loans -.04 -.03 -.02
LESS: Loss reserves (1) -1.11 -1.12 -1.13
Securities 17.79 17.32 19.00
Investment account 17.28 16.10 17.71
Debt 16.64 15.50 17.32
U.S. Treasury 1.70 1.12 .67
U.S. government agency
and corporation
obligations 10.57 9.70 10.09
Government-backed
mortgage pools 5.12 4.31 5.19
Collateralized
mortgage
obligations 2.89 2.55 2.42
Other 2.56 2.84 2.48
State and local
government .99 .96 .99
Private mortgage-
backed securities 1.35 1.66 2.01
Other 2.02 2.06 3.56
Equity .65 .60 .39
Trading account .51 1.22 1.29
Gross federal funds sold and
reverse RPs 3.34 3.76 4.06
Interest-bearing balances at
depositories 3.06 2.71 2.88
Non-interest-earning assets 11.59 11.33 11.92
Revaluation gains held in
trading accounts .56 .40 .55
Other 11.03 10.92 11.37
Liabilities 91.66 91.57 91.15
Interest-bearing liabilities 74.97 76.46 75.98
Deposits 51.50 51.57 51.94
In foreign offices 7.96 7.34 6.86
In domestic offices 43.53 44.23 45.08
Other checkable
deposits 1.60 1.32 1.20
Savings (including
MMDAs) 22.46 22.34 24.36
Small-denomination
time deposits 11.85 11.80 10.66
Large-denomination
time deposits 7.62 8.77 8.86
Gross federal funds
purchased and RPs 9.77 9.28 9.71
Other 13.70 15.61 14.32
Non-interest-bearing
liabilities 16.70 15.12 15.17
Demand deposits in
domestic offices 10.52 8.61 7.17
Revaluation losses held in
trading accounts .58 .41 .52
Other 5.59 6.09 7.49
Capital account 8.34 8.43 8.85
MEMO
Commercial real estate loans 11.00 12.06 12.06
Other real estate owned .03 .03 .04
Managed liabilities
Federal Home Loan Bank 39.83 41.98 40.81
advances n.a. n.a. 4.07
Average net consolidated
assets (billions of dollars) 1,881 2,031 2,130
Effective interest
rate (percent) (2)
Rates earned
Interest-earning assets 7.84 8.44 7.54
Taxable equivalent 7.88 8.48 7.58
Loans and leases, gross 8.50 9.14 8.26
Net of loss provisions 7.80 8.25 6.96
Securities 6.32 6.64 5.96
Taxable equivalent 6.46 6.77 6.08
Investment account 6.34 6.66 6.04
U.S. Treasury securities
and U.S. government
agency obligations
(excluding MBS) n.a. n.a. 5.83
Mortgage-backed
securities n.a. n.a. 6.60
Other n.a. n.a. 5.13
Trading account 5.58 6.25 4.83
Gross federal funds sold and
reverse RPs 5.12 6.06 3.86
Interest-bearing balances at
depositories 4.81 5.49 4.38
Rates paid
Interest-bearing liabilities 4.38 5.22 4.16
Interest-bearing deposits 3.76 4.42 3.60
In foreign offices 4.70 5.38 3.67
In domestic offices 3.60 4.26 3.60
Other checkable deposits 2.03 2.57 2.32
Savings (including
MMDAs) 2.49 2.94 2.30
Large time deposits (3) 4.96 5.88 5.11
Other time deposits (3) 5.03 5.73 5.42
Gross federal funds
purchased and RPs 4.87 6.02 3.86
Other interest-bearing
liabilities 5.41 6.36 5.30
Income and expense as
a percentage of
average net
consolidated assets
Gross interest income 6.98 7.54 6.70
Taxable equivalent 7.02 7.57 6.73
Loans 5.56 6.05 5.28
Securities 1.10 1.09 1.06
Gross federal funds sold and
reverse RPs .18 .22 .15
Other .14 .18 .21
Gross interest expense 3.26 3.96 3.14
Deposits 2.02 2.41 2.01
Gross federal funds
purchased and RPs .51 .56 .38
Other .74 .99 .75
Net interest income 3.72 3.58 3.56
Taxable equivalent 3.75 3.61 3.59
Loss provisioning (4) .55 .68 .91
Non-interest income 3.36 3.18 3.36
Service charges on deposits .41 .42 .42
Fiduciary activities .48 .52 .42
Trading revenue .08 .07 .08
Interest rate exposures .02 .02 .04
Foreign exchange rate
exposures .05 .04 .03
Other commodity and equity
exposures * * *
Other 2.39 2.18 2.44
Non-interest expense 4.12 4.00 3.95
Salaries, wages, and
employee benefits 1.53 1.44 1.47
Occupancy .45 .43 .42
Other 2.14 2.14 2.07
Net non-interest expense .76 .82 .59
Gains on investment account
securities -.01 -.05 .09
Income before taxes and
extraordinary items 2.40 2.02 2.15
Taxes .86 .70 .74
Extraordinary items, net of
income taxes * * *
Net income 1.54 1.32 1.40
Cash dividends declared 1.16 .94 .96
Retained income .38 .38 .44
MEMO: Return on equity 18.46 15.72 15.79
Item 2002 2003 2004
Balance sheet items
as a percentage of
average net
consolidated assets
Interest-earning assets 88.34 88.10 88.19
Loans and leases, net 60.00 59.48 60.63
Commercial and industrial 13.27 11.96 11.91
U.S. addressees 12.94 11.66 11.65
Foreign addressees .33 .30 .26
Consumer 12.79 12.57 12.73
Credit card 6.56 6.35 6.90
Installment and other 6.22 6.21 5.83
Real estate 28.94 30.67 32.16
In domestic offices 28.88 30.54 31.96
Construction and land
development 3.36 3.22 3.51
Farmland .22 .20 .19
One- to four-family
residential 17.05 18.79 19.52
Home equity 3.92 4.74 5.90
Other 13.13 14.05 13.62
Multifamily residential 1.20 1.32 1.34
Nonfarm nonresidential 7.05 7.00 7.41
In foreign offices .06 .13 .20
To depository institutions
and acceptances
of other banks 1.44 1.21 .54
Foreign governments .02 .02 .01
Agricultural production .27 .23 .19
Other loans 1.80 1.59 1.88
Lease-financing receivables 2.65 2.35 2.28
LESS: Unearned income on
loans -.02 -.02 -.02
LESS: Loss reserves (1) -1.17 -1.10 -1.06
Securities 20.30 21.16 21.28
Investment account 19.17 20.09 20.12
Debt 18.82 19.88 19.96
U.S. Treasury .74 .95 .89
U.S. government agency
and corporation
obligations 11.45 12.99 12.80
Government-backed
mortgage pools 6.00 6.08 5.74
Collateralized
mortgage
obligations 2.79 3.72 3.42
Other 2.65 3.19 3.64
State and local
government .97 .95 .96
Private mortgage-
backed securities 2.13 2.14 2.65
Other 3.53 2.85 2.66
Equity .34 .21 .16
Trading account 1.13 1.07 1.16
Gross federal funds sold and
reverse RPs 4.71 4.20 2.98
Interest-bearing balances at
depositories 3.33 3.26 3.29
Non-interest-earning assets 11.66 11.90 11.81
Revaluation gains held in
trading accounts .47 .60 .42
Other 11.19 11.30 11.39
Liabilities 90.79 90.65 89.87
Interest-bearing liabilities 74.69 73.18 74.10
Deposits 50.48 49.81 50.78
In foreign offices 6.09 6.33 6.99
In domestic offices 44.38 43.48 43.79
Other checkable
deposits 1.17 1.33 1.41
Savings (including
MMDAs) 26.45 27.52 27.63
Small-denomination
time deposits 8.78 7.47 6.94
Large-denomination
time deposits 7.98 7.16 7.81
Gross federal funds
purchased and RPs 9.66 9.69 8.96
Other 14.55 13.68 14.36
Non-interest-bearing
liabilities 16.10 17.47 15.77
Demand deposits in
domestic offices 6.32 5.97 5.63
Revaluation losses held in
trading accounts .44 .56 .40
Other 9.34 10.95 9.74
Capital account 9.21 9.35 10.13
MEMO
Commercial real estate loans 12.24 12.10 12.85
Other real estate owned .05 .06 .05
Managed liabilities
Federal Home Loan Bank 39.48 38.12 39.29
advances 4.85 4.75 4.65
Average net consolidated
assets (billions of dollars) 2,124 2,287 2,376
Effective interest
rate (percent) (2)
Rates earned
Interest-earning assets 6.04 5.30 5.26
Taxable equivalent 6.07 5.33 5.29
Loans and leases, gross 6.80 6.11 5.98
Net of loss provisions 5.59 5.11 5.19
Securities 4.79 3.80 3.63
Taxable equivalent 4.91 3.91 3.73
Investment account 4.86 3.87 3.64
U.S. Treasury securities
and U.S. government
agency obligations
(excluding MBS) 4.28 3.17 2.94
Mortgage-backed
securities 5.34 4.20 4.02
Other 4.22 3.61 3.29
Trading account 3.59 2.62 3.43
Gross federal funds sold and
reverse RPs 1.68 1.14 1.25
Interest-bearing balances at
depositories 2.46 1.93 2.27
Rates paid
Interest-bearing liabilities 2.41 1.79 1.71
Interest-bearing deposits 1.96 1.35 1.29
In foreign offices 1.70 1.23 1.42
In domestic offices 1.99 1.36 1.27
Other checkable deposits .94 .64 .72
Savings (including
MMDAs) 1.08 .66 .65
Large time deposits (3) 3.36 2.70 2.48
Other time deposits (3) 3.68 2.95 2.58
Gross federal funds
purchased and RPs 1.73 1.20 1.37
Other interest-bearing
liabilities 3.54 3.02 2.76
Income and expense as
a percentage of
average net
consolidated assets
Gross interest income 5.31 4.67 4.67
Taxable equivalent 5.34 4.70 4.70
Loans 4.15 3.72 3.72
Securities .90 .75 .73
Gross federal funds sold and
reverse RPs .08 .04 .03
Other .18 .15 .19
Gross interest expense 1.77 1.30 1.26
Deposits 1.09 .77 .74
Gross federal funds
purchased and RPs .17 .12 .13
Other .51 .41 .40
Net interest income 3.54 3.37 3.41
Taxable equivalent 3.57 3.40 3.44
Loss provisioning (4) .80 .67 .55
Non-interest income 3.30 3.29 3.05
Service charges on deposits .42 .42 .40
Fiduciary activities .42 .37 .42
Trading revenue .08 .09 .07
Interest rate exposures .04 .04 -.01
Foreign exchange rate
exposures .04 .04 .05
Other commodity and equity
exposures * .01 .03
Other 2.37 2.41 2.16
Non-interest expense 3.73 3.64 3.55
Salaries, wages, and
employee benefits 1.49 1.47 1.45
Occupancy .40 .41 .39
Other 1.84 1.76 1.70
Net non-interest expense .43 .35 .50
Gains on investment account
securities .10 .06 .03
Income before taxes and
extraordinary items 2.41 2.41 2.39
Taxes .82 .82 .82
Extraordinary items, net of
income taxes * * *
Net income 1.59 1.59 1.58
Cash dividends declared .99 1.05 .95
Retained income .60 .54 .63
MEMO: Return on equity 17.26 17.01 15.56
* 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.) When possible, based on the average of quarterly balance
sheet data reported on schedule RC-K of the quarterly Call Report.
(3.) Before 1997, large time open accounts included in other time
deposits.
(4.) Includes provisions for allocated transfer risk.
D. Banks ranked 101 through 1,000 by assets
Item 1995 1996 1997 1998
Balance sheet items as a
percentage of average net
consolidated assets
Interest-earning assets 90.98 91.11 91.34 91.38
Loans and leases, net 62.24 62.72 62.34 61.23
Commercial and industrial 12.68 12.76 12.38 12.45
U.S. addressees 12.52 12.58 12.14 12.12
Foreign addressees .16 .18 .23 .32
Consumer 16.39 16.11 14.36 12.56
Credit card 6.45 6.92 5.87 4.78
Installment and other 9.94 9.19 8.49 7.78
Real estate 30.77 31.28 33.10 33.83
In domestic offices 30.75 31.26 33.08 33.81
Construction and land
development 2.21 2.38 2.68 2.87
Farmland .40 .46 .52 .56
One- to four-family
residential 17.47 17.29 18.08 18.14
Home equity 2.36 2.30 2.29 2.14
Other 15.11 14.99 15.78 16.00
Multifamily residential 1.21 1.28 1.28 1.25
Nonfarm nonresidential 9.46 9.85 10.52 10.99
In foreign offices .02 .02 .02 .02
To depository institutions
and acceptances
of other banks .36 .50 .59 .52
Foreign governments .02 .02 .02 .03
Agricultural production .69 .70 .73 .80
Other loans 1.78 1.67 1.47 1.30
Lease-financing receivables .90 1.00 .99 .99
LESS: Unearned income on
loans -.12 -.10 -.10 -.09
LESS: Loss reserves (1) -1.23 -1.23 -1.19 -1.15
Securities 23.04 22.61 23.37 24.18
Investment account 22.84 22.49 23.26 24.08
Debt 22.38 21.97 22.65 23.39
U.S. Treasury 6.47 5.59 4.94 3.91
U.S. government agency
and corporation
obligations 12.21 12.62 13.91 15.08
Government-backed
mortgage pools 5.42 5.67 6.20 6.45
Collateralized
mortgage
obligations 3.55 3.11 3.00 3.21
Other 3.25 3.84 4.71 5.42
State and local
government 2.13 2.23 2.43 2.69
Private mortgage-
backed securities .68 .76 .59 .65
Other .89 .76 .78 1.06
Equity .47 .52 .61 .69
Trading account .20 .12 .10 .11
Gross federal funds sold and
reverse RPs 3.91 3.86 3.59 4.16
Interest-bearing balances at
depositories 1.78 1.93 2.05 1.80
Non-interest-earning assets 9.02 8.89 8.66 8.62
Revaluation gains held in
trading accounts .05 .02 * *
Other 8.98 8.86 8.66 8.62
Liabilities 91.36 91.06 90.78 90.55
Interest-bearing liabilities 75.02 75.09 75.23 75.45
Deposits 59.59 59.82 61.24 62.20
In foreign offices 1.71 1.33 1.22 1.31
In domestic offices 57.88 58.49 60.02 60.89
Other checkable
deposits 8.53 6.19 4.94 4.22
Savings (including
MMDAs) 20.72 22.43 23.51 25.57
Small-denomination
time deposits 21.08 21.55 21.95 21.15
Large-denomination
time deposits 7.55 8.32 9.62 9.96
Gross federal funds
purchased and RPs 8.29 8.17 7.06 6.15
Other 7.14 7.10 6.92 7.10
Non-interest-bearing
liabilities 16.34 15.96 15.55 15.10
Demand deposits in
domestic offices 14.05 13.80 13.11 11.87
Revaluation losses held in
trading accounts .05 .02 .01 .01
Other 2.24 2.14 2.44 3.22
Capital account 8.64 8.94 9.22 9.45
MEMO
Commercial real estate loans 13.17 13.80 14.72 15.33
Other real estate owned .17 .13 .11 .09
Managed liabilities 24.71 24.96 24.89 24.65
Federal Home Loan Bank
advances n.a. n.a. n.a. n.a.
Average net consolidated
assets (billions of dollars) 1,094 1,078 971 938
Effective interest rate
(percent) (2)
Rates earned
Interest-earning assets 8.44 8.44 8.54 8.38
Taxable equivalent 8.53 8.52 8.63 8.47
Loans and leases, gross 9.45 9.41 9.53 9.42
Net of loss provisions 8.94 8.77 8.79 8.79
Securities 6.24 6.34 6.43 6.31
Taxable equivalent 6.50 6.60 6.69 6.57
Investment account 6.24 6.34 6.43 6.30
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 5.50 5.94 6.37 6.84
Gross federal funds sold and
reverse RPs 5.45 5.29 5.42 5.31
Interest-bearing balances at
depositories 6.07 5.69 5.44 5.77
Rates paid
Interest-bearing liabilities 4.64 4.58 4.67 4.60
Interest-bearing deposits 4.26 4.27 4.34 4.28
In foreign offices 5.94 5.72 5.42 5.55
In domestic offices 4.21 4.23 4.32 4.25
Other checkable deposits 2.02 1.96 2.17 2.15
Savings (including
MMDAs) 3.24 3.11 3.08 2.96
Large time deposits (3) 5.62 5.48 5.56 5.51
Other time deposits (3) 5.53 5.57 5.57 5.64
Gross federal funds
purchased and RPs 5.61 5.16 5.20 5.14
Other interest-bearing
liabilities 6.28 5.90 6.08 5.99
Income and expense as a
percentage of average
net consolidated assets
Gross interest income 7.70 7.70 7.79 7.66
Taxable equivalent 7.78 7.78 7.87 7.74
Loans 6.00 6.01 6.05 5.89
Securities 1.42 1.42 1.49 1.50
Gross federal funds sold and
reverse RPs .21 .20 .19 .22
Other .07 .06 .06 .06
Gross interest expense 3.46 3.41 3.47 3.45
Deposits 2.55 2.57 2.69 2.70
Gross federal funds
purchased and RPs .46 .43 .37 .32
Other .45 .42 .42 .42
Net interest income 4.24 4.29 4.32 4.22
Taxable equivalent 4.32 4.37 4.39 4.29
Loss provisioning (4) .43 .52 .58 .49
Non-interest income 1.84 1.88 2.07 2.26
Service charges on deposits .42 .41 .40 .39
Fiduciary activities .27 .29 .32 .37
Trading revenue .03 .02 .01 .02
Interest rate exposures n.a. .01 .01 .01
Foreign exchange rate
exposures n.a. .01 * *
Other commodity and equity
exposures n.a. * * *
Other 1.12 1.16 1.34 1.49
Non-interest expense 3.68 3.69 3.73 3.86
Salaries, wages, and
employee benefits 1.44 1.44 1.50 1.56
Occupancy .45 .45 .46 .47
Other 1.79 1.80 1.77 1.83
Net non-interest expense 1.84 1.81 1.66 1.60
Gains on investment account
securities -.01 .02 .02 .04
Income before taxes and
extraordinary items 1.96 1.98 2.10 2.16
Taxes .68 .69 .73 .74
Extraordinary items, net of
income taxes * * * .06
Net income 1.28 1.29 1.37 1.47
Cash dividends declared .87 1.04 1.10 1.01
Retained income .41 .25 .28 .46
MEMO: Return on equity 14.82 14.42 14.89 15.60
Item 1999 2000 2001
Balance sheet items
as a percentage of
average net
consolidated assets
Interest-earning assets 91.68 91.50 91.16
Loans and leases, net 61.48 62.15 62.46
Commercial and industrial 12.64 12.95 13.03
U.S. addressees 12.32 12.60 12.65
Foreign addressees .32 .36 .38
Consumer 10.79 10.19 9.76
Credit card 3.37 3.27 3.61
Installment and other 7.41 6.92 6.15
Real estate 35.90 36.93 37.64
In domestic offices 35.87 36.91 37.62
Construction and land
development 3.48 4.15 4.90
Farmland .58 .65 .66
One- to four-family
residential 18.26 17.17 16.18
Home equity 1.99 2.10 2.21
Other 16.26 15.06 13.97
Multifamily residential 1.44 1.58 1.69
Nonfarm nonresidential 12.12 13.36 14.18
In foreign offices .02 .02 .02
To depository institutions
and acceptances
of other banks .46 .37 .38
Foreign governments .03 .03 .03
Agricultural production .78 .82 .85
Other loans 1.25 1.22 1.22
Lease-financing receivables .78 .75 .74
LESS: Unearned income on
loans -.08 -.08 -.07
LESS: Loss reserves (1) -1.06 -1.04 -1.12
Securities 25.17 24.34 22.81
Investment account 25.09 24.25 22.70
Debt 24.33 23.46 22.28
U.S. Treasury 2.53 1.81 1.32
U.S. government agency
and corporation
obligations 16.29 15.56 14.70
Government-backed
mortgage pools 6.72 6.22 6.27
Collateralized
mortgage
obligations 3.52 3.04 3.08
Other 6.05 6.30 5.35
State and local
government 2.91 2.91 2.90
Private mortgage-
backed securities 1.00 .99 .94
Other 1.60 2.19 2.42
Equity .77 .79 .43
Trading account .08 .09 .11
Gross federal funds sold and
reverse RPs 3.35 3.40 4.20
Interest-bearing balances at
depositories 1.68 1.60 1.68
Non-interest-earning assets 8.32 8.50 8.84
Revaluation gains held in
trading accounts .01 .02 .01
Other 8.31 8.49 8.84
Liabilities 90.90 90.95 90.32
Interest-bearing liabilities 76.76 77.43 77.01
Deposits 61.93 62.67 63.10
In foreign offices 1.20 1.28 1.24
In domestic offices 60.73 61.40 61.86
Other checkable
deposits 3.75 3.32 3.25
Savings (including
MMDAs) 27.35 27.03 27.67
Small-denomination
time deposits 19.60 19.44 18.79
Large-denomination
time deposits 10.03 11.61 12.14
Gross federal funds
purchased and RPs 6.90 6.30 5.77
Other 7.92 8.45 8.15
Non-interest-bearing
liabilities 14.15 13.52 13.31
Demand deposits in
domestic offices 10.19 8.97 8.23
Revaluation losses held in
trading accounts .01 * .01
Other 3.95 4.55 5.08
Capital account 9.10 9.05 9.68
MEMO
Commercial real estate loans 17.28 19.32 21.03
Other real estate owned .08 .07 .08
Managed liabilities 26.33 28.01 27.75
Federal Home Loan Bank
advances n.a. n.a. 5.27
Average net consolidated
assets (billions of dollars) 972 986 1,002
Effective interest
rate (percent) (2)
Rates earned
Interest-earning assets 7.83 8.48 7.86
Taxable equivalent 7.92 8.56 7.94
Loans and leases, gross 8.74 9.42 8.76
Net of loss provisions 8.26 8.75 7.88
Securities 6.03 6.45 5.97
Taxable equivalent 6.29 6.71 6.25
Investment account 6.03 6.45 5.96
U.S. Treasury securities
and U.S. government
agency obligations
(excluding MBS) n.a. n.a. 5.85
Mortgage-backed
securities n.a. n.a. 6.33
Other n.a. n.a. 5.40
Trading account 7.33 9.30 6.60
Gross federal funds sold and
reverse RPs 4.98 6.15 3.91
Interest-bearing balances at
depositories 5.07 5.76 3.94
Rates paid
Interest-bearing liabilities 4.19 4.93 4.11
Interest-bearing deposits 3.84 4.46 3.82
In foreign offices 5.07 6.13 4.45
In domestic offices 3.82 4.43 3.81
Other checkable deposits 1.99 2.27 1.81
Savings (including
MMDAs) 2.65 3.07 2.22
Large time deposits (3) 5.17 6.00 5.27
Other time deposits (3) 5.11 5.74 5.51
Gross federal funds
purchased and RPs 4.82 5.95 3.83
Other interest-bearing
liabilities 5.36 6.45 5.41
Income and expense
as a percentage of
average net
consolidated assets
Gross interest income 7.19 7.79 7.16
Taxable equivalent 7.27 7.86 7.24
Loans 5.47 5.96 5.59
Securities 1.51 1.58 1.33
Gross federal funds sold and
reverse RPs .17 .21 .16
Other .04 .04 .08
Gross interest expense 3.20 3.79 3.14
Deposits 2.44 2.87 2.48
Gross federal funds
purchased and RPs .34 .38 .22
Other .42 .54 .44
Net interest income 3.99 4.00 4.02
Taxable equivalent 4.07 4.07 4.10
Loss provisioning (4) .39 .52 .65
Non-interest income 2.31 2.35 2.37
Service charges on deposits .38 .36 .39
Fiduciary activities .38 .44 .40
Trading revenue .02 .01 *
Interest rate exposures .01 .01 -.01
Foreign exchange rate
exposures * * *
Other commodity and equity
exposures * * *
Other 1.53 1.55 1.58
Non-interest expense 3.70 3.84 3.88
Salaries, wages, and
employee benefits 1.56 1.59 1.61
Occupancy .47 .47 .46
Other 1.68 1.78 1.81
Net non-interest expense 1.39 1.48 1.52
Gains on investment account
securities -.01 -.04 .05
Income before taxes and
extraordinary items 2.20 1.96 1.90
Taxes .74 .67 .66
Extraordinary items, net of
income taxes .01 * .01
Net income 1.47 1.29 1.25
Cash dividends declared 1.06 .92 1.33
Retained income .40 .37 -.08
MEMO: Return on equity 16.11 14.21 12.93
Item 2002 2003 2004
Balance sheet items
as a percentage of
average net
consolidated assets
Interest-earning assets 91.36 91.34 91.58
Loans and leases, net 61.46 61.32 63.34
Commercial and industrial 12.38 11.51 11.52
U.S. addressees 12.06 11.20 11.21
Foreign addressees .31 .31 .31
Consumer 8.13 6.80 6.34
Credit card 2.64 1.82 1.92
Installment and other 5.50 4.97 4.42
Real estate 38.92 40.96 43.38
In domestic offices 38.90 40.91 43.32
Construction and land
development 5.40 5.89 6.98
Farmland .73 .80 .91
One- to four-family
residential 15.39 15.71 15.37
Home equity 2.51 2.92 3.46
Other 12.88 12.79 11.90
Multifamily residential 1.83 2.00 2.24
Nonfarm nonresidential 15.55 16.51 17.82
In foreign offices .03 .05 .06
To depository institutions
and acceptances
of other banks .37 .37 .25
Foreign governments .02 .02 .01
Agricultural production .86 .83 .82
Other loans 1.18 1.25 1.32
Lease-financing receivables .75 .67 .75
LESS: Unearned income on
loans -.06 -.06 -.06
LESS: Loss reserves (1) -1.10 -1.03 -.98
Securities 23.86 24.36 23.59
Investment account 23.80 24.23 23.54
Debt 23.30 23.79 23.18
U.S. Treasury 1.22 1.00 1.02
U.S. government agency
and corporation
obligations 15.85 16.96 16.70
Government-backed
mortgage pools 6.55 7.03 6.80
Collateralized
mortgage
obligations 3.69 3.69 3.41
Other 5.60 6.24 6.49
State and local
government 2.89 2.95 2.92
Private mortgage-
backed securities .99 .87 1.08
Other 2.34 2.01 1.46
Equity .50 .43 .36
Trading account .06 .14 .05
Gross federal funds sold and
reverse RPs 4.15 3.85 2.95
Interest-bearing balances at
depositories 1.89 1.81 1.69
Non-interest-earning assets 8.64 8.66 8.42
Revaluation gains held in
trading accounts .01 * *
Other 8.64 8.65 8.42
Liabilities 89.93 89.69 89.19
Interest-bearing liabilities 76.35 75.76 75.00
Deposits 62.83 61.93 60.79
In foreign offices .88 .64 .65
In domestic offices 61.95 61.29 60.14
Other checkable
deposits 3.32 3.55 3.65
Savings (including
MMDAs) 30.17 31.42 31.65
Small-denomination
time deposits 16.83 15.03 13.45
Large-denomination
time deposits 11.63 11.29 11.39
Gross federal funds
purchased and RPs 5.27 5.35 5.53
Other 8.25 8.48 8.69
Non-interest-bearing
liabilities 13.58 13.93 14.20
Demand deposits in
domestic offices 8.05 7.97 8.13
Revaluation losses held in
trading accounts .01 * *
Other 5.52 5.95 6.06
Capital account 10.07 10.31 10.81
MEMO
Commercial real estate loans 23.05 24.62 27.25
Other real estate owned .10 .11 .10
Managed liabilities 26.57 26.40 26.98
Federal Home Loan Bank
advances 5.71 6.29 6.46
Average net consolidated
assets (billions of dollars) 1,022 1,072 1,080
Effective interest
rate (percent) (2)
Rates earned
Interest-earning assets 6.43 5.60 5.46
Taxable equivalent 6.51 5.68 5.53
Loans and leases, gross 7.33 6.58 6.26
Net of loss provisions 6.57 6.02 5.86
Securities 4.93 3.80 3.77
Taxable equivalent 5.19 4.05 4.02
Investment account 4.93 3.82 3.77
U.S. Treasury securities
and U.S. government
agency obligations
(excluding MBS) 4.54 3.42 3.15
Mortgage-backed
securities 5.38 3.95 4.01
Other 4.51 4.07 4.21
Trading account 3.82 1.67 3.63
Gross federal funds sold and
reverse RPs 1.73 1.27 1.57
Interest-bearing balances at
depositories 1.79 1.26 1.47
Rates paid
Interest-bearing liabilities 2.54 1.88 1.73
Interest-bearing deposits 2.28 1.61 1.44
In foreign offices 2.14 1.43 1.43
In domestic offices 2.28 1.61 1.44
Other checkable deposits 1.06 .74 .72
Savings (including
MMDAs) 1.17 .76 .74
Large time deposits (3) 3.34 2.58 2.33
Other time deposits (3) 3.77 2.86 2.51
Gross federal funds
purchased and RPs 1.83 1.29 1.45
Other interest-bearing
liabilities 4.17 3.60 3.37
Income and expense
as a percentage
of average net
consolidated assets
Gross interest income 5.85 5.08 4.99
Taxable equivalent 5.93 5.16 5.06
Loans 4.58 4.08 4.02
Securities 1.15 .91 .88
Gross federal funds sold and
reverse RPs .07 .05 .05
Other .05 .05 .04
Gross interest expense 1.92 1.41 1.29
Deposits 1.49 1.04 .92
Gross federal funds
purchased and RPs .09 .07 .08
Other .34 .30 .29
Net interest income 3.93 3.68 3.70
Taxable equivalent 4.00 3.75 3.77
Loss provisioning (4) .55 .41 .31
Non-interest income 2.37 2.31 2.27
Service charges on deposits .41 .41 .39
Fiduciary activities .35 .34 .37
Trading revenue * .01 .01
Interest rate exposures * .01 .01
Foreign exchange rate
exposures * * *
Other commodity and equity
exposures * * *
Other 1.61 1.55 1.50
Non-interest expense 3.73 3.60 3.54
Salaries, wages, and
employee benefits 1.64 1.64 1.64
Occupancy .45 .43 .43
Other 1.64 1.53 1.48
Net non-interest expense 1.36 1.29 1.28
Gains on investment account
securities .04 .05 .02
Income before taxes and
extraordinary items 2.06 2.03 2.13
Taxes .67 .66 .69
Extraordinary items, net of
income taxes * .03 *
Net income 1.39 1.40 1.45
Cash dividends declared 1.19 1.64 .78
Retained income .19 -.25 .67
MEMO: Return on equity 13.75 13.54 13.39
* In absolute value, less than 0.005 percent.
n.a. Not available.
MMDA Money market deposit account.
RP Repurchase agreement.
CD Certificate of deposit.
(1.) Includes allocated transfer risk reserves.
(2.) When possible, based on the average of quarterly balance
sheet data reported on schedule RC-K of the quarterly Call Report.
(3.) Before 1997, large time open accounts included in other time
deposits.
(4.) Includes provisions for allocated transfer risk.
E. Banks not ranked among the 1,000 largest by assets
Item 1995 1996 1997 1998
Balance sheet items as a
percentage of average
net consolidated assets
Interest-earning assets 92.48 92.45 92.45 92.64
Loans and leases, net 56.60 57.38 58.76 59.11
Commercial and industrial 9.65 9.98 10.16 10.33
U.S. addressees 9.59 9.91 10.08 10.25
Foreign addressees .06 .07 .08 .08
Consumer 9.54 9.42 8.98 8.46
Credit card 1.01 1.04 .85 .70
Installment and other 8.53 8.39 8.14 7.76
Real estate 33.54 34.10 35.55 36.04
In domestic offices 33.54 34.10 35.55 36.04
Construction and land
development 2.38 2.61 2.82 3.02
Farmland 2.48 2.55 2.69 2.83
One- to four-family
residential 17.45 17.47 18.16 18.04
Home equity 1.20 1.20 1.24 1.21
Other 16.25 16.28 16.92 16.83
Multifamily residential .95 .92 .95 .93
Nonfarm nonresidential 10.28 10.54 10.93 11.22
In foreign offices * * * *
To depository institutions
and acceptances
of other banks .19 .21 .20 .14
Foreign governments * * * *
Agricultural production 3.95 3.92 4.05 4.27
Other loans .72 .69 .67 .67
Lease-financing receivables .22 .23 .25 .24
LESS: Unearned income on
loans -.30 -.27 -.24 -.20
LESS: Loss reserves (1) -.93 -.90 -.87 -.86
Securities 30.52 29.53 28.24 26.70
Investment account 30.48 29.50 28.21 26.66
Debt 30.03 29.01 27.69 26.12
U.S. Treasury 9.19 7.85 6.70 5.05
U.S. government agency
and corporation
obligations 15.13 15.67 15.58 15.43
Government-backed
mortgage pools 4.19 4.21 4.01 3.90
Collateralized
mortgage
obligations 2.76 2.46 2.19 2.02
Other 8.18 9.00 9.38 9.51
State and local
government 4.69 4.62 4.60 4.80
Private mortgage-
backed securities .20 .18 .20 .16
Other .81 .68 .61 .68
Equity .45 .49 .52 .54
Trading account .03 .03 .03 .04
Gross federal funds sold and
reverse RPs 3.91 4.04 3.95 5.12
Interest-bearing balances at
depositories 1.45 1.51 1.49 1.72
Non-interest-earning assets 7.52 7.55 7.55 7.36
Revaluation gains held in
trading accounts * * * *
Other 7.52 7.55 7.55 7.36
Liabilities 90.04 89.82 89.63 89.54
Interest-bearing liabilities 75.74 75.58 75.47 75.35
Deposits 72.69 72.47 72.06 71.77
In foreign offices .11 .10 .09 .07
In domestic offices 72.58 72.37 71.97 71.70
Other checkable
deposits 12.37 11.75 11.39 11.18
Savings (including
MMDAs) 20.41 19.58 18.98 19.01
Small-denomination
time deposits 30.91 31.28 31.09 30.42
Large-denomination
time deposits 8.89 9.76 10.50 11.10
Gross federal funds
purchased and RPs 1.79 1.71 1.67 1.49
Other 1.26 1.41 1.75 2.09
Non-interest-bearing
liabilities 14.30 14.23 14.16 14.19
Demand deposits in
domestic offices 13.23 13.13 13.09 13.08
Revaluation losses held in
trading accounts * * * *
Other 1.07 1.10 1.06 1.10
Capital account 9.96 10.18 10.37 10.46
MEMO
Commercial real estate loans 13.72 14.18 14.80 15.27
Other real estate owned .25 .20 .16 .13
Managed liabilities 12.06 12.99 14.02 14.76
Federal Home Loan Bank
advances n.a. n.a. n.a. n.a.
Average net consolidated
assets (billions of dollars) 666 661 647 644
Effective interest rate
(percent) (2)
Rates earned
Interest-earning assets 8.39 8.37 8.50 8.35
Taxable equivalent 8.53 8.50 8.63 8.48
Loans and leases, gross 9.80 9.75 9.80 9.69
Net of loss provisions 9.54 9.47 9.49 9.34
Securities 6.10 6.14 6.26 6.04
Taxable equivalent 6.49 6.52 6.65 6.46
Investment account 6.10 6.14 6.26 6.04
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 6.07 6.47 6.33 5.26
Gross federal funds sold and
reverse RPs 5.95 5.34 5.51 5.36
Interest-bearing balances at
depositories 5.88 5.63 5.62 5.67
Rates paid
Interest-bearing liabilities 4.46 4.49 4.61 4.60
Interest-bearing deposits 4.39 4.44 4.54 4.53
In foreign offices 5.73 5.34 4.77 5.08
In domestic offices 4.39 4.44 4.53 4.53
Other checkable deposits 2.50 2.41 2.46 2.44
Savings (including
MMDAs) 3.32 3.26 3.36 3.39
Large time deposits (3) 5.55 5.48 5.53 5.53
Other time deposits (3) 5.51 5.61 5.66 5.63
Gross federal funds
purchased and RPs 5.61 5.11 5.22 4.99
Other interest-bearing
liabilities 6.45 5.77 6.32 6.45
Income and expense as a
percentage of average
net consolidated assets
Gross interest income 7.78 7.77 7.90 7.75
Taxable equivalent 7.91 7.89 8.02 7.87
Loans 5.63 5.68 5.86 5.80
Securities 1.86 1.80 1.76 1.59
Gross federal funds sold and
reverse RPs .25 .24 .24 .29
Other .04 .04 .04 .06
Gross interest expense 3.37 3.39 3.48 3.46
Deposits 3.19 3.22 3.28 3.25
Gross federal funds
purchased and RPs .10 .08 .08 .07
Other .08 .08 .11 .13
Net interest income 4.41 4.38 4.42 4.28
Taxable equivalent 4.54 4.50 4.54 4.41
Loss provisioning (4) .24 .25 .27 .29
Non-interest income 1.38 1.42 1.41 1.52
Service charges on deposits .44 .44 .44 .42
Fiduciary activities .22 .19 .20 .23
Trading revenue .01 * * *
Interest rate exposures n.a. * * *
Foreign exchange rate
exposures n.a. * * *
Other commodity and equity
exposures n.a. * * *
Other .71 .79 .77 .86
Non-interest expense 3.80 3.70 3.69 3.74
Salaries, wages, and
employee benefits 1.79 1.77 1.80 1.82
Occupancy .50 .49 .49 .49
Other 1.51 1.44 1.40 1.43
Net non-interest expense 2.42 2.28 2.28 2.23
Gains on investment account
securities * .01 .01 .02
Income before taxes and
extraordinary items 1.75 1.85 1.89 1.79
Taxes .55 .59 .59 .53
Extraordinary items, net of
income taxes * * * *
Net income 1.20 1.26 1.30 1.26
Cash dividends declared .62 .64 .74 .82
Retained income .58 .62 .56 .44
MEMO: Return on equity 12.05 12.37 12.53 12.02
Item 1999 2000 2001
Balance sheet items
as a percentage of
average net
consolidated assets
Interest-earning assets 92.55 92.52 92.26
Loans and leases, net 59.76 62.31 62.67
Commercial and industrial 10.64 11.09 11.10
U.S. addressees 10.55 11.02 11.02
Foreign addressees .08 .07 .08
Consumer 8.16 7.98 7.42
Credit card .69 .59 .57
Installment and other 7.47 7.39 6.85
Real estate 36.84 39.29 40.30
In domestic offices 36.83 39.29 40.30
Construction and land
development 3.28 3.70 4.23
Farmland 2.95 3.06 3.04
One- to four-family
residential 17.66 18.43 18.25
Home equity 1.17 1.28 1.37
Other 16.49 17.15 16.87
Multifamily residential .98 1.04 1.06
Nonfarm nonresidential 11.96 13.06 13.71
In foreign offices * * *
To depository institutions
and acceptances
of other banks .14 .12 .12
Foreign governments .01 .01 *
Agricultural production 4.06 3.85 3.76
Other loans .67 .69 .67
Lease-financing receivables .26 .27 .27
LESS: Unearned income on
loans -.15 -.11 -.09
LESS: Loss reserves (1) -.87 -.88 -.88
Securities 26.91 25.40 22.80
Investment account 26.88 25.38 22.79
Debt 26.34 24.82 22.49
U.S. Treasury 3.34 2.12 1.33
U.S. government agency
and corporation
obligations 16.89 16.95 15.27
Government-backed
mortgage pools 3.95 3.47 3.78
Collateralized
mortgage
obligations 2.00 1.70 1.94
Other 10.93 11.78 9.56
State and local
government 4.96 4.64 4.51
Private mortgage-
backed securities .26 .23 .27
Other .89 .88 1.11
Equity .53 .56 .30
Trading account .03 .02 .01
Gross federal funds sold and
reverse RPs 4.17 3.22 5.01
Interest-bearing balances at
depositories 1.71 1.59 1.77
Non-interest-earning assets 7.45 7.48 7.74
Revaluation gains held in
trading accounts * * *
Other 7.45 7.48 7.74
Liabilities 89.75 89.88 89.59
Interest-bearing liabilities 75.89 76.04 76.00
Deposits 71.40 70.53 70.93
In foreign offices .07 .05 .06
In domestic offices 71.33 70.48 70.88
Other checkable
deposits 11.07 10.57 10.19
Savings (including
MMDAs) 19.69 19.03 19.13
Small-denomination
time deposits 29.07 28.41 28.07
Large-denomination
time deposits 11.50 12.47 13.48
Gross federal funds
purchased and RPs 1.79 2.06 1.55
Other 2.71 3.45 3.51
Non-interest-bearing
liabilities 13.86 13.84 13.59
Demand deposits in
domestic offices 12.80 12.64 12.16
Revaluation losses held in
trading accounts * * *
Other 1.06 1.20 1.44
Capital account 10.25 10.12 10.41
MEMO
Commercial real estate loans 16.33 17.91 19.15
Other real estate owned .11 .11 .12
Managed liabilities 16.09 18.08 18.67
Federal Home Loan Bank
advances n.a. n.a. 3.34
Average net consolidated
assets (billions of dollars) 651 655 675
Effective interest
rate (percent) (2)
Rates earned
Interest-earning assets 8.05 8.44 7.94
Taxable equivalent 8.18 8.56 8.05
Loans and leases, gross 9.28 9.51 9.03
Net of loss provisions 8.89 9.14 8.59
Securities 5.88 6.15 5.86
Taxable equivalent 6.29 6.54 6.28
Investment account 5.89 6.15 5.86
U.S. Treasury securities
and U.S. government
agency obligations
(excluding MBS) n.a. n.a. 5.97
Mortgage-backed
securities n.a. n.a. 6.20
Other n.a. n.a. 5.29
Trading account 3.60 4.01 6.43
Gross federal funds sold and
reverse RPs 4.96 6.25 3.83
Interest-bearing balances at
depositories 5.69 6.38 4.56
Rates paid
Interest-bearing liabilities 4.28 4.80 4.40
Interest-bearing deposits 4.22 4.67 4.32
In foreign offices 4.34 5.13 3.97
In domestic offices 4.22 4.67 4.32
Other checkable deposits 2.28 2.47 1.97
Savings (including
MMDAs) 3.21 3.56 2.81
Large time deposits (3) 5.21 5.89 5.53
Other time deposits (3) 5.25 5.70 5.60
Gross federal funds
purchased and RPs 4.73 5.69 3.92
Other interest-bearing
liabilities 5.64 6.24 5.74
Income and expense
as a percentage of
average net
consolidated assets
Gross interest income 7.48 7.83 7.35
Taxable equivalent 7.60 7.95 7.45
Loans 5.62 5.99 5.75
Securities 1.58 1.57 1.32
Gross federal funds sold and
reverse RPs .22 .21 .20
Other .06 .05 .08
Gross interest expense 3.26 3.64 3.34
Deposits 3.02 3.30 3.08
Gross federal funds
purchased and RPs .08 .12 .06
Other .15 .21 .20
Net interest income 4.22 4.20 4.01
Taxable equivalent 4.35 4.31 4.12
Loss provisioning (4) .31 .32 .36
Non-interest income 1.44 1.32 1.31
Service charges on deposits .42 .43 .44
Fiduciary activities .26 .21 .25
Trading revenue * .01 *
Interest rate exposures * * *
Foreign exchange rate
exposures * * *
Other commodity and equity
exposures * * *
Other .75 .68 .62
Non-interest expense 3.73 3.58 3.55
Salaries, wages, and
employee benefits 1.82 1.78 1.79
Occupancy .49 .47 .47
Other 1.42 1.32 1.29
Net non-interest expense 2.29 2.26 2.24
Gains on investment account
securities * -.01 .04
Income before taxes and
extraordinary items 1.62 1.61 1.45
Taxes .47 .45 .39
Extraordinary items, net of
income taxes * * *
Net income 1.15 1.17 1.06
Cash dividends declared .70 .79 .64
Retained income .45 .38 .42
MEMO: Return on equity 11.26 11.52 10.16
Item 2002 2003 2004
Balance sheet items
as a percentage of
average net
consolidated assets
Interest-earning assets 92.22 92.13 92.34
Loans and leases, net 62.72 62.33 63.81
Commercial and industrial 10.71 10.42 10.29
U.S. addressees 10.64 10.37 10.25
Foreign addressees .06 .05 .04
Consumer 6.76 6.16 5.45
Credit card .49 .51 .40
Installment and other 6.28 5.64 5.05
Real estate 41.52 42.32 44.76
In domestic offices 41.52 42.31 44.76
Construction and land
development 4.51 4.99 6.00
Farmland 3.08 3.12 3.22
One- to four-family
residential 17.91 17.10 17.20
Home equity 1.62 1.80 2.12
Other 16.29 15.30 15.08
Multifamily residential 1.16 1.28 1.41
Nonfarm nonresidential 14.86 15.82 16.93
In foreign offices * * *
To depository institutions
and acceptances
of other banks .10 .09 .07
Foreign governments * * *
Agricultural production 3.64 3.39 3.26
Other loans .65 .66 .68
Lease-financing receivables .31 .26 .25
LESS: Unearned income on
loans -.07 -.06 -.06
LESS: Loss reserves (1) -.90 -.92 -.89
Securities 23.34 23.46 23.33
Investment account 23.33 23.43 23.32
Debt 23.05 23.11 23.06
U.S. Treasury 1.04 .90 .81
U.S. government agency
and corporation
obligations 16.07 16.22 16.56
Government-backed
mortgage pools 4.54 4.84 4.75
Collateralized
mortgage
obligations 2.30 2.20 1.96
Other 9.23 9.18 9.85
State and local
government 4.56 4.73 4.67
Private mortgage-
backed securities .26 .21 .19
Other 1.12 1.05 .83
Equity .27 .31 .26
Trading account .01 .03 .01
Gross federal funds sold and
reverse RPs 4.26 4.26 3.33
Interest-bearing balances at
depositories 1.89 2.08 1.86
Non-interest-earning assets 7.78 7.87 7.66
Revaluation gains held in
trading accounts * * *
Other 7.78 7.87 7.66
Liabilities 89.72 89.58 89.55
Interest-bearing liabilities 76.01 75.47 75.22
Deposits 70.50 69.82 68.87
In foreign offices .06 .05 .07
In domestic offices 70.44 69.77 68.80
Other checkable
deposits 10.42 10.60 10.59
Savings (including
MMDAs) 20.99 22.00 22.71
Small-denomination
time deposits 25.90 24.20 22.46
Large-denomination
time deposits 13.13 12.97 13.04
Gross federal funds
purchased and RPs 1.51 1.52 1.76
Other 4.00 4.13 4.59
Non-interest-bearing
liabilities 13.71 14.11 14.33
Demand deposits in
domestic offices 12.24 12.58 12.77
Revaluation losses held in
trading accounts * * *
Other 1.47 1.53 1.55
Capital account 10.27 10.42 10.45
MEMO
Commercial real estate loans 20.67 22.23 24.50
Other real estate owned .14 .15 .14
Managed liabilities 18.79 18.78 19.57
Federal Home Loan Bank
advances 3.71 3.87 4.33
Average net consolidated
assets (billions of dollars) 704 742 769
Effective interest
rate (percent) (2)
Rates earned
Interest-earning assets 6.79 5.94 5.73
Taxable equivalent 6.91 6.05 5.84
Loans and leases, gross 7.84 7.08 6.72
Net of loss provisions 7.39 6.72 6.45
Securities 5.02 3.86 3.73
Taxable equivalent 5.43 4.26 4.11
Investment account 5.02 3.87 3.73
U.S. Treasury securities
and U.S. government
agency obligations
(excluding MBS) 4.80 3.74 3.39
Mortgage-backed
securities 5.47 3.58 3.90
Other 4.87 4.43 4.18
Trading account 4.80 .66 7.23
Gross federal funds sold and
reverse RPs 1.63 1.08 1.32
Interest-bearing balances at
depositories 2.68 1.96 2.03
Rates paid
Interest-bearing liabilities 2.92 2.13 1.87
Interest-bearing deposits 2.78 2.02 1.75
In foreign offices 1.67 .85 1.04
In domestic offices 2.79 2.02 1.75
Other checkable deposits 1.16 .78 .70
Savings (including
MMDAs) 1.72 1.13 1.04
Large time deposits (3) 3.61 2.78 2.47
Other time deposits (3) 3.88 2.96 2.55
Gross federal funds
purchased and RPs 1.84 1.31 1.44
Other interest-bearing
liabilities 5.32 4.06 3.67
Income and expense
as a percentage of
average net
consolidated assets
Gross interest income 6.31 5.46 5.32
Taxable equivalent 6.41 5.56 5.42
Loans 5.02 4.47 4.35
Securities 1.16 .89 .87
Gross federal funds sold and
reverse RPs .07 .05 .05
Other .06 .05 .05
Gross interest expense 2.22 1.60 1.41
Deposits 1.98 1.42 1.22
Gross federal funds
purchased and RPs .03 .02 .02
Other .21 .17 .17
Net interest income 4.08 3.86 3.91
Taxable equivalent 4.19 3.96 4.01
Loss provisioning (4) .35 .29 .23
Non-interest income 1.39 1.47 1.39
Service charges on deposits .45 .43 .43
Fiduciary activities .27 .28 .32
Trading revenue * * *
Interest rate exposures * * *
Foreign exchange rate
exposures * * *
Other commodity and equity
exposures * * *
Other .67 .76 .64
Non-interest expense 3.57 3.56 3.52
Salaries, wages, and
employee benefits 1.82 1.82 1.81
Occupancy .46 .45 .45
Other 1.28 1.28 1.27
Net non-interest expense 2.18 2.09 2.14
Gains on investment account
securities .05 .04 .02
Income before taxes and
extraordinary items 1.60 1.53 1.56
Taxes .41 .38 .38
Extraordinary items, net of
income taxes -.01 * *
Net income 1.18 1.14 1.18
Cash dividends declared .68 .67 .64
Retained income .50 .47 .54
MEMO: Return on equity 11.47 10.97 11.29
* 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.) When possible, based on the average of quarterly balance
sheet data reported on schedule RC-K of the quarterly Call Report.
(3.) Before 1997, large time open accounts included in other time
deposits.
(4.) Includes provisions for allocated transfer risk.
A.2. Report of income, all U.S. banks, 1995-2004
Millions of dollars
Item 1995 1996 1997 1998
Gross interest income 302,530 313,696 338,865 359,675
Taxable equivalent 305,166 316,156 341,298 362,140
Loans 227,376 239,850 256,141 271,441
Securities 51,029 50,631 52,660 56,598
Gross federal funds sold and
reverse repurchase
agreements 9,744 9,272 13,658 14,999
Other 14,382 13,944 16,406 16,637
Gross interest expense 148,010 150,249 164,692 178,161
Deposits 105,326 107,512 117,350 125,217
Gross federal funds
purchased and repurchase
agreements 18,424 16,780 20,439 22,182
Other 24,259 25,956 26,903 30,760
Net interest income 154,520 163,447 174,173 181,514
Taxable equivalent 157,156 165,907 176,606 183,979
Loss provisioning 12,667 16,395 19,402 21,427
Non-interest income 83,850 95,313 105,640 123,668
Service charges on deposits 16,056 17,050 18,558 19,769
Fiduciary activities 12,889 14,296 16,584 19,268
Trading revenue 6,337 7,525 8,018 7,693
Other 48,568 56,444 62,480 76,939
Non-interest expense 151,162 162,581 171,060 193,833
Salaries, wages, and
employee benefits 64,017 67,826 72,346 79,538
Occupancy 19,761 20,892 22,080 24,164
Other 67,384 73,865 76,634 90,129
Net non-interest expense 67,312 67,268 65,420 70,165
Gains on investment account
securities 481 1,123 1,825 3,090
Income before taxes 75,024 80,908 91,177 93,016
Taxes 26,241 28,447 32,001 31,965
Extraordinary items, net of
income taxes 28 88 56 506
Net income 48,812 52,550 59,230 61,556
Cash dividends declared 31,106 39,419 42,801 41,205
Retained income 17,706 13,131 16,430 20,351
Item 1999 2000 2001
Gross interest income 366,137 423,839 404,606
Taxable equivalent 368,764 426,476 407,288
Loans 278,537 326,800 311,876
Securities 62,116 67,665 63,086
Gross federal funds sold and
reverse repurchase
agreements 12,330 13,546 12,649
Other 13,155 15,829 16,994
Gross interest expense 174,946 222,159 188,824
Deposits 119,665 151,145 132,390
Gross federal funds
purchased and repurchase
agreements 21,130 26,860 19,590
Other 34,149 44,155 36,841
Net interest income 191,191 201,680 215,782
Taxable equivalent 193,818 204,317 218,464
Loss provisioning 21,186 29,386 43,238
Non-interest income 144,429 153,163 160,298
Service charges on deposits 21,497 23,719 26,873
Fiduciary activities 20,502 22,220 21,989
Trading revenue 10,429 12,235 12,547
Other 92,001 94,988 98,889
Non-interest expense 204,632 216,432 226,057
Salaries, wages, and
employee benefits 86,151 89,036 94,239
Occupancy 25,865 26,765 27,944
Other 92,616 100,631 103,875
Net non-interest expense 60,203 63,269 65,759
Gains on investment account
securities 250 -2,280 4,625
Income before taxes 110,055 106,744 111,411
Taxes 39,211 37,250 37,105
Extraordinary items, net of
income taxes 169 -31 -324
Net income 71,012 69,463 73,980
Cash dividends declared 52,101 52,547 54,844
Retained income 18,912 16,916 19,137
Item 2002 2003 2004
Gross interest income 350,091 329,770 350,041
Taxable equivalent 352,838 332,553 353,029
Loans 269,942 258,158 269,746
Securities 59,316 53,315 58,583
Gross federal funds sold and
reverse repurchase
agreements 6,223 5,122 5,245
Other 14,610 13,175 16,467
Gross interest expense 118,915 94,462 99,245
Deposits 81,894 62,744 63,986
Gross federal funds
purchased and repurchase
agreements 9,919 7,590 9,203
Other 27,101 24,128 26,055
Net interest income 231,176 235,308 250,796
Taxable equivalent 233,923 238,091 253,784
Loss provisioning 45,298 32,790 23,996
Non-interest income 168,543 183,586 188,391
Service charges on deposits 29,631 31,693 33,457
Fiduciary activities 21,637 22,455 25,101
Trading revenue 10,735 11,446 9,956
Other 106,541 117,991 119,877
Non-interest expense 230,315 243,299 263,400
Salaries, wages, and
employee benefits 100,485 108,469 115,305
Occupancy 29,317 31,319 33,257
Other 100,514 103,510 114,838
Net non-interest expense 61,772 59,713 75,009
Gains on investment account
securities 6,415 5,633 3,822
Income before taxes 130,521 148,438 155,614
Taxes 42,980 48,450 49,887
Extraordinary items, net of
income taxes -78 427 63
Net income 87,464 100,416 105,791
Cash dividends declared 67,231 77,757 59,585
Retained income 20,232 22,659 46,206
NOTE. Except where otherwise indicated, data in this article are from the quarterly Reports of Condition and Income (Call Report) 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 and the effects of push-down accounting. For additional information on the adjustments to the data, see the appendix in William B. English and William R. Nelson (1998), "Profits and Balance Sheet Developments at U.S. Commercial Banks in 1997," Federal Reserve Bulletin, vol. 84 (June), p. 408. Size categories, based on assets at the start of each quarter, are as follows: the ten 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 2004, the approximate asset sizes of the banks in those groups were as follows: the ten largest banks, more than $96 billion; large banks, $6.7 billion to $96 billion; medium-sized banks, $422 million to $6.6 billion; and small banks, less than $422 million. 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 assets. Appendix table A.2 reports income statement data for all banks. (1.) Core deposits are transaction deposits, savings deposits (including money market deposit accounts), and small time deposits. (2.) The number of bank holding companies and related statistics shown here include all top-tier bank holding companies. The fifty large bank holding companies are defined as the fifty largest bank holding companies as measured by total consolidated assets after the exclusion of a few institutions whose commercial banking operations account for only a small portion of their assets and earnings. The article "Report on the Condition of the U.S. Banking Industry: Fourth Quarter 2004," also in this issue, provides information on the fifty large bank holding companies and on the banking industry from the perspective of bank holding companies (including financial holding companies) that file reports FR Y-9C and FR Y-9LP; currently, only about 2,200 top-tier bank holding companies are required to file those reports (see "Report on the Condition," table 1, last row, and note 1). (3.) The net financing gap rose in the fourth quarter because of a special dividend payment by Microsoft that reduced internal funds by $32 billion. Even after excluding this special payment, however, the financing gap increased over 2004. (4.) For more details, see the discussion in "Interest Income and Expense" below in the section "Trends in Profitability." (5.) BLPS respondents are instructed to consider only new loans for home purchase, not refinancings of existing mortgages. In many cases, however, the refinanced mortgage may not be held by the originating bank, making it difficult for the respondents to make this distinction easily. (6.) The merger was of two large bank holding companies and caused a reclassification of certain securitized credit card receivables as credit card loans; credit card outstandings jumped 46.2 percent in the third quarter as a result. (7.) For details, see Mark Carlson and Roberto Perli (2004), "Profits and Balance Sheet Developments at U.S. Commercial Banks in 2003," Federal Reserve Bulletin, vol. 90 (Spring), p. 168. (8.) The FHLBs were established in 1932 as government-sponsored enterprises chartered to provide a low-cost source of funds, primarily for mortgage lending. They are cooperatively owned by their member financial institutions, a group that originally was limited to savings and loans associations, savings banks, and insurance companies. Commercial banks were first able to join FHLBs in 1989, and since then FHLB advances have become a significant source of funding for them, particularly for medium-sized and small banks. (9.) The Financial Accounting Standards Board defines goodwill as an intangible asset equal to the excess of the cost of an acquired entity over the net of the amounts assigned to assets acquired and liabilities assumed--in other words, the premium paid by the acquirer of a firm. For details on how this affected banks' accounting, see Mark Carlson and Roberto Perli (2003), "Profits and Balance Sheet Developments at U.S. Commercial Banks in 2002," Federal Reserve Bulletin, vol. 89 (June), p. 255. (10.) 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. 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 tier 1 ratio is the ratio of tier 1 capital to risk-weighted assets; the total ratio is the ratio of tier 1 plus tier 2 capital to risk-weighted assets. The leverage ratio is the ratio of tier 1 capital to tangible assets. Tangible assets are equal to total assets less assets excluded from common equity in the calculation of tier 1 capital. (11.) 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 CAMELS stands for a key element of bank financial condition--Capital adequacy, Asset quality, Management, Earnings, Liquidity, and Sensitivity to market risks. (12.) The estimated average margin by which banks exceeded standards for being well capitalized was computed as follows: Among the leverage, tier 1, and total capital ratios of each well-capitalized bank, the institution's "tightest" capital ratio is defined as the one closest to the regulatory standard for being well capitalized. The bank's margin is then defined as the percentage point difference between its tightest capital ratio and the corresponding regulatory standard. The average margin among all well-capitalized banks is the weighted average of all the individual margins, and the weights are each bank's share of the total assets of well-capitalized banks. (13.) The adjustments to the data to take account of mergers and the effects of push-down accounting were relatively large for 2004. (14.) For a discussion of the effects of market interest rates on the net interest margin, see Carlson and Perli (2004), "Profits and Balance Sheet Developments," p. 173. (15.) At the ten largest banks, the share of interest-bearing liabilities that consisted of managed liabilities was about 58 percent in 2004, compared with a share of 53 percent at large banks, 36 percent at medium-sized banks, and 26 percent at small banks. (16.) Yields on residential and commercial real estate loans are not available separately from the Call Report; only income data for the broader "real estate loan" category are available. To investigate the relationship between the concentration of commercial real estate loans in banks' real estate portfolios and the yield on real estate loans, we ran a cross-sectional regression of the latter on the share of real estate loans that are backed by commercial real estate. We found that the coefficient is both positive and statistically significant for small and medium-sized banks. RELATED ARTICLE: Commercial real estate lending by smaller banks. At the 100 largest banks, the share of assets that consists of commercial real estate (CRE) loans has changed little in recent years, while the share at medium-sized and small banks (hereafter, smaller banks) has increased substantially (chart A). This discussion explores some of the possible reasons for, and consequences of, the rapid accumulation of CRE loans at smaller banks. The growth in CRE loans at smaller banks as a group masks considerable variation across banks. We examined the distribution of growth rates of CRE loans at more than 5,000 smaller banks that had at least 1 percent of assets invested in CRE loans at the end of 1996 and remained in existence through the end of 2004. The median quarterly (annualized) growth rate of CRE loans over that period was between 5 percent and 20 percent for more than half of these banks; but about 15 percent of the banks saw runoffs in these loans, while roughly 10 percent of the banks had growth rates exceeding 25 percent (chart B). To facilitate the analysis, we classified each bank as "high growth" or "low growth" depending on whether the median rate of growth of its CRE loans was above or below the distribution's median value of 10.6 percent for all smaller banks in the 1997-2004 period. We then investigated the relative performance of the two groups over that period. [GRAPHICS OMITTED] The return on assets at high-growth banks has generally been higher than the return on assets at low-growth banks in recent years (chart C). Similarly, the return on equity (not shown) has been markedly higher at high-growth banks, in part because of their generally greater leverage. This better performance also reflects higher net interest margins at high-growth banks than at low-growth banks over the same period (data not shown). Delinquency rates on CRE loans have been relatively low by historical standards for both groups of banks. The delinquency rate at high-growth banks has been consistently below the rate at low-growth banks (chart D). The better performance of the high-growth banks in this regard may reflect, in part, the very fact of more rapid growth in such loans because new loans are presumably unlikely to default for a time. [GRAPHICS OMITTED] A portion of CRE loans consists of C&I loans that are collateralized by real estate--that is, loans the proceeds of which were not used to purchase or improve the securing real estate. (Call Report instructions specify that any loan secured by real estate is to be reported as a real estate loan.) In March 2005, Federal Reserve System staff members contacted nine smaller banks that had high concentrations of, and rapid growth in, CRE loans to inquire about their CRE lending. Asked what percentage of their CRE loans were C&I loans secured by real estate, the nine smaller banks gave answers that ranged from about 2 percent to about 30 percent, with most less than 10 percent. (1) A few of these banks indicated that over the three years ending in the first quarter of 2005, they had tightened CRE lending standards somewhat, on net, but similar fractions noted some tendency to ease loan terms by, for example, raising maximum loan sizes, trimming loan spreads over costs of funds, and boosting loan-to-value ratios. However, these banks had tightened debt-service coverage ratios, on net. They also indicated that their CRE lending over the past three years had been secured by properties located in both urban and suburban areas and to a lesser extent in exurban areas. The types of securing properties most frequently mentioned were warehouses and other industrial structures; also mentioned were office buildings as well as nursing homes and other medical facilities. The two most frequently mentioned reasons for the rapid growth of CRE lending over the past three years were generally favorable economic conditions and population growth in the banks' lending markets. Banks also mentioned that profitable investment in office buildings sometimes coincided with high vacancy rates because some of the vacant offices were less well suited for the types of businesses expanding in their markets. The banks generally did not attribute much of the growth to an increase in the share of CRE loans that represented real-estate-secured C&I loans. Banks reporting an increase in that share cited two factors: rising values of commercial structures, which increased the capacity of their owners to borrow, and the banks' imposition of stricter collateral requirements on borrowers. The rapid run-up in CRE loans over the past three years raises questions about its effects on other aspects of banks' balance sheets. The responses of the banks contacted suggest that the growth was accommodated in part by reducing capital-to-asset ratios, although banks also reported raising new capital to meet the rising demand for CRE credit. The banks generally reported that they had not reduced acquisitions of securities or limited the growth of other types of loans to accommodate the additional CRE assets. Note. Thomas F. Brady, of the Division of Monetary Affairs, prepared this material. (1.) A similar question was asked in the Federal Reserve Board's August 2002 Senior Loan Officer Opinion Survey on Bank Lending Practices; the institutions responding to the survey are generally much larger than the smaller banks under discussion here. For the fifty-three banks answering the question, the answer ranged from less than 2 percent to more than 30 percent, with most less than 20 percent. The average for all fifty-three respondents was about 15 percent. RELATED ARTICLE: Credit derivatives. Credit derivatives are over-the-counter agreements in which the risk of credit loss of a reference entity is transferred from one party (the beneficiary) to another (the protection provider). The Bank for International Settlements estimates that the total notional amount of credit derivatives outstanding worldwide was about $4.6 trillion in June 2004. (1) According to surveys of market participants conducted last year by the British Bankers' Association and Fitch Ratings, banks held the largest share of credit derivatives at the end of 2003. Securities firms, insurance companies, and hedge funds were also active participants in the market. Banks and securities firms were active on both sides of the market, while insurance companies were mostly sellers of protection. Hedge funds have been active as protection buyers for some time, but recently they became major players as protection sellers, too. (2) The Fitch survey reveals that about two-thirds of all credit derivatives held at the end of 2003 by U.S. and Canadian banks and broker-dealers were credit default swaps (CDS) referenced to an individual entity. Those contracts generally allow the beneficiary to deliver to the protection provider an obligation of the reference entity upon default of the latter and receive its par value in exchange. Portfolio CDS products, such as traded indexes of CDS, baskets of CDS, and synthetic collateralized debt obligations (CDOs) accounted for a further 25 percent of all credit derivatives. (3) Some portfolio products are popular because they allow investors to trade credit risk on a potentially large number of reference entities in just one transaction; others are popular because their value is sensitive to default correlation risk and thus can be used as a hedge against the tendency of different reference entities to default at the same time. In recent years the total notional amount of credit derivatives held by U.S. commercial banks has expanded very rapidly. According to regulatory reports, it exceeded $2.3 trillion at the end of 2004--more than double the total at the end of 2003--and more than 99 percent of the 2004 total was held at the ten largest institutions. Banks were beneficiaries on more than $1.2 trillion of the 2004 notional amount, and they were protection providers on about $1.1 trillion (chart A). On net, therefore, banks were recipients of credit protection, as they typically have been in the past, and only a handful of banks were net protection providers. As the credit quality of U.S. firms improved and credit spreads declined in 2004, the market value of credit derivatives contracts for which banks were the protection provider more than doubled, to about $15.5 billion. Conversely, the market value of contracts for which banks were the beneficiary declined a similar amount, and those positions showed a loss of about $15 billion at year-end (chart B). The aggregate net fair value of all credit derivatives contracts on banks' books was thus only about $500 million, down from a little more than $900 million a year earlier. [GRAPHICS OMITTED] As with most other types of derivatives contracts, banks enter into credit derivatives both in their role as dealers and for their own account. The large notional amount of credit derivatives held on banks' books, combined with the small net market value of those contracts, is consistent with banks having a substantial dealer role. Indeed, banks that are engaged in that type of activity would generally aim at keeping a balanced book by entering into at least partially offsetting contracts with a variety of counterparties. Banks may choose to enter into credit derivative contracts for their own account for a number of reasons. First, banks that wish to reduce their exposure to credit risk may find it less costly to buy protection in the CDS market than to reduce the size of their loan or bond portfolios. Buying such protection, unlike securitizing or selling loans in the secondary market, has the added advantage of enabling banks to retain and service the loans and thus avoid compromising their relationships with clients. (4) About three-fourths of the global banks that responded to the Fitch survey stated that they use credit derivatives to some extent for credit risk management purposes, although less than one-fifth mentioned it as a dominant reason for their involvement in the market. Second, credit derivatives can be viewed as an alternative asset class, and banks seeking to gain exposure to corporate credit risk or further diversify their existing credit portfolios can sell protection in the single-name or portfolio CDS market as an alternative to buying corporate bonds or extending C&I loans. About 70 percent of global banks do so, according to Fitch, but again only a minority of those said this was their main reason for participating in the market. A third important reason that banks may want to enter into credit derivatives contracts, mentioned by about half the global banks surveyed by Fitch, is regulatory capital management. Under the 1988 Basel Capital Accord, which determines the amount of regulatory capital that banks are required to hold against their credit exposures, loans to corporations carry a risk-based capital charge of 8 percent, which is largely independent of the credit quality of the borrower. For loans to highly rated corporations, this capital charge likely exceeds the amount of economic capital that a prudent bank would choose to hold against the credit exposure. Although credit derivatives are not covered by the 1988 accord, national bank regulators have treated them in a way that is consistent with the spirit of the accord. If a bank holds a loan on which it has purchased protection in the credit derivatives market from another bank, its only exposure, from a regulatory as well as an economic perspective, is to the counterparty bank. Since, under the 1988 accord, exposures to OECD banks (that is, banks regulated by a member country of the Organization for Economic Co-operation and Development) carry only a 1.6 percent capital charge, credit protection purchased from those banks allows banks to reduce considerably the capital they are required to hold against corporate loans and at the same time retain those loans on their balance sheets. The return earned on such loans, however, net of the cost paid for protection, is far below the loan rate. When implemented, the New Basel Capital Accord, or Basel II, will likely reduce the incentive to use credit derivatives for regulatory capital management of this sort because it provides for risk-based capital charges that are more closely matched with true economic risk. NOTE. Roberto Perli, of the Division of Monetary Affairs, prepared this material. (1.) See Bank for International Settlements, "Triennial Central Bank Survey: Foreign Exchange and Derivatives Market Activity in 2004, available at www.bis.org. (2.) See the British Bankers' Association, "Credit Derivatives Report 2003/ 2004," available at www.bba.org.uk; and Fitch Ratings, "Global Credit Derivatives Survey," Special Report, September 7, 2004, available at www.fitchratings.com. (3.) A CDS basket is a contract that is referenced to more than one entity. Typically, the buyer of protection has the right to deliver a defaulted bond and receive par in exchange upon the default of any of the entities referenced in the basket. Such contracts are called "first-to-default baskets." Investors can also trade "nth-to-default baskets," whereby they can deliver a bond for par upon the nth default among the reference entities. Synthetic CDOs are contracts that transfer credit risk on portfolios of CDS on a large number of reference entities. (4.) In their responses to a special question in the Federal Reserve Board's January 2003 Senior Loan Officer Opinion Survey on Bank Lending Practices, most banks indicated that purchasing a CDS is superior to selling a loan because it preserves the bank's relationship with the borrower. Elizabeth C. Klee and Fabio M. Natalucci, of the Board's Division of Monetary Affairs, prepared this article. Thomas C. Allard assisted in developing the database underlying much of the analysis. Arshia A. Burney provided research assistance. |
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