View PDF

The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.

Life After the Drought
Slow Growth in Rural America
The Wave o f Bank Failures




THE EIGHTH FEDERAL RESERVE DISTRICT

CONTENTS

Agriculture
Agriculture in 1989: Life After the Drought............................................................................................................1
Business
Rural Economic Performance Slows in the 1980s ................................................................................................. 5
Banking and Finance
U.S. Bank Failures Hit 200 in 1988 ................................................................. ................................................

. .9

Statistics ..................................................................................................................................................................... 14
Pieces of Eight—An Economic Perspective on the 8th District is a quarterly summary of agricultural, banking and
business conditions in the Eighth Federal Reserve District. Single subscriptions are available free of charge by writing:
Research and Public Information Department, Federal Reserve Bank of St. Louis, Post Office Box 442, St. Louis,
MO 63166. The views expressed are not necessarily official positions of the Federal Reserve System.



1

Agriculture in 1989:
Life After the Drought
by Michael T. Belongia

T

he 1988 drought temporarily reversed the
upward trends in grain surpluses and excess
capacity that have typified American and, indeed,
world agriculture in the 1980s. At the end of
1986, with U.S. stocks of coarse grains, wheat
and rice standing at 204 million tons, about equal
to one year’s domestic use, domestic farm pro­
grams idled more than 75 million acres of
cropland in 1987. Although stocks fell somewhat
by the end of 1987, helped in part by stronger ex­
ports, further acreage reductions were viewed as
necessary to lower accumulated stocks to less cost­
ly levels. Therefore, 1988 program enhancements
idled an additional 3 million acres of cropland.
What analysts had expected to be a gradual
reduction in stockpiles became, with the help of
the severe early-season drought, the largest oneyear reduction in world grain stocks on record:
U.S. grain stocks fell 100 million tons. Rice stocks
were relatively unaffected, in contrast, as the 1988
crop escaped most of the drought’s damage.
As farmers, consumers and policymakers look
to 1989, they face a number of conflicting signals.
Some, fearing the consequences of a world food
shortage, view the sharp reduction in stocks as
dangerous footing for the next crop year. After all,
the 1980s have seen three droughts already in the
U.S. (1980, 1985, 1988) and, in some analysts’
view, it is prudent to idle less acreage in 1989 to
rebuild stocks somewhat and ensure against the
possibility of another drought-damaged crop.
Others, however, note that crop production has
tended to rebound sharply after a drought and that
the world agricultural problem remains the
overemployment of resources in farming as
technological advances continue to increase food
output at a rate faster than the growth in food de­
mand. According to this view, 1988 was an aber­
ration and the best strategy is to continue to move
resources out of agriculture permanently.
While much discussion in 1988 focused on
lower grain production and stocks, 1989 involves
choices beyond the achievement of desired levels
of output and stock rebuilding. Reductions in grain
production led to higher prices for grain buyers—
households as well as poultry and livestock pro­
ducers who incur the cost of higher prices for
feed. The point, as always, is that agricultural pro­
gram decisions lead to redistributions of costs and



benefits between farmers, consumers and among
various groups of farmers. Moreover, as illustrated
by the repeated failures of the General Agreement
on Tariffs and Trade (GATT) negotiations on farm
subsidies across countries, domestic policy deci­
sions can have substantial effects on the welfare of
foreign consumers and farmers. With this as a
backdrop, the short summaries below indicate the
expectations for 1989 held by speakers at the U.S.
Department of Agriculture’s recent Outlook
Conference.1

Farm Finance
Overall, the prospect is good for additional
improvements in farm balance sheets in 1989. On
the negative side, it has been estimated that,
despite nearly $3 billion in special disaster
payments, the drought threatened the financial sur­
vival of 15,000 farms. On the positive side,
however, stabilizing land values, higher receipts
from both grain and livestock marketings and
moderate input price increases all indicate some
improvement in farm finances. Moreover, direct
payments to farmers from government programs,
although smaller, will continue to be substantial.
Government payments are expected to be near $11
billion in 1989, down from $14 billion in 1988
and $17 billion in 1987; as a percentage of net
farm income, this represents a two-year decline
from 37 percent to 24 percent.
A breakdown of the income outlook is shown
in table 1. Among items to note, the increase in
cash expenses will be due primarily to increases in
planted acreage and input use rather than higher
input prices. Farmers should rebuild inventories
somewhat, reversing the decline associated with
the drought. This inventory rebuilding, in turn,
will imply quite different movements in farm in­
come depending on the measure used. Net farm in­
come is projected to rise in 1989 because it is an
accrual-based measure, which will increase as crop
yields and receipts rise. Net cash income,
however, is expected to decline because lower
commodity sales associated with inventory
rebuilding will tend to reduce this measure.

Livestock
Beef
Beef production in 1989 is expected to be 7
percent lower than in 1988, falling to the lowest
level since 1980. Cattle inventories in 1988 fell
below 100 million head for the first time since
1961 and may fall another 1 percent this year.

2

Table 1
Farm Income Outlook for 19891
Receipts ($ billions)

1987

1988

1989

Livestock (total)

$76.0
33.8
10.3
11.5
17.8
2.6

$80
37
9
13
17
4

$79-81
37
10
14
18
0-2

62.0
4.9
8.8
9.6
23.5
15.2

69
6
9
13
24
17

69-72
7
10
12
25
15-18

17

14

10-12

Cash Expenses

103

111

115-118

Inventory Change

-1

-9

8-10

39
57

44-48
48-52

Cattle/Calves
Hogs
Poultry/Eggs
Dairy
Other

Crops (total)
Wheat
Corn
Soybeans
Fruits/Vegetables
Other
Direct Payments from
Government Programs

Net Farm Income
Net Cash Income

46
57

1 This partial table, compiled from speeches at the USDA Outlook Conference, does not include all income and expense items
necessary to derive the Net Farm Income and Net Cash Income figures.

Tightening beef supplies were associated with a 5
percent increase in beef prices to an average of
$2.59 per pound during the summer of 1988—a
record average price. A further rise of 1 percent
to 3 percent is forecast for 1989.
The outlook for 1989 beef production is af­
fected by the aftermath of the drought. On one
hand are the negative effects of higher production
costs. Feed prices rose sharply late in 1988 as
available grain supplies declined: corn prices in
November, at $2.60 per bushel, were 50 percent
higher than a year earlier and hay prices were
about 35 percent higher. A normal 1989 grain
crop, which would reverse some or all of these
feed price increases, would not be an influence un­
til late 1989. Offsetting this factor, however, is the
prospect for a fourth consecutive year of profits
for beef producers, following five years of losses.
Net returns to cow-calf producers, which are pro­
jected to be in the range of $40-$45 per head, will
be less than the $54 average last year. Thus,
analysts expect these returns to be sufficient to en­
courage some heifer retention by existing pro­
ducers but not re-entry to the industry by those
who left in the early 1980s.



Pork
As with beef, the effects of the drought are a
major variable in the pork outlook. Higher feed
costs have raised the break-even price for hog pro­
ducers about $5 per hundredweight. Because hog
prices are expected to rise only slightly, however,
returns to many producers could be negative in
1989, encouraging some herd liquidation.
Moreover, even though total pork output for 1989
is expected to be near 1988’s level, herd liquida­
tions associated with the sharply higher feed prices
during the second half of 1988 will be responsible
for a decline in pork production late in 1989.
Overall, 1989 pork supplies are expected to hold
near the 64 pounds per capita of 1988; retail
prices should rise between 1 percent and 3
percent.

Poultry and Eggs
Broiler production is expected to increase bet­
ween 3 percent and 5 percent in 1989, with most
of the increase occurring during the second half of

3

the year. Prices are expected to average between
50 cents to 56 cents per pound in the first quarter,
compared to the 45-cent average of the same
period in 1988. For the second and third quarters,
however, prices are expected to fall between 3
cents and 7 cents per pound relative to their 1988
values for the same periods. Turkey production
also is expected to increase 3 percent in 1989,
following 17 percent and 6 percent rises in 1987
and 1988. Prices may rise to the range of 68 cents
to 74 cents per pound, up from the 62-cent to
64-cent average expected for 1988.
Egg production has shown negative returns to
producers since 1987 and, as a consequence, is ex­
pected to decline 2 percent in 1989; 1988 produc­
tion is expected to be down 1 percent from a year
ago. Negative returns to producers are expected at
least through the first half of 1989, due largely to
higher feed costs. Retail prices are expected to rise
9 percent to a range of 68 cents to 74 cents per
dozen. This would be the highest average egg
price since 1984.
Dairy
Although cow numbers were down 1 percent
from 1987, a 3 percent increase in output per cow
raised 1988 milk production to a record high. A
declining milk-to-feed price ratio—caused by a
combined 50-cent reduction in the support price
and higher feed prices—will limit herd expansions
and tend to reduce output per cow in 1989 so that
production next year will be near the 1988 level.
This level of output is expected to raise prices
received by farmers by 10 cents to 50 cents above
the 1988 average price of about $12 per hun­
dredweight. Retail prices are expected to rise
2 percent. Commodity Credit Corporation (CCC)
purchases are expected to be eight to nine billion
pounds (milk equivalent) in 1988, up from 6.7
billion pounds in 1987. Purchases are expected to
fall in 1989, however, to five billion to seven
billion pounds.

Crops
Com
A 4 percent decline in harvested acreage,
combined with a 31 percent reduction in yields,
produced a 1988 corn crop 34 percent smaller than
the previous year’s. At 4,671 million bushels, this
was the smallest harvest since the drought-damaged
1983 crop. Ending stocks, forecast to be 1,446
million bushels, represent a 66 percent decline
from the 1987/88 crop year.
With more lenient provisions for corn pro­
gram participation [a 10 percent Acreage Reduc­



tion Program (ARP) and no paid land diversion
versus a 20 percent ARP and 15 percent diversion
in 1987/88], planted acreage is expected to rise
between 8 million and 10 million acres this year.
With normal yields, a corn crop of between 7.7
billion and 8.3 billion bushels is estimated. If the
crop turns out nearer the low estimate of 7.7
billion bushels, analysts expect little rebuilding of
stocks and only slight declines in price from the
$2.40-$2.80 per bushel average projected for
1988/89. Production at the high end of the range,
however, will likely trigger stock rebuilding and
push prices toward the $1.65 per bushel loan rate.
Soybeans
One effect of the drought, which reduced
U.S. soybean production in 1988 by 21 percent
and exports by 30 percent, has been the creation
of an opportunity for producers in the southern
hemisphere to expand production and output.
Because their crop followed the U.S. crop, South
American soybean producers had strong price
signals to plant more acreage and, perhaps, gain a
larger share of the world soybean market; the
1988/89 crop year price is expected to be $6.75 to
$8.75 per bushel, up from $6.15 in 1987/88. An
indicator of their expanded production is the pro­
jection that larger soybean exports from South
America will offset the 30 percent decline in U.S.
exports so that, on net, world trade in soybeans
will decline only 4 percent.
Rice
Rice production of 158.4 million hun­
dredweight in 1988 was up 24 percent from the
previous year and was the largest crop harvested
since 1981. Most of this expansion can be at­
tributed to relatively high prices when the 1988
crop was planted and a loosening of planting
restrictions under the rice program as growers
were allowed to plant 75, rather than 65, percent
of their base acreage. World rice supplies are ex­
pected to be relatively tight in 1989, despite near­
record production levels, because of increased
utilization; usage is forecast to rise by 6 million
tons. World trade also is expected to expand, in
part, because higher grain prices have made rice
an attractive substitute.
Wheat
1989 will begin with the lowest stocks-to-use
ratio in 15 years. Consequently, the ARP for this
year’s crop was reduced from 27.5 percent to 10
percent. This, plus higher prices, leads analysts to
expect planted acreage to expand between 13
million and 15 million acres. A trend yield of 38

f l

Table 2
Percentage Changes in Food Price Indicators, 1986 through 1989
1986

1987

1988p

1989f

3.2 %

4.1%

4.0%

3 to 5%

Food away from home

3.9

4.0

3.9

4 to 6

Food at home

2.9

4.3

4.0

3 to 5

4.3
3.2
0.6
8.2
7.5
9.2
6.9
0.2

6.4
7.1
7.6
8.2
-1 .5
10.6
-5 .9
2.5

3.2
2.0
4.9
- 2 .9
6.6
6.1
5.2
2.0

0
1
1
1
- 4
4
15
2

to
to
to
to
to
to
to
to

3
3
3
4
- 7
7
20
4

- 2 .2
0.9
2.1
4.0
- 1 .6
- 2 .9
- 0 .2
3.2
2.8
5.9
2.6

1.5
8.8
11.3
12.9
3.5
4.1
2.7
1.8
3.5
- 2 .6
4.2

4.1
7.3
7.8
5.8
8.1
10.6
4.7
2.7
6.4
0.0
3.6

3
3
6
0
4
4
4
4
4
4
3

to
to
to
to
to
to
to
to
to
to
to

6
6
9
3
7
7
7
7
7
7
5

Consumer Price Indexes
All food

Meat, poultry and fish
Meat
Beef and veal
Pork
Poultry
Fish and seafood
Eggs
Dairy products
Fats and oils
Fruits and vegetables
Fresh fruits
Fresh vegetables
Processed fruits and vegetables
Processed fruits
Processed vegetables
Sugar and sweets
Cereals and bakery products
Nonalcoholic beverages
Other prepared foods
p = preliminary

f= forecast

bushels per acre would increase the 1989/90 wheat
crop by 40 percent more than last year’s droughtdamaged crop. The season average price for 1988
is expected to be between $3.55 and $3.85 per
bushel, compared to $2.57 in the previous year. A
season average price between $3.40 and $3.80 per
bushel is expected for 1989. This expectation of
continued high wheat prices is based on the
historically low stocks entering 1989, world
utilization projected at 530 million tons and world
production somewhat less than 530 million tons.
Cotton
The 1988/89 crop, at 14.8 million bales, was
slightly larger than the previous year’s. With
domestic use and exports both declining, however,
stocks are expected to rise 3 million bales to 8.8
million, about 30 percent larger than the 1982-86
average. The 25 percent decline in exports can be
attributed to the price support program that causes
noncompetitive U.S. prices.
The 1989/90 crop will be influenced by a
doubling of the cotton program’s ARP to 25 per­
cent of base acreage. Combined with reductions in
both the target price (down 2.5 cents to 73.4



cents) and loan rate (down 1.8 cents to 50 cents),
domestic production should decline about 2 million
bales; this projection is based on trend yields and a
reduction in planted acreage between 2 million and
3 million acres.

Food Prices
Domestic retail food prices are expected to in­
crease in 1989 at close to the 4 percent rate ex­
perienced in 1987 and 1988. Prices for eggs, fish
and seafood, fruits, cereal and bakery products and
nonalcoholic beverages are forecast to rise slightly
faster than the overall rate. The rise in the food
index will be held down, however, by slower in­
creases in meat prices generally (and poultry
prices, in particular), and fresh vegetable prices.
Table 2 summarizes the projections for food price
changes by component for 1989.*1
FOOTNOTES
1Much of the material in the introduction is taken from
Ewen M. Wilson, “ Implications of the 1988 Drought for
Agricultural Production and Stocks,” Washington, D.C.,
December 1, 1988.

Rural Economic
Performance Slows
in the 1980s
by Kenneth C. Carraro and
Thomas B. Mandelbaum

M

T .^ ^ L a n y people imagine rural America
as a sparsely populated expanse dominated by
farms and a few oil wells. In most rural
communities, however, far more people are
working in either manufacturing or service jobs
than are employed in farming or mining. Given the
publicity regarding the “ rural crisis,” many
envision deteriorating economic conditions
throughout the countryside precipitated by the fall
in commodity prices during the 1980s. On
average, it is true that rural economies have grown
more slowly than metropolitan areas during the
current decade; however, a closer look reveals
wide variations in rural economic conditions
among regions and even within states.
This article provides an overview of the
performance of rural economies in the 1970s and
early 1980s. After summarizing national economic
trends in rural areas, the focus is narrowed
progressively to examine rural economic growth at
the District, state and county levels. In this article,
the term “ rural” refers to those counties not
included in metropolitan statistical areas as defined
by the federal government.1

Are Rural Areas Falling Behind?
Rural areas have grown more slowly than
metropolitan areas in the 1980s, evidenced by
numerous economic measures. The concern
regarding the slower rural growth in recent years
may stem partially from a comparison with the
1970s, when U.S. rural areas outpaced
metropolitan areas in terms of most economic and
demographic indicators (see table 1).
From 1979 to 1986, growth in real personal
income was more than twice as fast in the nation’s
metropolitan areas (2.3 percent annual rate) as it
was in rural areas (0.9 percent annual rate). In
stark contrast, real personal income grew faster
(3.8 percent rate) in rural areas than in
metropolitan areas (2.8 percent rate) in the 1970s.
The relatively slow rural growth has led to a
decline in rural per capita income as a percentage



of metropolitan per capita income. In 1979, the
nation’s rural per capita income (adjusted for
inflation, 1982-84 dollars) stood at $10,151 or 77
percent of the nation’s metropolitan per capita
income of $13,163. By 1986, rural per capita
income of $10,330 fell to only 72.4 percent of the
nation’s metropolitan per capita income of
$14,271.
Not surprisingly, total employment, as well as
other economic indicators shown in table 1, are
consistent with the relative income trends. Total
employment in the 1970s grew at a 2.2 percent
annual rate in both areas. In the 1980s, however,
the rural employment growth rate fell sharply to
0.8 percent annually while the metropolitan
employment growth rate fell only slightly to 2
percent. The rate of decline of farm employment
increased from 0.6 percent per year in the 1970s
to 2 percent per year in the 1980s.

Eighth District Trends
As in the nation, the Eighth District’s rural
growth was faster than in metropolitan counties in
the 1970s and then slowed in comparison to
metropolitan counties in the 1980s.2 Additionally,
the District grew more slowly than the nation in
the 1980s after closely mirroring the national
growth rate in the 1970s. The overall slower
District growth may reflect the pattern of national
economic growth during the 1980s that has been
called the “ bi-coastal economy.” This term
emphasizes the relatively rapid economic growth
on the East coast and in California compared with
interior states.

Table 1
Compounded Annual Growth Rates
1969-79

1979-86

Rural Metro

Rural Metro

Real Personal Income
United States
District

3.8%
3.8

2.8%
2.4

0.9%
0.2

2.3%
1.0

Population
United States
District

1.3
1.1

1.0
0.7

0.7
0.3

1.1
0.4

Real Per Capita Income
United States
District

2.5
2.7

1.7
2.1

0.3
0.0

1.2
0.6

Total Employment
United States
District

2.2
1.8

2.2
1.7

0.8
0.4

2.0
0.9

Business

5

6

Table 2
Compounded Annual Growth Rates of Real
Personal Income in Eighth District States
1969-79
Rural
Arkansas
Kentucky
Illinois
Indiana
Mississippi
Missouri
Tennessee

4.9%
4.8
2.9
2.5
4.3
3.9
4.6

Metro
4.7%
3.0
1.8
2.4
4.9
2.2
3.8

1979-86
Rural
1.0%
0.2
-0 .8
-0 .1
0.2
0.6
1.1

Metro
1.8%
0.9
0.6
0.2
1.5
1.8
2.2

Table 2 demonstrates that the faster rural
growth of the 1970s and slower rural growth of
the 1980s, relative to metropolitan areas, was pre­
sent in each District state except Mississippi. In all
cases, both rural and metropolitan real personal in­
come growth was slower in the 1980s than in the
1970s. In fact, two states, Illinois and Indiana,
registered declines in rural income. On the other
hand, Tennessee had both the highest rural growth,
1.1 percent, and the highest metropolitan growth,
2.2 percent, in the 1980s.
Other economic measures, shown in table 1,
confirm the story of slower rural development. In
the District, the growth rates of population, per
capita income and total employment all were
slower in rural areas than in metropolitan areas in
the 1980s. Per capita personal income in the
District’s rural counties fell to $9,634 or 77.4 per­
cent of the District’s metropolitan counties’
$12,444 in 1986. In 1979, rural per capita income
was 80.7 percent of metropolitan per capita
income.
The relatively slow rural growth has especial­
ly important consequences for the District
economy. In 1986, 34.9 percent of District
residents lived in rural areas compared with 23.2
percent of the nation’s population. There is
substantial variation among District states,
however. Just 17.6 percent of Illinois residents
lived in rural areas, while more than half of those
living in Arkansas, Mississippi and Kentucky did.

What Accounts for the District’s
Slow Rural Growth
One of the first places to look for an explana­
tion of the economic performance of an area is its
economic composition. In terms of employment,
metropolitan and rural areas of the District are
similar in most major categories. A few sectors,
however, provide important clues to help explain
the growth differential between rural and



metropolitan counties. These employment sectors
are services, wholesale and retail trade, manufac­
turing and finance.
The most rapid expansion of jobs in the
District during the 1980s occurred in the services
sector. Not only has the services sector produced
the largest job growth, it has also provided the
largest share of District employment. The ruralmetropolitan growth disparity is most apparent in
this sector. Service jobs grew at an annual rate of
4.2 percent in metropolitan counties and at a 3.4
percent rate in rural areas. Service jobs also ac­
counted for a smaller share of rural employment,
18.8 percent, than in metropolitan counties where
service jobs accounted for 26 percent of all jobs in
1986. In summary, not only were rural areas han­
dicapped with a smaller share of the most rapidly
growing employment sector, but also that sector
expanded slower than in metropolitan areas.
Similar stories characterize the District’s
finance, insurance and real estate sector and the
wholesale and retail trade job sector. Rural areas
had smaller shares of these rapidly growing sectors
and each sector had poorer performance in rural
areas than in metropolitan areas.
The manufacturing sector, however, provides
an interesting contrast to the job trends in the
above-cited sectors. Many observers are surprised
to find that rural economies have a heavier
reliance on manufacturing as a source of jobs and
income than do metropolitan areas. For example,
in 1986, 20.3 percent of all rural jobs were
classified as manufacturing jobs compared with on­
ly 17 percent in metropolitan areas. This higher
reliance on manufacturing is a relatively new
phenomenon; as recently as 1978 manufacturing
accounted for a higher proportion of metropolitan
jobs than it did of rural jobs (22.9 percent versus
22.8 percent). This change has occurred because
rural areas have lost manufacturing jobs at a
slower rate than have metropolitan areas. The dif­
ference in manufacturing structure, therefore,
serves to counteract the slower rural growth.

Rural Heterogeneity
We have all heard horror stories regarding the
problems of some rural communities in recent
years. For example, in Arkansas, the unemploy­
ment rate in St. Francis County stood at more than
27 percent in June 1988 due to manufacturing
layoffs. Although situations such as these publicize
the severe difficulties facing some rural counties,
particularly those lacking a diversified economic
base, they are atypical. Like metropolitan areas,
rural America is far from homogeneous, a fact
hidden by aggregate growth rates such as those in
table 1.

0
Real Personal Income Growth
Compounded Annual Rates, 1979-86

Fastest fifth
Second-fastest fifth
Middle fifth
Second-slowest fifth
Slowest fifth
Denotes metropolitan counties



8

The variation in economic performance among
District counties can be seen in the map on the
previous page. Areas that contain one or more
metropolitan areas are enclosed by a heavy outline.
The 681 counties on the map are shaded according
to real personal income growth between 1979 and
1986. They are divided into five groups of coun­
ties ranging from the slowest fifth, shaded dark
gray, to the most rapidly growing fifth, shaded
dark green3
The largest concentration of rapidly growing
counties is in northwestern Arkansas and southcentral Missouri. Metropolitan counties, which ac­
count for 20 percent of the 681 counties in the
seven states, account for 31 percent of the two
most rapidly growing groups of counties. Ten­
nessee is notable because only three of the state’s
95 counties fall into the slowest group and twothirds of the counties are in the top two growth
categories. The fastest growing county in the seven
states was Williamson County, part of the
Nashville, Tennessee, metropolitan area, with an
annual real income growth of 6.2 percent. St.
Charles County, part of the St. Louis metropolitan
area, was the second-fastest growing county with
annual growth of 5.6 percent.

FOOTNOTES
M etropolitan statistical areas are regions that have a city
of at least 50,000 in population or an urbanized area of at
least 50,000 with total population of at least 100,000.
Metropolitan areas are generally defined in terms of entire
counties and include the county containing the main city
as well as surrounding counties that have strong
economic and social ties to the central county.
2ln this article, the Eighth Federal Reserve District is
represented by the entire states of Arkansas, Illinois,
Indiana, Kentucky, Mississippi, Missouri and Tennessee.




The slowest growing counties, shaded dark
gray, are concentrated in two bands and are
primarily in rural areas. The largest concentration
of slow-growing counties is spread across rural
portions of northern Missouri and north-central Il­
linois. The second concentration of slow-growing
counties spans the lower Mississippi River valley.
The four counties with the least growth are in
rural areas in this region. Issaquena and Jefferson
counties in Mississippi—in which real income
dropped at rates of 6.3 percent and 5.0 p ercen tborder the river. Prairie County, Arkansas, and
Quitman County, Mississippi—in which real in­
come fell at rates of 4.4 percent and 4.1
percent—are within 50 miles of the Mississippi
River.
The Congressional Research Service reported
last year that the lower Mississippi Valley has
replaced Appalachia as the nation’s poorest area.
Indeed, the slowest growing counties are in this
area. In response to the economic problems in the
lower Mississippi Valley area, Congress recently
created a regional commission to study and suggest
programs to aid the troubled economies.

Com pounded annual growth rates of real personal
income in the slowest fifth were less than or equal to
-1 .0 2 percent; the second-slowest fifth, greater than
-1 .0 2 percent and less than or equal to 0.01 percent; the
middle fifth, greater than 0.01 percent and less than or
equal to 0.72 percent; the second-fastest fifth, greater
than 0.72 percent and less than or equal to 1.60 percent;
and in the fastest fifth, greater than 1.60 percent.

g

U.S. Bank Failures
Hit 200 in 1988
by Lynn M. Barry

|>
■ ^ ^ i^ ^ a n k ru p t savings and loans are the focus
of an enormous amount of media and public
attention. Their federal insurance agency, the
Federal Savings and Loan Insurance Corporation,
is mentioned weekly if not daily in newspapers and
periodicals throughout our country. Failures,
however, have not been restricted to savings and
loans; an increasing number of commercial banks
have failed in recent years.
The Federal Deposit Insurance Corporation
(FDIC), through its regulatory and insurance
functions, has a mandate to preserve confidence in
and provide stability to the commercial banking
system. In addition, the FDIC is empowered to
maintain that confidence and stability through the
quick and efficient resolution of bank failures. The
recent wave of failures has challenged the FDIC’s
ability to achieve these objectives. Having
weathered in 1988 the largest number of bank
failures since its formation, the FDIC is currently
operating with a weakened deposit insurance fund.
In 1988, the FDIC handled 198 commercial
bank failures and two FDIC-insured thrift and loan
association failures. Texas and Oklahoma again
ranked number one and two in the number of bank
failures as banks located in the energy belt
continued to suffer from energy-related loan
exposure. For farm banks, however, 1988 marked
a year of continued recovery.
This article provides an analysis of 1988 bank
failures, looking at various geographic and
statistical breakdowns as well as describing the
process by which the FDIC handles insolvent
banks.

1988 Failures
The 221 failed and assisted banks in 1988
were far more than in any other year since the
Great Depression and compare with 203 in 1987,
145 in 1986, 120 in 1985 and 79 in 1984. To put
the volume of recent bank failures into
perspective, from the early 1940s through the early
1980s, an average of less than six banks failed
each year.
The FDIC began 1988 with roughly $18
billion in reserves in addition to annual income



from premium assessments of approximately $3.3
billion. In closing or merging these institutions last
year, gross outlays of roughly $8.3 billion were
incurred by the FDIC. For 1988, the FDIC
expects to post its first yearly operating loss, an
estimated $3 billion to $4 billion.
The assets of banks that failed or received
assistance in 1988 amounted to $53.8 billion, the
highest in the FDIC’s 55-year history, nearly eight
times the 1987 level. In all, however, the assets of
these failed banks represented less than 2 percent
of total U.S. bank assets.
The largest failed bank last year, First
RepublicBank Dallas, held $17.1 billion in assets.
The Dallas-based holding company was acquired
on July 29, 1988, by NCNB Corporation,
Charlotte, North Carolina, with $4 billion in
federal funds or guarantees. In 1987, the largest
commercial bank failure was Capital Bank and
Trust Company, Baton Rouge, Louisiana, with
closing assets of $384.4 million.
In 1988, the average failed bank held $191.7
million in assets compared with $37.7 million in
1987 (see table 1). The 1988 average is dominated
by the failure of 40 banks owned by First
RepublicBank Corporation; 31 of its 40 failed
banks had assets exceeding $100 million.
Excluding the banks associated with First
RepublicBank Corporation from the averages
yields an average failed bank asset size in 1988 of
$40.4 million.
Table 1 shows that 92 bank failures (46
percent) last year were at banks with less than $25
million in assets, 29 fewer than in 1987. In 1987,
66 percent of the year’s failures were in the
smallest asset size category. The failure rate for
banks with assets less than $25 million was 2.2
percent in 1988, down from 2.8 percent in 1987.
Banks with assets less than $100 million accounted
for 80.5 percent of 1988 failures, down from 93
percent in 1987. All but 39 of the 200 banks that
failed last year had assets less than $100 million;
while, in 1987, all but 13 of the 184 failures had
assets less than $100 million.

Geographic Distribution
Table 2 shows that 1988 commercial bank
failures were concentrated in the Tenth (Kansas
City) and Eleventh (Dallas) Federal Reserve
Districts where 159, or approximately 80 percent,
of the 200 bank failures were located. The 117
failures in the Dallas District had combined closing
assets of $34.9 billion, representing 19.1 percent
of total bank assets in the District. Assets at failed
Texas banks accounted for 91 percent of total
District failed bank assets in 1988. In the Kansas
City District, the 42 failures totaled $970.8 million

10

Table 1
Failed Bank Statistics by Asset Size 1987-1988
1988

Asset Size
(m illions)
Less than $25
$25 -$50
$50 -$100
$100-$300
$300-$ 1,000
More than $1,000

Failures

1987

Average
Asset Size
(m illions)

Failure
Rate1

Failures

Average
Asset Size
(m illions)

Failure
Rate1

92
46
23
25
10
4

$

13.5
36.0
70.0
178.3
598.8
5,848.7

2.2%
1.4
0.8
1.4
1.9
1.1

121
36
14
10
3
0

$ 13.0
36.1
68.5
180.3
433.1
0.0

2.8%
1.0
0.5
0.5
0.6
0.0

200

$

191.7

1.5%

184

$ 37.7

1.4%

’ Number of bank failures as a percentage of the total number of insured U.S. commercial banks as of year-end in each
respective asset size category.

in assets, 0.8 percent, of District bank assets.
As shown in table 3, Texas led all states with
113 bank failures in 1988, followed by Oklahoma
with 23, Louisiana with 11 and Colorado with 10.
Many of these failures can be attributed to energyrelated loan exposure. These four states accounted
for 157, 78.5 percent, of 1988 failures. Of the 184
bank failures in 1987, 108, or 59 percent, took
place in these states. At the other extreme, 27
states were failure-free in 1988 while another 14
states had only one bank closing.

Table 2
1988 Bank Failures by Federal Reserve D istrict
Federal Reserve D istrict

Failures

Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco

0
1
1
1
0
10
9
1
10
42
117
8

TOTAL

200

’ Includes the failure of two FDIC-insured thrift and loan
associations in California.




Of the 1988 bank failures, only one was
located in the Eighth (St. Louis) Federal Reserve
District. Lakeland State Bank, Sunrise Beach,
Missouri, closed on September 1, 1988, with
assets of $9.1 million. In 1987, the St. Louis
District reported two bank failures having
combined assets of $47.1 million.

Agricultural Banks
The brighter news in 1988 was the continuing
recovery of Farm Belt banks. The health of
agricultural banks—those with 25 percent or more
of their portfolio in farm loans—is improving.
With total assets of $422.5 million, failures of
agricultural banks accounted for 12 percent (24 of
200) of 1988 bank failures. As shown in table 4,
this compares to 29 percent, or 53 of the 184 bank
failures, in 1987. Iowa, Kansas and Minnesota led
in the number of farm bank failures in 1988 with
six in Iowa and five each in Kansas and
Minnesota.
In 1988, the average failed agricultural bank
had $17.6 million in assets. The largest, Liberty
Bank and Trust, Warsaw, Indiana, had closing
assets of $48.7 million.

Handling Failed Banks
When a bank fails, the FDIC can exercise
several options in its role of protecting depositors:
purchase and assumption, deposit transfer or
deposit payoff.

11

Table 3
FDIC-lnsured Bank Failures by State 1984-1988

Table 4
Agricultural Bank Failures by State 1986-1988

1984

1988

1987

1986

1985

Alabama

0

2

1

2

1

Alaska

1

2

1

0

0

Arizona

1

0

0

0

0

Arkansas

0

0

0

1

2

California

3

8

8

7

6

Colorado

10

13

7

6

2

Delaware

1

0

0

0

0

Florida

3

3

3

2

2

Idaho

0

0

1

0

0

Illinois

1

2

1

2

5

Indiana

1

3

1

1

2

Iowa

6

6

10

11

3

Kansas

6

8

14

13

7

Kentucky

0

1

2

0

1

Louisiana

11

14

8

0

1

Massachusetts

0

2

0

0

0

Michigan

1

0

0

0

1

Minnesota

7

10

5

6

4

Mississippi

0

1

0

0

1

Missouri

2

4

9

9

2

Montana

1

3

1

0

0

Nebraska

1

6

6

13

5

New Jersey

0

0

0

0

1

New Mexico

0

0

2

3

0

New York

1

1

0

4

0

North Dakota

1

2

0

0

0

1

1

0

0

0

23

31

16

13

5

Oregon

0

1

1

3

5

Pennsylvania

0

1

0

0

0

Puerto Rico

0

0

1

0

1

South Dakota

1

2

1

0

1

Tennessee

0

0

2

5

11

113

50

26

12

6

2

3

3

1

1

Washington

1

0

0

0

0

West Virginia

0

0

0

0

1

Wisconsin

0

0

1

1

0

Wyoming

1

4

7

5

2

200

184

138

120

79

Ohio
Oklahoma

Texas
Utah

1987

1986

0
0
0
1
6
5
0
1
5
1
1
0
3
1
0
0
0

1
0
2
3
6
6
0
1
8
4
6
2
6
2
0
6
0

1
1
1
0
10
13
1
0
4
8
6
0
5
1
2
5
1

24

53

59

Colorado
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Minnesota
Missouri
Nebraska
North Dakota
Oklahoma
South Dakota
Tennessee
Texas
Wyoming

NOTE: There were 62 agricultural bank failures in 1985
and 25 in 1984.

Purchase And Assumption
Purchase and assumption transactions (P&A),
which protect all depositors, are the dominant
method used by the FDIC to handle failed banks.
In a P&A, the failed bank is sold to another finan­
cial institution. The FDIC notifies bankers that a
bank is for sale, accepting sealed bids from in­
terested parties with each bid indicating how much
money will be required from the FDIC to take
over the bank. The acquiring bank assumes most
of the bank’s liabilities and, in return, receives the
failed bank's quality assets (performing loans,
securities, plant and equipment, etc). The acquir­
ing bank also receives cash from the FDIC for the
amount by which the assumed liabilities exceed the
purchased assets minus the premium paid by the
acquiring bank.
The number of bank failures handled by this
method has risen dramatically in recent years. In
1982, the FDIC handled 26 failed banks by P&A
transactions, while in 1988, 165 of the 200 failures
were resolved by this method at a cost of $5.1
billion (see table 5).
Deposit Transfer and Deposit Payoff

NOTE: States not listed were failure-free during this fiveyear period. Totals do not include 21 assistance transac­
tions in 1988, 19 in 1987 and seven in 1986.




1988

Insured-deposit transfers and insured-deposit
payoffs are last-resort alternatives employed by
bank regulators in dealing with a failed bank. In
1988, 27 of the 200 failed banks were handled as
insured-deposit transfers at a cost of $633.7

12

million to the FDIC. Seven failures were classified
as insured-deposit payoffs, costing $130.7 million.
Insured-deposit transfers appear as if the bank
is being purchased, but in reality the acquiring
bank is simply taking over the failed institution’s
insured deposits. Normally, the transferee bank
will purchase good assets of the failed bank, with
any shortfall (less the purchase premium) being
funded with cash from the FDIC. The acquiring
bank takes on this responsibility in the hopes of
adding the former customers of the failed bank to
its own customer base. It acts as an agent for the
FDIC, providing the failed bank’s customers with
access to their insured accounts. As the FDIC sells
off the failed bank’s assets, it divides the remain­
ing proceeds among uninsured account holders and
creditors, including the insurance fund. In some
cases, the FDIC will make a cash advance to unin­
sured general creditors based on anticipated collec­
tions from remaining failed bank assets. Creditors
suffer a loss if the proceeds of the asset sale do
not cover creditor claims.
At times, the FDIC cannot interest a solvent
bank in either a purchase and assumption or an
insured-deposit transfer. In these instances, the
FDIC will bolt the bank’s doors and payoff the
holders of insured deposit accounts.
Of these three methods of handling bank
failures—P&A, deposit transfer, deposit payoff—a
purchase and assumption is probably the least
disruptive to the local community. Customer ser­
vices are not interrupted because generally this
transaction takes place over a weekend. Checks
continue to clear, interest-bearing accounts con­
tinue to accrue interest, and generally, the failed
bank’s borrowers receive financing with terms

Table 5
Disposition of Failed and Assisted Banks by the
FDIC 1988
Purchase and assumptions
Insured-deposit transfers
Insured-deposit payoffs
Bridge banks

165
27
7
1

Failed banks
Open-bank assistance

200
21

TOTAL FAILED AND ASSISTED BANKS

221

similar to previous arrangements. With a deposit
transfer, the effects on a community are minimal
except that uninsured creditors are exposed to
some chance of loss and, if there is no cash
advance by the FDIC, some delay in access to



their uninsured deposits. Deposit payoffs can result
in the greatest loss exposure to uninsured
depositors, particularly if there is no cash advance
by the FDIC based on estimated recoveries.
Moreover, creditworthy borrowers of the failed
banks will not automatically have a new lender nor
will depositors and borrowers have an assuming
bank to provide banking services.

Bridge Bank
A new program used by the FDIC to handle
failures of larger, more complex banks is the
bridge bank program. Under this method, the
FDIC approves the organization of a new fullservice bank to take over the liabilities and assets
of the failed bank until a purchaser can be found.
Prior to the purchase, the FDIC operates the new
bank. In 1988, First Republic Bank, Newark,
Delaware, a credit card operation, was reorganized
under the bridge bank program. Assets of $590
million were transferred to the newly chartered
Delaware Bridge Bank, Newark, Delaware. On
September 9, 1988, Citibank, New Castle,
Delaware purchased the bank for $782 million.

Open-Bank Assistance
The FDIC also has another approach for
handling failed banks: the open-bank assistance
program. Twenty-one insolvent banks were
handled under this program in 1988 at a cost of
$2.4 billion to the FDIC. With an open-bank
assistance, the bank does not close and technically
“ fail” before being acquired. Instead, a potential
buyer can approach the bank and buy it, with
FDIC assistance, before the bank actually becomes
insolvent. Because of to the recent rise in bank
failures, most of the FDIC’s initiatives attempt to
address the problems of troubled banks before they
fail.
Under the Federal Deposit Insurance Act of
1950, the FDIC obtained authority to intervene
prior to a bank’s failure to 1) facilitate the merger
of a failing bank or 2) prevent failure of a bank
that is deemed ‘essential.’
The open-bank assistance process typically
starts with the banking grapevine. Bankers hear
that a bank in a desirable market is having trouble.
They contact the owners and ask to review the
bank. Many times the potential buyer will discover
that the bank’s potential for loss far outstrips its
capital. Therefore, the only way the sale makes
financial sense is with FDIC open-bank assistance.
The buyers agree to purchase the bank subject to
this assistance.




13

Conclusion
A record number of FDIC-insured banks fail­
ed in 1988; the fifth consecutive year. Last year’s
221 failures brought to 858 the number of banks
that have failed or received assistance since 1982.
From the inception of the FDIC in 1933 through
1981, a total of 586 banks failed.
Regulators predict that last year was the final
record breaker. William Seidman, chairman of the
FDIC, projects that the insurance fund will grow
in 1989 and that the number of bank failures will
decline. In 1989, the farm economy and therefore,
agricultural banks, should show continued im­
provement, however, problems will persist in the
oil patch.




14

E ighth D is tric t B usiness
Level

Payroll Employment
United States
District
Arkansas
Little Rock
Kentucky
Louisville
Missouri
St. Louis
Tennessee
Memphis
Manufacturing
Employment
United States
District
Arkansas
Kentucky
Missouri
Tennessee

Compounded Annual Rates of Change
111/1988-

IV /1 9 8 7 -

IV /1 9 8 8

IV /1 9 8 8

IV /1 9 8 8

19881

19871

107,344.0
6.527.0
868.3
239.7
1,364.2
459.2
2.231.0
1,144.8
2,063.5
432.7

3.3%
3.4
5.4
5.5
1.6
4.1
4.6
3.8
2.3
2.1

3.5%
1.6
2.3
3.4
2.7
3.4
1.2
1.2
1.1
0.9

3.60/o
2.3
3.0
3.1
3.3
4.3
1.4
1.4
2.5
2.8

2.8%
2.9
2.5
1.8
3.1
3.5
2.0
1.8
4.1
4.5

19,699.7
1,428.3
230.7
274.1
423.4
500.1

2.7%
2.2
5.4
0.4
2.1
1.7

2.10/0
1.2
2.5
3.9
0.7
-0 .4

2.5%
1.8
3.7
4.4
0.5
0.8

0.5%
1.0
3.6
2.6
1.2
1.0

50.4
294.4
338.6
369.6
1.401.0
1.565.0
1,078.9

- 7 .6 %
6.2
1.3
-0 .8
8.6
2.4
2.4

- 4 .9 %
3.0
0.8
1.6
3.3
2.9
2.0

4.50/o
3.0
4.2
3.6
4.8
3.9
1.8

(thousands)

(thousands)

District Nonmanufacturing
Employment (thousands)
Mining
Construction
FIRE2
Transportation3
Services
Trades
Government

111/1988

11/1988111/1988

- 7 .0 %
-0 .1
0.6
0.8
2.4
2.2
1.7
111/1987111/1988

19871

19 8 6 1

3.40/o
2.7
3.8
2.5
2.0
3.3

3.20/o
3.2
1.7
3.1
2.3
5.0

4.20/o
3.8
3.5
2.4
3.7
5.2

Real Personal Income 4 (unions)

United States
District
Arkansas
Kentucky
Missouri
Tennessee

$3,424.2
189.4
24.9
40.7
67.0
56.8

2.7%
0.6
0.0
2.0
-0 .6
1.4

IV /1 9 8 8

111/1988

5.3%
6.5
7.0
5.8
7.6
7.1
5.9
6.5
6.0
5.2

5.5%
6.7
8.1
6.6
7.8
5.9
6.0
6.5
6.0
5.2

Levels

Unemployment Rate
United States
District
Arkansas
Little Rock
Kentucky
Louisville
Missouri
St. Louis
Tennessee
Memphis

1988

5.5%
6.5
7.7
6.4
8.0
6.3
5.6
6.3
5.8
5.0

1987

1986

6.2%
7.2
8.1
7.1
8.8
6.9
6.3
7.0
6.6
5.7

7.0%
7.8
8.8
6.9
9.3
7.1
6.1
7.0
8.0
6.8

Note: All data are seasonally adjusted, On this page only, the sum of data from Arkansas, Kentucky, Missouri and Tennessee
is used to represent the District.
1Figures are simple rates of change comparing year-to-year data.
2Finance, Insurance and Real Estate
tra n sp o rta tio n , Communications and Public Utilities
“Annual rate. Data deflated by CPI-U, 1982-84 = 100.

15

U. S. P rices
Level

Compounded Annual Rates of Change

IV/1988

111/1988IV/1988

IV/1987IV/1988

120.1
120.9

4.4
4.4

144.0
152.3
135.0

162.0
174.0

1988’

19871

4.2
5.2

4.0
4.1

3.6
4.1

2.8
4.3
2.1

11.9
6.0
I9.8

8.8
2.6
17.8

3.1
5.6
-0 .8

5.1
4.7

8.0
5.5

7.2
4.6

1.9
1.9

Consumer Price Index
( 1 9 8 2 -8 4 = 1 0 0 )

Nonfood
Food
Prices Received by Farmers
( 1 9 7 7 = 100)

All Products
Livestock
Crops
Prices Paid by Farmers
(1 9 7 7 = 1 0 0 )

Production items
Other items2

Note: Data not seasonally adjusted except for Consumer Price Index.
1Figures are simple rates of change comparing year-to-year data.
2Other items include farmers’ costs for commodities, services, interest, wages and taxes.

E ighth D is tric t B anking
Changes in Financial P osition fo r the y e a r ending
S eptem ber 30, 1988 (by Asset size)
Less than
$100 million

SELECTED ASSETS
Securities
U.S. Treasury &
agency securities
Other securities
Loans & Leases
Real estate
Commercial1
Consumer
Agriculture
Loan loss reserve
Total Assets
SELECTED LIABILITIES
Deposits
Nontransaction accounts
MMDAs
$100,000 CDs
Demand deposits
Other transaction accounts2
Total Liabilities
Total Equity Capital

- 3 .3 %

$100 - $300
million

7.6%

-2 .6
- 1 0 .6
3.6
139.9
53.1
2.8
1.8
1.2
-0 .6

10.7
1.0
10.0
143.7
1.8
16.5
26.3
7.5
8.6

- 0.9%
-0 .3
- 1 4 .7
10.3
-3 .7
-2 .0
-0 .8
1.3

8.7%
9.6
-8 .8
17.3
0.8
13.2
8.5
9.5

$300 million $1 billion

More than
$1 billion

14.1%
9.5
24.2
24.4
153.7
19.8
20.7
12.5
20.7
18.9
18.6%
19.8
7.8
21.1
12.0
21.9
19.0
18.7

Note: All figures are simple rates of change comparing year-to-year data. Data are not seasonally adjusted.
11ncludes banker’s acceptances and nonfinancial commercial paper
in clu d e s NOW, ATS and telephone and preauthorized transfers




5.2%
4.4
6.8
5.3
97.8
8.6
-7 .9
3.8
5.9
3.4
7.3%
9.9
2.7
7.9
0.7
6.8
3.8
5.4

16

P e rfo rm a n c e R atios

(b y A s s e t s iz e )
United States

Eighth District

EARNINGS AND RETURNS
Annualized Return on Average
Assets
Less than $100 million
$100 - $300 million
$300 million - $1 billion
$1 - $10 billion
More than $10 billion
Agricultural banks
Annualized Return on Average
Equity
Less than $100 million
$100 - $300 million
$300 million - $1 billion
$1 - $10 billion
More than $10 billion
Agricultural banks
Net Interest Margin1
Less than $100 million
$100 - $300 million
$300 million - $1 billion
$1 - $10 billion
More than $10 billion
Agricultural banks
ASSET QUALITY2
Nonperforming Loans3
Less than $100 million
$100 - $300 million
$300 million - $1 billion
$1 - $10 billion
More than $10 billion
Agricultural banks
Loan Loss Reserves
Less than $100 million
$100 - $300 million
$300 million - $1 billion
$1 - $10 billion
More than $10 billion
Agricultural banks
Net Loan Losses4
Less than $100 million
$100 - $300 million
$300 million - $1 billion
$1 - $10 billion
More than $10 billion
Agricultural banks

111/88

III/8 7

111/86

1 .06%
1.01
1 .0 7
.86

.99%
1.00
.96
.59

1 .06o/o
.99
.83
1.01

—

—

1 .14

—

.90

.97

1 1 .5 2 %
1 2 .1 9
13 .4 6
1 2 .8 0

11 .0 3 %
12 .2 5
12 .1 2
8 .9 0

1 1 .8 8 %
1 2 .2 9
1 0 .6 9
1 4 .9 3

—

1 1 .4 9
3 .9 5 %
3 .8 8
4 .0 4
3 .7 2
—

—

9 .4 2
4 .0 2 %
4 .0 0
4 .1 2
3 .7 3
—

—
1 0 .2 5
4 .1 2 %
3 .9 7
4 .0 9
3.71
—

3 .8 3

3 .8 7

4 .0 0

1 .820/o
1.72
1.33
2 .0 3

2.28o/o
2 .0 7
1.84
2 .4 5

2 .8 0 %
2.21
2.51
2 .1 4

—

—

2 .0 8

2 .8 4

3 .7 4

1.45%
1.36
1.32
1.82

1 .48%
1.39
1.36
1.95

1 .40%
1.31
1 .34
1.45

—

—
1.73
.270/0
.32
.29
.83

—

1.75
.46%
.41
.51
.46

—
1.65
.60%
.57
.58
.40

—

—

—

.25

.69

.89

III/8 8

III/8 7

III /8 6

.740/o
.85
.68
.76
.91
1.01

.640/o
.80
.58
.60
-1 .0 8
.76

.66%
.85
.68
.80
.51
.59

8.320/0
1 0 .8 5
9 .8 0
1 1 .8 9
1 8 .9 0
1 0 .4 5

7 .2 8 %
1 0 .3 3
8.21
9 .3 6
-2 4 .5 0
8.11

7 .5 5 %
1 1 .1 8
9 .7 9
1 2 .1 5
9 .9 6
6 .4 4

4.250/o
4 .2 5
4 .1 5
4 .0 6
3 .3 0
4.07

4.32o/o
4 .2 4
4 .2 4
4.01
3 .2 6
4 .04

4 .3 8 %
4 .2 4
4 .2 5
4 .0 2
3 .2 9
4.11

2 .4 3 %
2.01
2 .1 9
2 .1 3
5 .5 3
2 .6 9

2 .9 0 %
2 .4 5
2.54
2.51
5 .5 3
3.81

3.370/o
2 .6 6
2.71
2 .3 3
3 .6 2
4 .9 4

1 . 620/0
1.51
1 .64
1 .78
4 .1 8
2 .0 7

1 .62o/o
1 .52
1 .72
1 .85
4 .2 2
2 .1 2

1 .5 1 %
1.41
1 .5 9
1 .5 5
1 .8 0
1 .9 4

.51%
.46
.56
.74
.78
.46

.72%
.53
.68
.52
.60
.86

.91%
.63
.66
.61
.63
1 .48

Note: Agricultural banks are defined as those with 25 percent or more of their total loan portfolio in agriculture loans.
11nterest income less interest expense as a percent of average earning assets
2Asset quality ratios are calculated as a percent of total loans.
3Nonperforming loans include loans past due more than 89 days and nonaccrual.
4Loan losses are adjusted for recoveries.





Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102