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Quarterly Banking Profile Fourth Quarter 2007 INSURED INSTITUTION PERFORMANCE I I I I I Industry Earned $5.8 Billion In Fourth Quarter Expenses For Bad Loans, Trading Losses Weigh On Earnings Noncurrent Rate On Mortgage Loans Reaches New High Pace Of Reserve Building Picks Up Net Income Totaled $105.5 Billion In 2007 Quarterly Net Income Declines to a 16-Year Low One in Four Large Institutions Lost Money in the Fourth Quarter Record-high loan-loss provisions, record losses in trading activities and goodwill impairment expenses combined to dramatically reduce earnings at a number of FDIC-insured institutions in the fourth quarter of 2007. Fourth-quarter net income of $5.8 billion was the lowest amount reported by the industry since the fourth quarter of 1991, when earnings totaled $3.2 billion. It was $29.4 billion (83.5 percent) less than insured institutions earned in the fourth quarter of 2006. The average return on assets (ROA) in the quarter was 0.18 percent, down from 1.20 percent a year earlier. This is the lowest quarterly ROA since the fourth quarter of 1990, when it was a negative 0.19 percent. Insured institutions set aside a record $31.3 billion in provisions for loan losses in the fourth quarter, more than three times the $9.9 billion they set aside in the fourth quarter of 2006. Trading losses totaled $10.6 billion, marking the first time that the industry has posted a quarterly net trading loss. In the fourth quarter of 2006, the industry had trading revenue of $4.0 billion. Expenses for goodwill and other intangibles totaled $7.4 billion, compared to $1.6 billion a year earlier. Against these negative factors, net interest income remained one of the few positive elements in industry performance. Net interest income for the fourth quarter totaled $92.0 billion, an 11.8-percent ($9.7-billion) year-over-year increase. Earnings weakness was fairly widespread in the fourth quarter. More than half of all institutions (51.2 percent) reported lower net income than in the fourth quarter of 2006, and 57.1 percent reported lower quarterly ROAs. However, the magnitude of the decline in industry earnings was attributable to a relatively small number of large institutions. In contrast to the steep 102 basis-point drop in the industry’s ROA, the median ROA fell by only 14 basis points, from 0.93 percent to 0.79 percent. Seven large institutions accounted for more than half of the total yearover-year increase in loss provisions. Ten large institutions accounted for the entire decline in trading results. Five institutions accounted for three-quarters of the increase in goodwill and intangibles expenses, and sixteen institutions accounted for three-quarters of the year-over-year decline in quarterly net income. One out of every four institutions with assets greater than $10 billion reported a net loss for the fourth quarter. Institutions associated with subprime mortgage lending operations and institutions engaged in significant trading activity were among those reporting the largest earnings declines. Chart 2 Chart 1 Loss Provisions Set a New Quarterly Record Fourth Quarter Earnings Are the Lowest Since 1991 $ Billions 40.0 Securities and Other Gains/Losses, Net Net Operating Income 31.8 31.2 32.5 31.1 32.0 30.4 31.1 29.5 30.2 36.9 35.2 35.6 34.0 33.2 34.7 32.6 4th Quarter 2006 to 4th Quarter 2007 ($ Billions) 21.4 38.0 38.1 36.9 Positive Factor Negative Factors 19.1 28.8 9.7 24.0 16.0 5.8 8.0 -4.1 0.0 1 2 3 2003 FDIC QUARTERLY 4 1 2 3 2004 4 1 2 3 2005 4 1 2 3 2006 4 1 2 3 Increase in Net Interest Income 4 2007 1 -8.1 Decrease in Noninterest Income Increase in Decrease in Increase in Loan Loss Gains on Noninterest Provision Securities Sales Expense 2008, VOLUME 2, NO. 1 Margin Erosion Persists aside $68.2 billion in provisions for loan losses in 2007, more than twice the $29.5 billion they set aside in 2006. Loss provisions represented 11.6 percent of net operating revenue (net interest income plus total noninterest income), the highest proportion for the industry since 1992. Total noninterest income of $233.4 billion was $7.0 billion (2.9 percent) less than in 2006, as trading revenue fell from $19.0 billion in 2006 to only $4.1 billion in 2007, and net gains on loan sales fell by $5.1 billion (68.5 percent). This is the first time since the mid-1970s that full-year noninterest income has declined.1 Noninterest expenses were $30.2 billion (9.1 percent) higher than a year earlier. Net interest income increased by $22.7 billion (6.9 percent) in 2007, even though the industry’s full-year net interest margin declined to its lowest level since 1988, because interest-earning assets grew by 9.4 percent during the year. As interest rates fell during the quarter, average asset yields declined more than average funding costs, and net interest margins (NIMs) narrowed slightly from third-quarter levels. The average NIM in the fourth quarter was 3.30 percent, compared to 3.36 percent in the third quarter. Except for the fourth quarter of 2006, when the accounting treatment of a few large corporate restructurings resulted in a reduction in reported net interest income, this is the lowest quarterly NIM for the industry since 1989. Almost 60 percent of all institutions had their margins decline from third-quarter levels. Margin erosion was especially pronounced at large mortgage lenders. Full-Year Earnings Fall to Five-Year Low For all of 2007, insured institutions earned $105.5 billion, a decline of $39.8 billion (27.4 percent) from 2006. This is the lowest annual net income for the industry since 2002 and is the first time since 1999-2000 that annual net income has declined. While much of the decline in industry earnings was concentrated among some of the largest institutions, evidence of broader weakness in earnings bespoke an operating environment that was less favorable than in previous years. Fewer than half of all insured institutions—49.2 percent— reported improved earnings in 2007, the first time in at least 23 years that a majority of insured institutions have not posted full-year earnings increases. The percentage of institutions that were unprofitable in 2007—11.6 percent—was the highest since 1991. The average ROA for the year was 0.86 percent, the lowest yearly average since 1991, when it was 0.42 percent, and the first time in 15 years that the industry’s annual ROA has been below 1 percent. More than half of all institutions—59.2 percent—reported lower ROAs in 2007 than in 2006. Sharply higher loss provisions and a very rare decline in annual noninterest income were primarily responsible for the lower industry profits. Insured institutions set 1 Total noninterest income of FDIC-insured commercial banks declined by $1.0 billion (11.7 percent) between 1975 and 1976. Noninterest income data for insured savings institutions are not available for those years. Chart 3 Chart 4 Net Charge-Off Rate Rises to Five-Year High Net charge-offs registered a sharp increase in the fourth quarter, rising to $16.2 billion, compared to $8.5 billion in the fourth quarter of 2006. The annualized net charge-off rate in the fourth quarter was 0.83 percent, the highest since the fourth quarter of 2002. Net charge-offs were up year-overyear in all major loan categories except loans to the farm sector (agricultural production loans and real estate loans secured by farmland). Net charge-offs of loans to commercial and industrial (C&I) borrowers were $1.6 billion (104.5 percent) higher than in the fourth quarter of 2006. Net charge-offs of residential mortgage loans were up by $1.3 billion (144.2 percent), and charge-offs of home equity lines of credit were $1.0 billion (378.4 percent) higher. Credit card charge-offs were up by $1.0 billion (33.0 percent), and charge-offs of other loans to individuals increased by $1.1 billion (58.4 percent). Margins Remain Near 19-Year Lows Annual ROA Fell to Its Lowest Level Since 1991 Net Interest Margin (%) 5.00 Annual ROA % 1.6 ROE 1.4 Assets < $100 Million 4.50 Annual ROE % 16.0 14.0 1.2 4.08 12.0 1.0 10.0 4.00 ROA 3.50 0.8 8.0 0.6 6.0 0.4 4.0 0.2 2.0 3.29 3.00 Assets > $100 Million 2.50 1 2 3 2003 FDIC QUARTERLY 4 1 2 3 2004 4 1 2 3 2005 4 1 2 3 2006 4 1 2 3 4 0.0 0.0 -0.2 -2.0 1984 2007 2 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008, VOLUME 2, NO. 1 Quarterly Banking Profile Growth in Noncurrent Loans Accelerates loans and leases rose from 1.13 percent to 1.29 percent during the quarter, its highest level since the first quarter of 2005. But the “coverage ratio” of reserves to noncurrent loans fell from $1.05 in reserves for every $1.00 of noncurrent loans to 93 cents at the end of 2007. This is the first time since 1993 that the industry’s noncurrent loans have exceeded its reserves. At year end, one in three institutions had noncurrent loans that exceeded reserves, compared to fewer than one in four institutions a year earlier. Despite the heightened level of charge-offs, the rising trend in noncurrent loans that began in mid-2006 continued to gain momentum in the fourth quarter. Total noncurrent loans — loans 90 days or more past due or in nonaccrual status — rose by $26.9 billion (32.5 percent) in the last three months of 2007. This is the largest percentage increase in a single quarter in the 24 years for which noncurrent loan data are available. Eight institutions accounted for half of the total increase in noncurrent loans in the fourth quarter, but noncurrent loans were up at half of all insured institutions. The percentage of loans that were noncurrent at year-end was 1.39 percent, the highest level since the third quarter of 2002. The fourth-quarter increase in noncurrent loans was led by noncurrent residential mortgage loans, which grew by $11.1 billion (31.7 percent). The percentage of residential mortgage loans that were noncurrent rose from 1.57 percent to 2.06 percent during the quarter and is now at the highest level in the 17 years that noncurrent mortgage data have been reported. Noncurrent real estate construction and development loans increased by $8.4 billion (73.2 percent), noncurrent credit card loans rose by $1.9 billion (26.0 percent), noncurrent home equity loans were up by $1.6 billion (43.1 percent), and noncurrent other loans to individuals increased by $1.2 billion (26.7 percent). Only the farm loan categories registered declines in noncurrent amounts. Capital Ratios Exhibit Mixed Results Total equity capital increased by $25.1 billion (1.9 percent) during the fourth quarter. This increase lagged behind the 2.6-percent increase in assets during the quarter, and the industry’s equity-to-assets ratio declined from 10.44 percent to 10.37 percent. Goodwill accounted for almost one-third ($7.9 billion) of the increase in equity, despite large writedowns of goodwill at several institutions. The industry’s leverage capital ratio registered a larger decline during the quarter, because leverage capital does not include goodwill. The leverage ratio fell from 8.14 percent to 7.98 percent, a four-year low. In contrast, the industry’s total risk-based capital ratio, which includes loss reserves, increased from 12.74 percent to 12.79 percent. At the end of 2007, 99 percent of all insured institutions, representing more than 99 percent of total industry assets, met or exceeded the highest regulatory capital standards. Large Boost to Loss Reserves Fails to Stem Decline in Coverage Ratio Asset Growth Remains Strong in the Fourth Quarter Insured institutions’ loss reserves posted their largest increase in 20 years in the fourth quarter, but this growth did not keep pace with the growth in noncurrent loans. The industry’s $31.3-billion loss provision exceeded the $16.2 billion in net charge-offs by a considerable margin, and reserves grew by $14.8 billion (17.0 percent). The ratio of reserves to total Assets continued to grow strongly in the fourth quarter, but the focus of growth shifted away from residential mortgage loans. Total assets increased by $331.8 billion (2.6 percent) during the quarter. Fed funds sold and securities purchased under resale agreements increased by $71.5 billion (11.5 percent), assets in trading accounts grew by $64.6 billion (8.0 Chart 5 Chart 6 Asset Quality Continues to Weaken A Growing Number of Institutions Have Concentrations of Exposure to Construction Lending Percent 4.00 Number of insured institutions where construction loans exceed total capital 2,500 3.50 2,000 3.00 1,609 1,538 2.50 1,500 Noncurrent Loan Rate 2.00 1,3361,374 1,260 1,1791,227 2,034 1,959 1,871 1,769 1,688 2,1662,188 2,104 2,368 2,3042,348 2,245 1,434 1,000 1.50 1.00 500 0.50 Quarterly Net Charge-off Rate 0.00 1990 1992 FDIC QUARTERLY 1994 1996 1998 2000 2002 2004 0 2006 3 03/03 09/03 03/04 09/04 03/05 09/05 03/06 09/06 03/07 09/07 2008, VOLUME 2, NO. 1 percent), C&I loans increased by $51.5 billion (3.7 percent), and credit card loans grew by $38.0 billion (9.9 percent). The industry’s portfolio of mortgage-backed securities rose by $36.9 billion (3.1 percent). Real estate loans secured by nonfarm nonresidential properties increased by $29.0 billion (3.1 percent). Residential mortgage loans rose by only $7.1 billion (0.3 percent), compared to a $30.8-billion increase in the third quarter. Real estate construction and development loans increased by only $12.5 billion (2.0 percent) during the fourth quarter. This is the smallest quarterly increase since the fourth quarter of 2003. Despite the slowdown in growth of construction lending, the number of institutions with concentrations of exposure to construction lending continued to rise. During the fourth quarter, the number of institutions whose construction loans exceeded their total capital increased from 2,348 to 2,368. increased by $2.6 trillion (13.4 percent) during the year, with assets in managed accounts increasing by $68.6 billion (1.6 percent) and assets in non-managed accounts rising by $2.5 trillion (16.9 percent). Assets in custodial and safekeeping accounts increased by $9.8 trillion (20.3 percent) in 2007. Net income from trust activities totaled $12.8 billion in 2007, an increase of $2.8 billion (28.6 percent) over 2006. Five institutions accounted for 53 percent of the industry’s net trust income in 2007. Three Failures in 2007 Is Most Since 2004 The number of FDIC-insured institutions reporting financial results declined from 8,559 to 8,533 during the fourth quarter.2 Fifty newly chartered institutions were added during the quarter, while 74 institutions were absorbed by mergers. One insured commercial bank failed in the fourth quarter. For the full year, 181 new insured institutions were chartered, 321 charters were absorbed in mergers, and three insured institutions failed. In the previous two years, there were no failures of FDIC-insured institutions, an interval unprecedented since the inception of the FDIC. In 2004, four insured institutions failed. Five mutually owned savings institutions, with combined assets of $4.8 billion, converted to stock ownership in the fourth quarter. For the entire year, ten insured savings institutions with total assets of $10.1 billion converted from mutual ownership to stock ownership. At the end of 2007, there were 76 FDIC-insured commercial banks and savings institutions on the “Problem List,” with combined assets of $22.2 billion, up from 65 institutions with $18.5 billion at the end of the third quarter. Domestic Deposits Post Record Growth Deposits in domestic offices of insured institutions increased by $170.6 billion (2.5 percent), the largest quarterly dollar increase ever reported by the industry. Deposits in noninterest-bearing accounts rose by $64.9 billion (5.8 percent), time deposits grew by $53.5 billion (2.1 percent), and deposits in other interest-bearing accounts increased by $49.1 billion (1.6 percent). Brokered deposits increased by $63.3 billion (12.4 percent). Nondeposit liabilities rose by $74.0 billion (2.3 percent), led by advances from Federal Home Loan Banks (up $38.4 billion, or 5.0 percent). Deposits in foreign offices grew by $62.2 billion (4.3 percent). The industry’s ratio of deposits to total assets, which hit an all-time low of 64.4 percent at the end of the third quarter, rose slightly to 64.5 percent at year end. 2 At the time this issue of the Quarterly Banking Profile went to press, one insured commercial bank with assets of $1.2 billion had not yet submitted a year-end 2007 Call Report. Trust Income Rose in 2007 Both trust assets and income from trust activities registered strong growth in 2007. Total assets in trust accounts Author: Ross Waldrop, Sr. Banking Analyst Author: Division of Insurance and Research, FDIC Author: (202) 898-3951 Chart 7 Chart 8 Commercial Lending Is Leading Overall Loan Growth Chartering and Merger Activity Slowed in 2007 Number of Institutions Quarterly Change ($ Billions) 180 700 Commercial Loans Consumer Loans 160 Mergers 600 140 120 500 100 400 80 300 New Charters 60 200 40 100 20 0 Failures 0 1 2 3 2004 FDIC QUARTERLY 4 1 2 3 2005 4 1 2 2006 3 4 1 2 3 1992 4 1994 1996 1998 2000 2002 2004 2006 2007 4 2008, VOLUME 2, NO. 1 Quarterly Banking Profile TABLE I-A. Selected Indicators, All FDIC-Insured Institutions* Return on assets (%) .................................................. Return on equity (%) ................................................... Core capital (leverage) ratio (%) ................................. Noncurrent assets plus other real estate owned to assets (%) ..................... Net charge-offs to loans (%) ....................................... Asset growth rate (%) ................................................. Net interest margin (%) ............................................... Net operating income growth (%) ............................... Number of institutions reporting .................................. Commercial banks ................................................... Savings institutions .................................................. Percentage of unprofitable institutions (%) ................. Number of problem institutions ................................... Assets of problem institutions (in billions) ................... Number of failed/assisted institutions ......................... 2007 0.86 8.17 . 7.98 . 2006 1.28 12.30 8.22 2005 1.28 12.43 8.25 2004 1.28 13.20 8.11 2003 1.38 15.05 7.88 2002 1.30 14.08 7.86 2001 1.14 13.02 7.79 0.94 0.59 9.94 3.29 . -23.72 8,533 . 7,282 1,251 11.56 76 $22 3 0.54 0.39 9.03 3.31 8.50 8,680 7,401 1,279 7.93 50 $8 0 0.50 0.49 7.64 3.47 11.39 8,833 7,526 1,307 6.22 52 $7 0 0.53 0.56 11.36 3.52 4.02 8,976 7,631 1,345 5.97 80 $28 4 0.75 0.78 7.58 3.73 16.39 9,181 7,770 1,411 5.99 116 $30 3 0.90 0.97 7.20 3.96 17.58 9,354 7,888 1,466 6.67 136 $39 11 0.87 0.83 5.44 3.78 -0.48 9,614 8,080 1,534 8.24 114 $40 4 * Excludes insured branches of foreign banks (IBAs) TABLE II-A. Aggregate Condition and Income Data, All FDIC-Insured Institutions Number of institutions reporting .......................................................................... Total employees (full-time equivalent) ................................................................. CONDITION DATA Total assets ......................................................................................................... Loans secured by real estate ........................................................................... 1-4 Family residential mortgages .................................................................. Nonfarm nonresidential ................................................................................. Construction and development ...................................................................... Home equity lines .......................................................................................... Commercial & industrial loans .......................................................................... Loans to individuals .......................................................................................... Credit cards ................................................................................................... Farm loans ....................................................................................................... Other loans & leases ........................................................................................ Less: Unearned income ................................................................................... Total loans & leases ......................................................................................... Less: Reserve for losses .................................................................................. Net loans and leases ........................................................................................ Securities .......................................................................................................... Other real estate owned ................................................................................... Goodwill and other intangibles ......................................................................... All other assets ................................................................................................. 4th Quarter 2007 8,533 2,214,621 3rd Quarter 2007 8,559 2,220,559 4th Quarter 2006 8,680 2,206,656 %Change 06:4-07:4 -1.7 0.4 $13,038,765 4,780,631 2,245,323 968,401 628,918 607,396 1,440,314 1,059,143 422,481 56,783 571,798 2,313 7,906,357 101,715 7,804,643 1,954,086 12,138 465,680 2,802,218 $12,706,982 4,701,042 2,238,248 939,426 616,447 591,363 1,388,804 1,013,345 384,506 56,166 546,314 2,237 7,703,433 86,948 7,616,485 1,989,074 9,806 461,065 2,630,552 $11,860,042 4,507,714 2,175,790 904,368 565,282 559,307 1,214,754 955,263 384,980 54,257 503,608 2,401 7,233,196 77,533 7,155,663 1,980,497 6,057 413,434 2,304,391 9.9 6.1 3.2 7.1 11.3 8.6 18.6 10.9 9.7 4.7 13.5 -3.7 9.3 31.2 9.1 -1.3 100.4 12.6 21.6 Total liabilities and capital ................................................................................... Deposits ........................................................................................................... Domestic office deposits ............................................................................... Foreign office deposits .................................................................................. Other borrowed funds ....................................................................................... Subordinated debt ............................................................................................ All other liabilities .............................................................................................. Equity capital .................................................................................................... 13,038,765 8,414,356 6,911,780 1,502,575 2,517,336 185,409 569,405 1,352,259 12,706,982 8,181,581 6,741,172 1,440,409 2,454,143 177,474 566,582 1,327,202 11,860,042 7,825,219 6,631,184 1,194,036 2,121,086 160,547 505,335 1,247,855 9.9 7.5 4.2 25.8 18.7 15.5 12.7 8.4 (dollar figures in millions) 110,937 Loans and leases 30-89 days past due ............................................................... Noncurrent loans and leases ............................................................................... 109,914 Restructured loans and leases ............................................................................ 6,991 Direct and indirect investments in real estate ...................................................... 1,104 Mortgage-backed securities ................................................................................ 1,236,031 Earning assets ..................................................................................................... 11,306,104 FHLB advances ................................................................................................... 808,781 Unused loan commitments .................................................................................. 8,359,380 Trust assets ......................................................................................................... 21,865,518 Assets securitized and sold** .............................................................................. 1,773,817 Notional amount of derivatives** ......................................................................... 164,780,773 Full Year Full Year 2007 2006 INCOME DATA Total interest income ................................................................................... $725,156 $643,459 Total interest expense ................................................................................. 372,311 313,353 Net interest income ................................................................................... 352,845 330,106 Provision for loan and lease losses ............................................................. 68,164 29,545 Total noninterest income ............................................................................. 233,419 240,430 Total noninterest expense ........................................................................... 362,540 332,307 Securities gains (losses) .............................................................................. -1,331 1,969 Applicable income taxes .............................................................................. 47,019 68,081 Extraordinary gains, net ............................................................................... -1,740 2,669 Net income ................................................................................................ 105,470 145,242 Net charge-offs ............................................................................................ 43,903 27,016 Cash dividends ............................................................................................ 110,160 93,445 Retained earnings ........................................................................................ -4,690 51,797 Net operating income ............................................................................... 107,852 141,388 ** Call Report filers only. FDIC QUARTERLY 92,233 82,974 4,130 1,098 1,199,169 11,031,937 770,363 8,302,064 21,501,132 1,741,732 173,284,358 %Change 12.7 18.8 6.9 130.7 -2.9 9.1 N/M -30.9 N/M -27.4 62.5 17.9 N/M -23.7 71,507 57,387 2,608 1,091 1,206,913 10,336,488 620,914 7,572,935 19,277,633 1,310,475 132,182,732 4th Quarter 4th Quarter 2007 2006 $189,149 $171,499 97,117 89,180 92,032 82,319 31,253 9,852 47,831 55,917 100,128 81,044 -3,633 513 -731 14,709 237 2,094 5,816 35,238 16,155 8,509 20,550 34,104 -14,734 1,134 7,762 32,879 55.1 91.5 168.1 1.2 2.4 9.4 30.3 10.4 13.4 35.4 24.7 %Change 06:4-07:4 10.3 8.9 11.8 217.2 -14.5 23.6 N/M N/M -88.7 -83.5 89.9 -39.7 N/M -76.4 N/M - Not Meaningful 5 2008, VOLUME 2, NO. 1 TABLE III-A. Full Year 2007, All FDIC-Insured Institutions Asset Concentration Groups* FULL YEAR (The way it is...) Number of institutions reporting ............................. Commercial banks .............................................. Savings institutions ............................................. Total assets (in billions) ......................................... Commercial banks .............................................. Savings institutions ............................................. Total deposits (in billions) ...................................... Commercial banks .............................................. Savings institutions ............................................. Net income (in millions) .......................................... Commercial banks .............................................. Savings institutions ............................................. Performance Ratios (%) Yield on earning assets .......................................... Cost of funding earning assets .............................. Net interest margin .............................................. Noninterest income to assets ................................. Noninterest expense to assets ............................... Loan and lease loss provision to assets ................ Net operating income to assets ............................. Pretax return on assets .......................................... Return on assets .................................................... Return on equity ..................................................... Net charge-offs to loans and leases ...................... Loan and lease loss provision to net charge-offs ... Efficiency ratio ........................................................ % of unprofitable institutions .................................. % of institutions with earnings gains ...................... All Insured Credit Card International Agricultural Commercial Institutions Banks Banks Banks Lenders 8,533 27 5 1,591 4,773 7,282 23 5 1,586 4,279 1,251 4 0 5 494 $13,038.8 $479.3 $2,784.3 $157.5 $4,619.1 11,176.1 437.9 2,784.3 157.1 4,158.8 1,862.7 41.4 0.0 0.4 460.3 8,414.4 153.6 1,706.1 128.2 3,268.7 7,308.9 143.2 1,706.1 127.8 2,966.0 1,105.5 10.4 0.0 0.3 302.8 105,470 15,390 14,893 1,808 38,261 99,511 13,799 14,893 1,804 36,979 5,959 1,591 0 4 1,282 Other Mortgage Consumer Specialized All Other All Other Lenders Lenders <$1 Billion <$1 Billion >$1 Billion 786 108 374 813 56 183 83 332 749 42 603 25 42 64 14 $1,333.6 $94.3 $37.9 $110.1 $3,422.5 211.9 41.2 29.5 95.1 3,260.3 1,121.7 53.2 8.4 15.0 162.3 738.3 71.3 26.7 90.1 2,231.4 79.2 27.4 21.1 78.2 2,159.9 659.1 43.8 5.6 11.8 71.5 3,931 1,179 959 1,111 27,938 1,814 786 627 1,019 27,789 2,117 393 332 92 149 6.76 3.47 3.29 1.90 2.94 0.55 0.88 1.24 0.86 8.17 0.59 155.26 59.37 11.56 49.19 13.18 4.63 8.56 10.50 8.34 3.72 3.34 5.39 3.46 15.12 3.95 126.17 44.54 7.41 55.56 6.23 3.64 2.59 1.97 2.83 0.59 0.57 0.75 0.58 7.44 0.76 176.05 66.95 0.00 40.00 7.15 3.18 3.97 0.68 2.69 0.17 1.21 1.45 1.21 10.88 0.22 113.69 61.94 3.08 61.28 6.88 3.29 3.59 1.26 2.77 0.38 0.91 1.26 0.86 7.94 0.35 154.02 59.45 14.33 47.18 6.57 3.93 2.63 0.93 2.23 0.59 0.33 0.47 0.30 3.14 0.40 209.60 61.10 14.25 32.70 7.61 3.34 4.26 2.54 3.53 1.04 1.24 1.99 1.27 11.69 0.87 143.98 52.61 10.19 49.07 5.49 2.45 3.04 11.07 9.84 0.09 2.58 3.88 2.60 13.11 0.29 122.56 70.95 24.60 44.92 6.56 2.86 3.70 1.03 3.05 0.13 1.02 1.27 1.04 9.11 0.21 113.56 68.46 4.06 55.23 6.23 3.30 2.94 1.88 2.74 0.34 0.91 1.27 0.89 8.34 0.39 160.85 60.50 5.36 46.43 86.71 80.98 83.66 91.04 88.45 92.03 91.27 88.15 91.62 85.08 Condition Ratios (%) Earning assets to total assets ................................ Loss allowance to: Loans and leases ................................................ Noncurrent loans and leases .............................. Noncurrent assets plus other real estate owned to assets ....................... Equity capital ratio .................................................. Core capital (leverage) ratio ................................... Tier 1 risk-based capital ratio ................................. Total risk-based capital ratio .................................. Net loans and leases to deposits ........................... Net loans to total assets ......................................... Domestic deposits to total assets .......................... 1.29 92.54 4.15 207.47 1.46 103.22 1.27 121.50 1.23 93.62 0.86 45.74 1.22 61.51 1.33 172.87 1.18 123.83 0.92 80.15 0.94 10.37 7.98 10.12 12.79 92.75 59.86 53.01 1.54 21.26 14.57 13.26 15.88 229.92 73.70 29.57 0.67 8.01 6.38 8.59 12.50 71.46 43.79 26.68 0.83 11.17 10.32 13.70 14.75 80.85 65.78 81.37 1.06 11.03 8.48 9.74 11.83 98.54 69.73 68.18 1.52 8.61 7.89 12.94 14.94 126.71 70.15 55.29 1.65 12.63 9.87 11.33 13.12 105.89 79.99 74.58 0.23 20.04 18.59 41.05 42.07 33.55 23.65 68.15 0.66 11.46 11.05 18.13 19.24 68.80 56.27 81.79 0.68 10.32 7.43 9.86 12.78 81.82 53.35 53.36 Structural Changes New Charters ...................................................... Institutions absorbed by mergers ........................ Failed Institutions ................................................ 181 321 3 1 1 0 0 0 0 5 24 0 49 254 0 5 12 2 0 2 0 120 2 0 1 7 0 0 19 1 PRIOR FULL YEARS (The way it was...) Number of institutions .................................. 2006 ............................. 2004 ............................. 2002 8,680 8,976 9,354 26 34 40 4 5 5 1,634 1,731 1,823 4,713 4,423 4,070 817 990 1,107 123 132 196 411 466 488 895 1,120 1,525 57 75 100 Total assets (in billions) ............................... 2006 ............................. 2004 ............................. 2002 $11,860.0 10,105.9 8,435.7 $408.4 383.0 299.3 $2,337.2 1,881.3 1,273.1 $149.2 138.7 123.8 $4,904.7 3,301.4 2,960.6 $1,445.0 1,503.6 1,342.0 $109.9 104.1 166.5 $42.2 52.0 60.2 $119.6 143.3 197.4 $2,343.9 2,598.4 2,013.0 Return on assets (%) ................................... 2006 ............................. 2004 ............................. 2002 1.28 1.28 1.30 4.19 4.03 3.60 1.01 0.76 0.74 1.23 1.22 1.24 1.28 1.29 1.30 0.94 1.18 1.31 1.75 1.66 1.35 1.54 1.68 1.08 1.04 1.10 1.14 1.26 1.32 1.32 Net charge-offs to loans & leases (%) …...... 2006 ............................. 2004 ............................. 2002 0.39 0.56 0.97 3.48 4.66 6.12 0.48 0.91 1.77 0.17 0.22 0.29 0.22 0.30 0.65 0.15 0.12 0.20 1.40 1.57 1.07 0.42 0.59 1.36 0.20 0.29 0.35 0.22 0.25 0.81 Noncurrent assets plus OREO to assets (%) ................................. 2006 ............................. 2004 ............................. 2002 0.54 0.53 0.90 1.37 1.50 1.68 0.40 0.57 1.19 0.67 0.68 0.85 0.55 0.51 0.87 0.56 0.43 0.71 0.85 0.53 1.28 0.20 0.31 0.59 0.56 0.59 0.70 0.45 0.45 0.75 Equity capital ratio (%) ................................. 2006 ............................. 2004 ............................. 2002 10.52 10.28 9.20 22.88 20.54 15.48 7.75 8.05 7.14 10.73 10.78 10.76 11.16 10.10 9.36 9.91 10.55 9.07 14.16 11.36 7.35 21.12 17.47 17.18 10.98 10.79 10.62 9.78 10.23 9.10 * See Table IV-A (page 8) for explanations. FDIC QUARTERLY 6 2008, VOLUME 2, NO. 1 Quarterly Banking Profile TABLE III-A. Full Year 2007, All FDIC-Insured Institutions Asset Size Distribution FULL YEAR (The way it is...) Number of institutions reporting ............................. Commercial banks ............................................... Savings institutions .............................................. Total assets (in billions) .......................................... Commercial banks ............................................... Savings institutions .............................................. Total deposits (in billions) ....................................... Commercial banks ............................................... Savings institutions .............................................. Net income (in millions) .......................................... Commercial banks ............................................... Savings institutions .............................................. Performance Ratios (%) Yield on earning assets .......................................... Cost of funding earning assets ............................... Net interest margin .............................................. Noninterest income to assets ................................. Noninterest expense to assets ............................... Loan and lease loss provision to assets ................. Net operating income to assets .............................. Pretax return on assets .......................................... Return on assets .................................................... Return on equity ..................................................... Net charge-offs to loans and leases ....................... Loan and lease loss provision to net charge-offs ... Efficiency ratio ........................................................ % of unprofitable institutions .................................. % of institutions with earnings gains ...................... $100 Million $1 Billion Less All to to than Insured $10 Billion Institutions $100 Million $1 Billion 8,533 3,440 4,425 549 7,282 3,065 3,706 425 1,251 375 719 124 $13,038.8 $181.9 $1,310.1 $1,420.3 11,176.1 162.9 1,062.1 1,112.7 1,862.7 19.0 247.9 307.5 8,414.4 148.1 1,039.9 1,008.1 7,308.9 133.8 854.8 792.0 1,105.5 14.3 185.1 216.1 105,470 1,322 12,440 13,473 99,511 1,282 10,804 11,519 5,959 39 1,636 1,954 Geographic Regions* Greater than $10 Billion New York 119 1,042 86 548 33 494 $10,126.5 $2,439.7 8,838.4 1,759.6 1,288.2 680.1 6,218.3 1,512.9 5,528.4 1,066.5 690.0 446.4 78,235 18,068 75,905 17,126 2,330 942 Atlanta 1,220 1,075 145 $3,329.1 3,060.6 268.6 2,184.0 2,023.6 160.4 26,050 27,097 -1,047 Chicago 1,763 1,455 308 $2,842.7 2,685.7 157.0 1,828.3 1,717.8 110.5 23,630 23,028 602 Kansas City 1,987 1,880 107 $977.9 935.2 42.7 691.1 661.1 30.0 13,304 13,116 187 San Dallas Francisco 1,743 778 1,618 706 125 72 $738.7 $2,710.7 621.2 2,113.9 117.5 596.9 547.1 1,650.9 476.6 1,363.2 70.5 287.7 7,192 17,226 6,331 12,813 861 4,413 6.76 3.47 3.29 1.90 2.94 0.55 0.88 1.24 0.86 8.17 0.59 155.26 59.37 11.56 49.19 6.96 2.91 4.05 1.22 3.77 0.21 0.74 0.97 0.75 5.39 0.23 145.31 76.03 18.11 50.00 7.14 3.29 3.86 1.13 3.13 0.25 0.98 1.31 0.99 9.44 0.24 149.06 66.10 7.12 49.58 7.07 3.37 3.70 1.43 2.83 0.42 1.05 1.48 0.99 8.79 0.41 149.28 57.57 6.19 45.17 6.65 3.52 3.13 2.08 2.92 0.62 0.84 1.20 0.82 7.98 0.68 156.29 58.43 11.76 29.41 6.81 3.45 3.36 2.18 3.14 0.67 0.83 1.22 0.79 6.45 0.90 130.05 56.25 16.03 37.33 6.56 3.47 3.08 1.53 2.57 0.37 0.88 1.20 0.84 8.10 0.33 184.23 59.87 17.54 39.02 6.08 3.35 2.73 2.05 2.77 0.39 0.87 1.27 0.87 9.66 0.46 154.10 61.13 10.72 47.14 7.61 3.26 4.34 3.36 4.21 0.85 1.44 2.09 1.46 14.29 0.78 154.18 57.70 6.14 55.41 7.15 3.28 3.86 1.37 3.19 0.32 1.01 1.36 1.02 10.00 0.29 165.05 64.13 8.20 58.92 7.25 3.73 3.52 1.56 2.89 0.80 0.68 0.93 0.66 6.17 0.76 164.10 59.60 19.41 47.94 86.71 91.70 91.80 90.51 85.43 86.67 86.09 86.00 86.55 89.91 87.45 1.29 92.54 1.28 107.04 1.17 95.86 1.29 96.09 1.30 91.30 1.52 121.32 1.06 91.96 1.29 83.62 1.39 81.59 1.16 95.20 1.36 86.53 0.94 10.37 7.98 10.12 12.79 92.75 59.86 53.01 0.95 13.74 13.53 19.67 20.70 76.66 62.40 81.39 1.06 10.52 9.97 13.21 14.30 87.98 69.83 79.26 1.06 11.37 9.44 11.95 13.26 96.38 68.41 70.31 0.90 10.15 7.41 9.32 12.40 93.35 57.32 46.68 0.76 12.07 8.68 11.86 13.92 90.83 56.32 52.94 0.81 10.32 7.07 8.93 11.64 93.25 61.18 58.30 0.95 9.24 7.17 8.79 11.72 84.19 54.14 50.45 1.37 9.75 8.09 9.46 12.18 97.15 68.66 63.54 0.97 10.23 8.88 11.14 12.80 89.09 65.99 73.19 1.09 10.35 9.02 11.59 14.66 102.72 62.56 39.97 Structural Changes New Charters ...................................................... Institutions absorbed by mergers ........................ Failed Institutions ................................................ 181 321 3 174 114 2 5 167 0 2 31 1 0 9 0 22 74 1 53 45 1 16 77 1 12 48 0 33 46 0 45 31 0 PRIOR FULL YEARS (The way it was...) Number of institutions ................................... 2006 ............................. 2004 ............................. 2002 8,680 8,976 9,354 3,632 4,093 4,680 4,399 4,286 4,118 530 480 450 119 117 106 1,092 1,129 1,212 1,218 1,219 1,237 1,826 1,951 2,055 2,018 2,094 2,167 1,753 1,834 1,901 773 749 782 Total assets (in billions) ................................ 2006 ............................. 2004 ............................. 2002 $11,860.0 10,105.9 8,435.7 $189.9 211.7 237.8 $1,290.0 1,199.6 1,124.9 $1,397.5 1,317.0 1,279.1 $8,982.6 7,377.6 5,793.9 $2,214.3 2,855.0 2,892.6 $2,911.4 2,177.1 1,711.2 $2,746.2 2,387.6 1,572.0 $859.8 768.2 440.1 $652.3 603.1 581.5 $2,476.1 1,315.1 1,238.3 Return on assets (%) .................................... 2006 ............................. 2004 ............................. 2002 1.28 1.28 1.30 0.92 1.00 0.99 1.16 1.19 1.16 1.22 1.45 1.44 1.31 1.27 1.31 1.27 1.37 1.11 1.31 1.34 1.32 1.10 0.88 1.28 1.76 1.55 1.58 1.23 1.26 1.41 1.29 1.60 1.58 Net charge-offs to loans & leases (%) .......... 2006 ............................. 2004 ............................. 2002 0.39 0.56 0.97 0.18 0.28 0.32 0.16 0.27 0.41 0.20 0.39 0.69 0.47 0.65 1.18 0.72 0.88 1.45 0.19 0.31 0.71 0.28 0.41 0.77 0.55 0.74 1.19 0.21 0.27 0.44 0.43 0.60 0.81 Noncurrent assets plus OREO to assets (%) .................................. 2006 ............................. 2004 ............................. 2002 0.54 0.53 0.90 0.73 0.74 0.85 0.59 0.56 0.74 0.52 0.51 0.69 0.53 0.53 0.98 0.51 0.58 1.01 0.33 0.35 0.78 0.57 0.55 1.00 1.05 0.81 0.82 0.62 0.61 0.81 0.56 0.51 0.74 10.52 10.28 9.20 13.01 11.82 11.28 10.39 10.19 10.06 10.97 10.89 10.06 10.42 10.15 8.76 12.48 11.21 8.85 10.05 8.74 9.38 9.07 9.36 8.57 10.64 10.62 10.34 10.42 10.78 9.60 10.92 12.10 9.98 Condition Ratios (%) Earning assets to total assets ................................ Loss Allowance to: Loans and leases ................................................ Noncurrent loans and leases ............................... Noncurrent assets plus other real estate owned to assets ....................... Equity capital ratio .................................................. Core capital (leverage) ratio ................................... Tier 1 risk-based capital ratio ................................. Total risk-based capital ratio .................................. Net loans and leases to deposits ........................... Net loans to total assets ......................................... Domestic deposits to total assets ........................... Equity capital ratio (%) .................................. 2006 ............................. 2004 ............................. 2002 * See Table IV-A (page 9) for explanations. FDIC QUARTERLY 7 2008, VOLUME 2, NO. 1 TABLE IV-A. Fourth Quarter 2007, All FDIC-Insured Institutions Asset Concentration Groups* FOURTH QUARTER (The way it is...) Number of institutions reporting ............................. Commercial banks .............................................. Savings institutions ............................................. Total assets (in billions) ......................................... Commercial banks .............................................. Savings institutions ............................................. Total deposits (in billions) ...................................... Commercial banks .............................................. Savings institutions ............................................. Net income (in millions) .......................................... Commercial banks .............................................. Savings institutions ............................................. All Insured Credit Card International Agricultural Commercial Institutions Banks Banks Banks Lenders 8,533 27 5 1,591 4,773 7,282 23 5 1,586 4,279 1,251 4 0 5 494 $13,038.8 $479.3 $2,784.3 $157.5 $4,619.1 11,176.1 437.9 2,784.3 157.1 4,158.8 1,862.7 41.4 0.0 0.4 460.3 8,414.4 153.6 1,706.1 128.2 3,268.7 7,308.9 143.2 1,706.1 127.8 2,966.0 1,105.5 10.4 0.0 0.3 302.8 5,816 3,027 -1,383 424 3,948 10,540 2,797 -1,383 423 5,097 -4,724 230 0 1 -1,148 Other Mortgage Consumer Specialized All Other All Other Lenders Lenders <$1 Billion >$1 Billion <$1 Billion 786 108 374 813 56 183 83 332 749 42 603 25 42 64 14 $1,333.6 $94.3 $37.9 $110.1 $3,422.5 211.9 41.2 29.5 95.1 3,260.3 1,121.7 53.2 8.4 15.0 162.3 738.3 71.3 26.7 90.1 2,231.4 79.2 27.4 21.1 78.2 2,159.9 659.1 43.8 5.6 11.8 71.5 -3,230 156 214 258 2,402 448 153 117 237 2,651 -3,678 3 97 21 -249 Performance Ratios (annualized, %) Yield on earning assets .......................................... Cost of funding earning assets .............................. Net interest margin .............................................. Noninterest income to assets ................................. Noninterest expense to assets ............................... Loan and lease loss provision to assets ................ Net operating income to assets ............................. Pretax return on assets .......................................... Return on assets .................................................... Return on equity ..................................................... Net charge-offs to loans and leases ...................... Loan and lease loss provision to net charge-offs ... Efficiency ratio ........................................................ % of unprofitable institutions .................................. % of institutions with earnings gains ...................... 6.78 3.48 3.30 1.49 3.11 0.97 0.24 0.16 0.18 1.74 0.83 193.46 66.27 17.68 47.56 13.36 4.40 8.97 10.43 8.32 5.37 2.49 4.10 2.61 11.96 4.23 167.80 42.33 11.11 48.15 6.20 3.57 2.63 1.01 2.83 0.98 -0.19 -0.63 -0.20 -2.55 1.05 209.30 86.38 40.00 0.00 7.15 3.17 3.99 0.71 2.83 0.20 1.09 1.32 1.10 9.73 0.31 95.69 64.66 10.75 58.39 6.93 3.35 3.58 1.05 2.97 0.72 0.36 0.49 0.35 3.14 0.60 170.12 63.50 20.18 43.08 6.38 3.86 2.52 0.78 2.72 1.13 -0.58 -1.34 -0.94 -10.51 0.66 240.30 68.46 20.87 47.20 7.84 3.41 4.43 2.57 3.77 1.71 0.65 1.14 0.66 5.29 1.03 201.17 54.48 20.37 51.85 5.60 2.50 3.10 11.20 10.26 0.09 2.28 3.61 2.30 11.46 0.26 136.68 73.26 28.07 46.26 6.61 2.87 3.73 1.07 3.18 0.20 0.92 1.14 0.95 8.24 0.33 104.18 70.43 8.86 53.38 6.32 3.36 2.96 1.43 2.90 0.68 0.35 0.26 0.29 2.78 0.55 231.63 71.27 12.50 46.43 Structural Changes New Charters ...................................................... Institutions absorbed by mergers ........................ Failed Institutions ................................................ 50 74 1 0 0 0 0 0 0 1 2 0 17 63 0 1 4 1 0 0 0 31 0 0 0 4 0 0 1 0 PRIOR FOURTH QUARTERS (The way it was...) Return on assets (%) ................................... 2006 ................................ 2004 ................................ 2002 1.20 1.25 1.20 3.43 3.72 3.74 0.96 0.77 0.43 1.06 1.04 1.02 1.20 1.25 1.28 0.91 1.22 1.36 1.54 1.50 1.41 2.17 1.74 -0.80 1.00 0.99 1.02 1.21 1.25 1.17 Net charge-offs to loans & leases (%) …...... 2006 ................................ 2004 ................................ 2002 0.47 0.60 0.98 3.88 4.64 5.36 0.36 1.10 1.73 0.30 0.31 0.45 0.35 0.35 0.65 0.19 0.15 0.29 1.62 1.44 1.15 0.32 0.54 2.33 0.28 0.36 0.49 0.29 0.24 0.90 *Asset Concentration Group Definitions (Groups are hierarchical and mutually exclusive): Credit-card Lenders - Institutions whose credit-card loans plus securitized receivables exceed 50 percent of total assets plus securitized receivables. International Banks - Banks with assets greater than $10 billion and more than 25 percent of total assets in foreign offices. Agricultural Banks - Banks whose agricultural production loans, plus real estate loans secured by farmland, exceed 25 percent of the total loans and leases. Commercial Lenders - Institutions whose commercial and industrial loans, plus real estate construction and development loans, plus loans secured by commercial real estate properties, exceed 25 percent of total assets. Mortgage Lenders - Institutions whose residential mortgage loans, plus mortgage-backed securities, exceed 50 percent of total assets. Consumer Lenders - Institutions whose residential mortgage loans, plus credit-card loans, plus other loans to individuals, exceed 50 percent of total assets. Other Specialized < $1 Billion - Institutions with assets less than $1 billion, whose loans and leases are less than 40 percent of total assets. All Other < $1 billion - Institutions with assets less than $1 billion that do not meet any of the definitions above, they have significant lending activity with no identified asset concentrations. All Other > $1 billion - Institutions with assets greater than $1 billion that do not meet any of the definitions above, they have significant lending activity with no identified asset concentrations. FDIC QUARTERLY 8 2008, VOLUME 2, NO. 1 Quarterly Banking Profile TABLE IV-A. Fourth Quarter 2007, All FDIC-Insured Institutions Asset Size Distribution FOURTH QUARTER (The way it is...) Number of institutions reporting ............................. Commercial banks ............................................... Savings institutions .............................................. Total assets (in billions) .......................................... Commercial banks ............................................... Savings institutions .............................................. Total deposits (in billions) ....................................... Commercial banks ............................................... Savings institutions .............................................. Net income (in millions) .......................................... Commercial banks ............................................... Savings institutions .............................................. $100 Million $1 Billion Less All to to than $100 Insured $10 Billion $1 Billion Million Institutions 8,533 3,440 4,425 549 7,282 3,065 3,706 425 1,251 375 719 124 $13,038.8 $181.9 $1,310.1 $1,420.3 11,176.1 162.9 1,062.1 1,112.7 1,862.7 19.0 247.9 307.5 8,414.4 148.1 1,039.9 1,008.1 7,308.9 133.8 854.8 792.0 1,105.5 14.3 185.1 216.1 5,816 221 2,489 2,484 10,540 221 2,150 2,163 -4,724 0 339 321 Geographic Regions* Greater than $10 Billion New York 119 1,042 86 548 33 494 $10,126.5 $2,439.7 8,838.4 1,759.6 1,288.2 680.1 6,218.3 1,512.9 5,528.4 1,066.5 690.0 446.4 622 1,709 6,006 2,993 -5,385 -1,284 Atlanta 1,220 1,075 145 $3,329.1 3,060.6 268.6 2,184.0 2,023.6 160.4 1,249 2,959 -1,709 Chicago 1,763 1,455 308 $2,842.7 2,685.7 157.0 1,828.3 1,717.8 110.5 4,322 4,304 18 Kansas City 1,987 1,880 107 $977.9 935.2 42.7 691.1 661.1 30.0 2,385 2,366 19 San Dallas Francisco 1,743 778 1,618 706 125 72 $738.7 $2,710.7 621.2 2,113.9 117.5 596.9 547.1 1,650.9 476.6 1,363.2 70.5 287.7 1,110 -4,960 1,054 -3,136 57 -1,824 Performance Ratios (annualized, %) Yield on earning assets .......................................... Cost of funding earning assets ............................... Net interest margin .............................................. Noninterest income to assets ................................. Noninterest expense to assets ............................... Loan and lease loss provision to assets ................. Net operating income to assets .............................. Pretax return on assets .......................................... Return on assets .................................................... Return on equity ..................................................... Net charge-offs to loans and leases ....................... Loan and lease loss provision to net charge-offs ... Efficiency ratio ........................................................ % of unprofitable institutions .................................. % of institutions with earnings gains ...................... 6.78 3.48 3.30 1.49 3.11 0.97 0.24 0.16 0.18 1.74 0.83 193.46 66.27 17.68 47.56 7.07 2.99 4.08 1.28 4.12 0.29 0.46 0.66 0.49 3.55 0.36 126.15 81.69 24.65 48.02 7.12 3.30 3.82 1.11 3.23 0.41 0.76 0.99 0.77 7.30 0.42 138.87 67.93 12.86 48.47 7.08 3.39 3.69 1.00 2.63 0.75 0.69 0.98 0.71 6.23 0.60 179.53 57.38 11.29 42.08 6.68 3.53 3.15 1.61 3.15 1.09 0.11 -0.07 0.02 0.24 0.94 199.30 66.98 25.21 25.21 6.86 3.44 3.42 2.18 3.44 0.97 0.39 0.58 0.28 2.32 1.00 171.70 56.21 20.54 45.30 6.66 3.57 3.08 1.00 2.65 0.76 0.28 0.04 0.15 1.50 0.56 222.53 70.15 25.16 36.48 6.20 3.40 2.80 2.08 2.94 0.70 0.61 0.86 0.62 6.77 0.74 172.84 63.36 16.39 47.19 7.65 3.22 4.43 3.21 4.29 1.52 0.97 1.26 1.00 10.05 1.10 196.92 59.62 13.89 53.40 7.09 3.25 3.83 1.30 3.39 0.58 0.60 0.79 0.61 5.93 0.46 189.26 67.45 13.20 54.79 7.05 3.64 3.42 0.31 3.08 1.41 -0.67 -1.35 -0.73 -6.95 1.09 203.52 83.58 24.81 37.66 Structural Changes New Charters ...................................................... Institutions absorbed by mergers ........................ Failed Institutions ................................................ 50 74 1 50 30 1 0 39 0 0 5 0 0 0 0 8 12 0 13 5 0 4 33 1 5 12 0 9 6 0 11 6 0 PRIOR FOURTH QUARTERS (The way it was...) Return on assets (%) .................................... 2006 ................................ 2004 ................................ 2002 1.20 1.25 1.20 0.68 0.89 0.84 1.08 1.14 0.99 1.10 1.36 1.47 1.24 1.25 1.20 1.26 1.37 0.94 1.21 1.19 1.21 1.19 0.85 1.14 1.82 1.66 1.57 1.10 1.18 1.36 0.94 1.59 1.66 Net charge-offs to loans & leases (%) .......... 2006 ................................ 2004 ................................ 2002 0.47 0.60 0.98 0.31 0.39 0.47 0.26 0.34 0.53 0.26 0.45 0.66 0.55 0.69 1.17 0.94 0.88 1.36 0.26 0.33 0.81 0.38 0.59 0.79 0.70 0.70 1.18 0.25 0.34 0.55 0.40 0.59 0.86 * Regions: New York - Connecticut, Delaware, District of Columbia, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Puerto Rico Rhode Island, Vermont, U.S. Virgin Islands Atlanta - Alabama, Florida, Georgia, North Carolina, South Carolina, Virginia, West Virginia Chicago - Illinois, Indiana, Kentucky, Michigan, Ohio, Wisconsin Kansas City - Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota Dallas - Arkansas, Colorado, Louisiana, Mississippi, New Mexico, Oklahoma, Tennessee, Texas San Francisco - Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon, Pacific Islands, Utah, Washington, Wyoming FDIC QUARTERLY 9 2008, VOLUME 2, NO. 1 TABLE V-A. Loan Performance, All FDIC-Insured Institutions Asset Concentration Groups* December 31, 2007 All Insured Institutions Credit Card International Agricultural Commercial Banks Banks Banks Lenders Mortgage Lenders Consumer Lenders Other Specialized <$1 Billion All Other <$1 Billion All Other >$1 Billion Percent of Loans 30-89 Days Past Due All loans secured by real estate ....................................... Construction and development ...................................... Nonfarm nonresidential ................................................. Multifamily residential real estate .................................. Home equity loans ......................................................... Other 1-4 family residential ........................................... Commercial and industrial loans ...................................... Loans to individuals .......................................................... Credit card loans ........................................................... Other loans to individuals .............................................. All other loans and leases (including farm) ...................... Total loans and leases ..................................................... 1.58 1.83 0.78 0.56 1.14 2.11 0.73 2.07 2.32 1.90 0.47 1.40 2.87 0.00 0.00 0.00 2.98 2.02 2.80 2.33 2.30 2.57 0.15 2.28 2.71 2.01 0.60 0.37 1.05 3.87 0.41 2.15 2.57 1.95 0.40 1.62 1.32 2.47 1.04 0.86 0.70 1.94 1.45 2.27 1.39 2.33 0.81 1.27 1.30 1.84 0.75 0.77 0.84 1.74 0.81 1.75 2.33 1.68 0.77 1.20 1.85 3.37 0.64 0.21 1.75 1.97 1.01 1.52 2.32 0.98 0.50 1.81 2.55 1.43 1.59 1.34 0.82 3.59 1.05 1.92 1.21 2.16 0.14 2.15 1.25 0.96 0.98 1.63 1.33 1.39 1.25 1.76 1.96 1.74 0.75 1.31 1.73 1.47 1.27 0.85 1.13 2.11 1.55 2.63 1.25 2.68 0.66 1.74 1.41 1.28 0.85 0.31 1.16 1.76 0.54 2.07 2.26 2.03 0.26 1.19 Percent of Loans Noncurrent** All real estate loans .......................................................... Construction and development ...................................... Nonfarm nonresidential ................................................. Multifamily residential real estate .................................. Home equity loans ......................................................... Other 1-4 family residential ........................................... Commercial and industrial loans ...................................... Loans to individuals .......................................................... Credit card loans ........................................................... Other loans to individuals .............................................. All other loans and leases (including farm) ...................... Total loans and leases ..................................................... 1.71 3.15 0.81 0.76 0.86 2.06 0.66 1.43 2.22 0.91 0.56 1.39 1.81 0.00 0.00 0.00 1.98 0.31 2.21 2.10 2.11 2.03 0.03 2.00 1.95 1.91 0.56 0.39 0.75 2.69 0.34 2.09 3.04 1.66 1.10 1.42 1.20 4.12 1.26 1.08 0.49 0.99 1.35 0.73 1.10 0.71 0.57 1.05 1.62 3.05 0.85 0.97 0.61 1.81 0.74 0.67 1.80 0.54 0.38 1.31 1.94 6.08 0.64 0.43 1.47 2.02 0.88 0.96 2.05 0.24 0.38 1.87 3.17 3.35 2.60 6.79 0.13 4.64 0.73 0.94 1.19 0.85 0.11 1.97 0.82 2.28 0.70 3.15 0.14 0.64 1.21 0.49 0.76 0.47 0.35 0.77 0.99 2.16 1.23 0.77 0.57 0.84 1.16 0.78 0.70 0.79 0.52 0.95 1.60 3.00 0.58 0.47 0.87 2.05 0.54 0.83 2.03 0.59 0.21 1.15 Percent of Loans Charged-off (net, YTD) All real estate loans .......................................................... Construction and development ...................................... Nonfarm nonresidential ................................................. Multifamily residential real estate .................................. Home equity loans ......................................................... Other 1-4 family residential ........................................... Commercial and industrial loans ...................................... Loans to individuals .......................................................... Credit card loans ........................................................... Other loans to individuals .............................................. All other loans and leases (including farm) ...................... Total loans and leases ..................................................... 0.23 0.36 0.09 0.12 0.47 0.21 0.54 2.50 4.06 1.52 0.25 0.59 1.80 0.00 0.00 0.00 1.90 1.52 4.54 4.17 4.16 4.24 0.01 3.95 0.39 0.25 0.04 0.04 0.49 0.44 0.35 2.80 3.36 2.56 0.06 0.76 0.09 0.38 0.11 0.15 0.07 0.10 0.69 0.64 2.07 0.55 0.00 0.22 0.22 0.38 0.11 0.19 0.36 0.20 0.44 1.16 3.37 0.90 0.54 0.35 0.27 0.80 0.04 0.02 0.82 0.20 0.74 3.28 7.07 0.56 0.42 0.40 0.09 0.06 0.01 0.00 0.16 0.09 2.48 1.65 2.70 1.29 0.02 0.87 0.03 0.10 -0.03 0.00 0.09 0.05 0.26 0.90 3.49 0.50 0.86 0.29 0.07 0.14 0.08 0.10 0.05 0.06 0.49 0.71 1.96 0.67 0.00 0.21 0.16 0.14 0.04 0.01 0.42 0.11 0.38 1.60 4.03 1.14 0.24 0.39 Loans Outstanding (in billions) All real estate loans .......................................................... Construction and development ...................................... Nonfarm nonresidential ................................................. Multifamily residential real estate .................................. Home equity loans ......................................................... Other 1-4 family residential ........................................... Commercial and industrial loans ...................................... Loans to individuals .......................................................... Credit card loans ........................................................... Other loans to individuals .............................................. All other loans and leases (including farm) ...................... Total loans and leases ..................................................... $4,780.6 628.9 968.4 202.7 607.4 2,245.3 1,440.3 1,059.1 422.5 636.7 628.6 7,908.7 $1.6 0.0 0.0 0.0 1.4 0.2 46.6 300.8 266.0 34.8 19.6 368.5 $484.6 9.8 26.6 11.8 96.3 288.2 321.0 224.1 70.6 153.5 208.2 1,237.8 $58.8 5.8 16.1 1.0 1.1 15.3 14.8 6.5 0.4 6.1 24.9 105.0 $2,201.6 502.6 711.9 115.9 191.2 641.3 663.2 228.1 23.8 204.2 169.3 3,262.2 $882.3 24.6 34.5 42.0 101.6 678.9 15.7 40.0 16.0 24.0 5.7 943.6 $36.2 0.8 3.7 0.2 9.9 21.5 4.3 34.9 9.0 25.9 1.0 76.5 $5.4 0.4 1.5 0.1 0.1 3.1 1.1 1.7 0.2 1.6 0.8 9.1 $43.9 3.0 10.2 0.7 1.7 25.2 6.5 7.7 0.3 7.4 4.7 62.8 $1,066.3 82.0 164.1 31.0 204.1 571.7 367.0 215.4 36.3 179.1 194.5 1,843.2 45.3 4.8 23.9 0.3 16.1 0.3 18.1 1.5 11.4 0.4 3.4 0.4 125.3 16.2 46.8 8.3 50.0 3.7 1,937.0 34.0 156.8 77.5 1,130.7 1.1 Memo: Other Real Estate Owned (in millions) All other real estate owned ............................................... 12,138.3 N/M 1,060.3 208.0 6,232.5 2,530.1 Construction and development ...................................... 2,224.0 0.0 0.0 64.2 1,972.6 130.7 Nonfarm nonresidential ................................................. 1,526.5 0.0 11.0 66.7 1,171.4 38.5 Multifamily residential real estate .................................. 361.9 0.0 0.0 5.9 247.1 22.4 1-4 family residential ..................................................... 6,643.1 1.2 544.3 48.1 2,549.9 2,299.5 Farmland ....................................................................... 68.7 0.0 0.0 22.8 40.2 0.2 * See Table IV-A (page 8) for explanations. ** Noncurrent loan rates represent the percentage of loans in each category that are past due 90 days or more or that are in nonaccrual status. FDIC QUARTERLY 10 2008, VOLUME 2, NO. 1 Quarterly Banking Profile TABLE V-A. Loan Performance, All FDIC-Insured Institutions Asset Size Distribution December 31, 2007 All Less $100 Million $1 Billion Insured than to to Institutions $100 Million $1 Billion $10 Billion Geographic Regions* Greater than $10 Billion New York Atlanta Chicago Kansas City Dallas San Francisco Percent of Loans 30-89 Days Past Due All loans secured by real estate ............................. Construction and development ........................... Nonfarm nonresidential ....................................... Multifamily residential real estate ........................ Home equity loans .............................................. Other 1-4 family residential ................................. Commercial and industrial loans ............................ Loans to individuals ............................................... Credit card loans ................................................. Other loans to individuals .................................... All other loans and leases (including farm) ............ Total loans and leases ........................................... 1.58 1.83 0.78 0.56 1.14 2.11 0.73 2.07 2.32 1.90 0.47 1.40 1.71 1.86 1.32 1.29 0.94 2.23 1.46 2.79 2.05 2.81 0.73 1.66 1.32 1.90 0.92 0.89 0.95 1.55 1.14 2.00 2.50 1.96 0.65 1.31 1.11 1.63 0.66 0.94 0.81 1.32 0.98 2.20 2.42 2.06 0.70 1.16 1.74 1.90 0.74 0.37 1.18 2.28 0.64 2.05 2.31 1.87 0.43 1.45 1.20 1.81 1.18 0.39 0.77 1.24 1.07 2.24 2.31 2.12 0.51 1.35 1.56 1.59 0.53 0.68 1.30 2.07 0.49 1.86 2.78 1.72 0.37 1.31 2.00 2.57 1.01 1.43 0.92 2.92 0.87 1.87 2.12 1.79 0.72 1.60 1.16 1.65 0.67 0.73 1.19 1.35 1.00 2.59 2.26 2.89 0.34 1.26 1.40 1.43 0.73 0.67 0.73 2.34 0.66 1.72 1.21 1.84 0.70 1.25 1.77 1.86 0.47 0.27 1.42 2.52 0.52 2.00 2.42 1.70 0.24 1.47 Percent of Loans Noncurrent** All real estate loans ................................................ Construction and development ........................... Nonfarm nonresidential ....................................... Multifamily residential real estate ........................ Home equity loans .............................................. Other 1-4 family residential ................................. Commercial and industrial loans ............................ Loans to individuals ............................................... Credit card loans ................................................. Other loans to individuals .................................... All other loans and leases (including farm) ............ Total loans and leases ........................................... 1.71 3.15 0.81 0.76 0.86 2.06 0.66 1.43 2.22 0.91 0.56 1.39 1.27 2.27 1.27 1.02 0.64 1.17 1.37 0.95 1.06 0.95 0.60 1.19 1.32 2.98 0.89 1.02 0.55 0.96 1.08 0.61 1.44 0.54 0.51 1.22 1.53 3.05 0.81 1.47 0.60 1.40 0.82 1.06 2.02 0.49 0.43 1.34 1.84 3.31 0.74 0.48 0.90 2.31 0.58 1.51 2.24 0.98 0.58 1.43 1.17 2.82 1.06 0.41 0.53 1.13 1.09 1.77 2.26 0.90 0.68 1.25 1.48 2.89 0.57 0.88 1.00 1.58 0.49 0.84 2.33 0.62 0.17 1.16 2.23 4.12 1.21 2.35 0.76 2.81 0.60 0.95 1.81 0.64 0.59 1.55 2.35 3.10 0.76 0.61 0.71 4.28 0.86 1.35 1.88 0.90 0.23 1.70 1.51 2.27 0.75 1.24 0.33 2.00 0.66 0.58 1.10 0.46 0.51 1.22 1.83 3.50 0.44 0.29 1.14 2.37 0.56 1.93 2.50 1.53 1.18 1.57 Percent of Loans Charged-off (net, YTD) All real estate loans ................................................ Construction and development ........................... Nonfarm nonresidential ....................................... Multifamily residential real estate ........................ Home equity loans .............................................. Other 1-4 family residential ................................. Commercial and industrial loans ............................ Loans to individuals ............................................... Credit card loans ................................................. Other loans to individuals .................................... All other loans and leases (including farm) ............ Total loans and leases ........................................... 0.23 0.36 0.09 0.12 0.47 0.21 0.54 2.50 4.06 1.52 0.25 0.59 0.12 0.29 0.10 0.21 0.19 0.11 0.58 0.67 2.44 0.64 0.14 0.23 0.14 0.33 0.08 0.13 0.14 0.11 0.50 1.02 5.28 0.69 0.28 0.24 0.21 0.42 0.11 0.36 0.28 0.12 0.53 2.09 3.69 1.27 0.32 0.41 0.26 0.35 0.09 0.04 0.51 0.23 0.54 2.64 4.08 1.63 0.25 0.68 0.10 0.28 0.07 0.01 0.22 0.08 0.98 3.33 4.22 1.78 0.21 0.90 0.19 0.31 0.06 0.31 0.46 0.13 0.33 1.31 4.00 0.92 0.32 0.33 0.33 0.51 0.14 0.31 0.40 0.35 0.31 1.52 3.44 0.84 0.35 0.46 0.28 0.41 0.07 0.07 0.68 0.20 0.94 2.94 4.27 1.78 0.13 0.78 0.18 0.31 0.12 0.22 0.26 0.12 0.33 1.08 2.45 0.77 0.37 0.29 0.29 0.36 0.09 0.04 0.64 0.31 0.65 3.20 4.11 2.60 0.12 0.76 Loans Outstanding (in billions) All real estate loans ................................................ Construction and development ........................... Nonfarm nonresidential ....................................... Multifamily residential real estate ........................ Home equity loans .............................................. Other 1-4 family residential ................................. Commercial and industrial loans ............................ Loans to individuals ............................................... Credit card loans ................................................. Other loans to individuals .................................... All other loans and leases (including farm) ............ Total loans and leases ........................................... $4,780.6 628.9 968.4 202.7 607.4 2,245.3 1,440.3 1,059.1 422.5 636.7 628.6 7,908.7 $77.4 10.8 22.1 1.7 2.5 31.4 16.7 9.0 0.1 8.9 11.9 115.0 $717.5 147.0 243.5 27.5 33.7 238.5 123.0 49.4 3.6 45.8 36.2 926.1 $716.1 165.1 233.8 40.9 42.0 220.4 153.6 79.2 29.5 49.7 36.0 984.9 $3,269.6 306.0 469.1 132.5 529.2 1,755.0 1,147.0 921.6 389.2 532.4 544.5 5,882.6 $805.9 65.1 182.4 47.5 58.3 448.2 203.3 291.9 186.0 105.9 94.4 1,395.6 $1,374.4 204.0 249.7 30.4 193.0 676.1 345.7 179.5 23.5 156.0 159.7 2,059.2 $870.0 122.6 193.2 29.7 152.9 355.6 349.3 175.8 46.1 129.7 164.4 1,559.4 $384.1 52.1 88.2 8.8 75.9 140.9 121.6 102.9 48.0 54.8 72.5 681.0 $330.2 87.8 104.8 6.9 21.6 98.7 102.1 40.8 7.8 33.0 20.3 493.3 $1,016.1 97.3 150.1 79.3 105.7 525.9 318.4 268.3 111.2 157.1 117.3 1,720.2 Memo: Other Real Estate Owned (in millions) All other real estate owned .................................... Construction and development ........................... Nonfarm nonresidential ....................................... Multifamily residential real estate ........................ 1-4 family residential ........................................... Farmland ............................................................. 12,138.3 2,224.0 1,526.5 361.9 6,643.1 68.7 356.1 70.0 115.2 13.1 143.7 13.6 2,616.9 1,021.6 667.6 100.3 792.6 32.4 1,798.3 712.2 307.2 95.2 670.5 11.2 7,367.0 420.2 436.6 153.3 5,036.4 11.5 951.3 201.1 148.5 30.8 540.4 15.0 3,028.1 782.4 367.0 114.4 1,720.7 6.7 2,809.0 348.2 393.5 121.5 1,399.0 8.7 1,763.9 299.9 250.6 29.5 637.4 9.1 1,156.0 391.7 292.1 23.7 398.7 27.2 2,430.0 200.8 74.9 42.0 1,946.9 1.9 * See Table IV-A (page 9) for explanations. ** Noncurrent loan rates represent the percentage of loans in each category that are past due 90 days or more or that are in nonaccrual status. FDIC QUARTERLY 11 2008, VOLUME 2, NO. 1 TABLE VI-A. Derivatives, All FDIC-Insured Commercial Banks and State-Chartered Savings Banks (dollar figures in millions; notional amounts unless otherwise indicated) 4th Quarter 2007 3rd Quarter 2007 2nd Quarter 2007 1st Quarter 2007 4th Quarter 2006 %Change 06:4-07:4 Less than $100 Million Asset Size Distribution $1 Billion $100 Million to to $10 Billion $1 Billion Greater than $10 Billion ALL DERIVATIVE HOLDERS 1,042 1,025 1,058 1,056 1,014 Number of institutions reporting derivatives …………………………… Total assets of institutions reporting derivatives ……………………… $9,826,802 $9,460,260 $9,147,067 $8,871,745 $8,834,288 Total deposits of institutions reporting derivatives …………………… 6,324,177 6,031,920 5,900,355 5,750,636 5,751,266 Total derivatives ………………………………………………………… 164,780,773 173,284,358 153,678,084 144,098,922 132,182,732 2.8 11.2 10.0 24.7 67 $4,954 3,969 94 632 $275,039 216,148 17,670 264 79 $821,793 $8,725,016 588,151 5,515,908 101,276 164,661,733 Derivative Contracts by Underlying Risk Exposure Interest rate ……………………………………………..………………… 129,587,559 138,789,177 123,340,595 116,751,425 107,434,665 Foreign exchange* ……………………………………………………… 17,174,474 16,696,567 15,117,713 14,167,853 12,564,160 Equity ……………………………………………………………………… 2,533,531 2,783,712 2,491,034 2,173,375 2,270,942 1,073,116 1,025,685 951,725 840,505 893,310 Commodity & other (excluding credit derivatives) …………………… Credit ………………………………………………..…………………… 14,412,094 13,989,217 11,777,017 10,165,765 9,019,655 Total ………………………………………………..……………………… 164,780,773 173,284,358 153,678,084 144,098,922 132,182,732 20.6 36.7 11.6 20.1 59.8 24.7 75 8 11 0 0 94 17,256 30 186 0 198 17,670 83,520 129,486,707 5,170 17,169,265 12,162 2,521,172 207 1,072,908 216 14,411,679 101,276 164,661,733 Derivative Contracts by Transaction Type Swaps ………………………………………………..…………………… 103,100,934 111,410,085 95,320,189 88,006,970 81,339,865 Futures & forwards ………………………………………………..……… 18,967,549 17,202,716 16,198,687 15,307,497 14,881,758 Purchased options ………………………………………………..……… 13,784,021 14,562,615 14,298,899 14,737,699 12,944,893 Written options ………………………………………………..………… 13,956,210 15,033,429 14,773,476 14,601,673 13,332,489 Total ………………………………………………..……………………… 149,808,714 158,208,844 140,591,251 132,653,840 122,499,005 26.8 27.5 6.5 4.7 22.3 19 18 5 44 86 10,639 1,621 3,109 2,088 17,457 59,484 103,030,791 16,017 18,949,894 20,357 13,760,550 4,884 13,949,194 100,742 149,690,429 Fair Value of Derivative Contracts Interest rate contracts ………………………………………………..… Foreign exchange contracts …………………………………………… Equity contracts ………………………………………………..………… Commodity & other (excluding credit derivatives) …………………… Credit derivatives as guarantor ………………………………………… Credit derivatives as beneficiary ……………………………………… 33,902 6,569 -18,947 1,422 -212,447 222,426 30,716 3,119 -20,872 1,664 -104,120 110,905 20,001 5,661 -24,473 1,946 -22,960 23,824 24,423 74,088 -18,499 22,530 9,032 -9,668 23,275 5,324 -17,845 2,658 31,583 -32,745 45.7 23.4 6.2 -46.5 -772.7 -779.3 0 0 0 0 0 0 45 0 10 0 0 0 58 -7 59 0 -16 7 33,799 6,576 -19,016 1,421 -212,431 222,419 39,085,024 37,222,439 27,722,186 11,592,113 1,604,898 618,960 473,413 297,419 70,485 288,125 337,075 26,387 48,917,897 36,310,944 27,875,202 10,094,603 1,831,220 718,390 464,820 330,227 95,900 278,442 308,298 27,617 39,403,807 33,846,133 24,588,177 8,948,450 1,667,700 676,071 442,652 283,520 62,916 280,133 261,410 27,273 32,457,730 33,802,189 24,684,533 8,372,488 1,571,241 624,415 397,237 236,563 74,332 271,647 200,458 23,931 29,551,704 31,385,640 23,273,618 7,690,210 1,415,846 592,897 341,346 220,856 44,858 235,107 272,314 21,581 32.3 18.6 19.1 50.7 13.4 4.4 38.7 34.7 57.1 22.6 23.8 22.3 11 9 12 0 0 0 0 5 0 0 0 0 2,067 10,311 2,552 7 4 5 22 74 1 0 0 0 23,077 27,112 27,038 3,801 17 10 148 400 37 158 27 0 39,059,868 37,185,007 27,692,583 11,588,305 1,604,878 618,945 473,242 296,940 70,447 287,967 337,048 26,387 Risk-Based Capital: Credit Equivalent Amount Total current exposure to tier 1 capital (%) …………………………… Total potential future exposure to tier 1 capital (%) …………….……… Total exposure (credit equivalent amount) to tier 1 capital (%) ……… 45.6 109.8 155.4 38.0 115.1 153.1 30.7 113.4 144.1 28.3 106.8 135.1 29.2 97.7 126.9 0.2 0.1 0.3 0.4 0.4 0.8 1.9 0.9 2.7 52.8 127.5 180.3 Credit losses on derivatives*** ……………………………………… 156.0 125.0 6.0 -3.0 -25.0 -724.0 1.0 0.0 155.0 166 8,307,238 5,354,783 159 7,977,733 5,083,233 167 7,640,639 4,917,948 156 7,388,068 4,770,665 147 7,223,404 4,712,089 12.9 15.0 13.6 11 760 599 45 22,358 17,483 57 250,499 175,641 53 8,033,621 5,161,060 Derivative Contracts by Underlying Risk Exposure Interest rate ………………………………………………..……………… 127,126,919 136,068,953 120,820,791 114,003,913 104,692,154 Foreign exchange ………………………………………………..……… 16,483,269 15,489,462 13,683,371 12,769,131 11,788,161 Equity ………………………………………………..…………………… 2,515,242 2,767,663 2,474,617 2,168,932 2,266,778 Commodity & other ………………………………………………..……… 1,072,230 1,024,998 951,236 840,237 893,087 Total ………………………………………………..……………………… 147,197,659 155,351,076 137,930,014 129,782,212 119,640,180 21.4 39.8 11.0 20.1 23.0 9 0 0 0 9 304 12 1 0 317 -591.6 16.1 -82.6 5,665.8 -358.0 0 0 0 0 0 0 0 0 0 0 13 9 0 1 23 -5,671 1,864 211 -6,401 -9,997 0.0 0.0 0.0 -0.4 0.7 7.3 -7.4 -256.0 56 4,160 3,336 591 254,949 200,320 237 749,334 536,933 75 8,643,139 5,463,628 Derivative Contracts by Maturity** Interest rate contracts ……………………………………. < 1 year ………………………. 1-5 years ………………………. > 5 years Foreign exchange contracts ……………………..….….. < 1 year ………………………. 1-5 years ………………………. > 5 years Equity contracts …………………………………………... < 1 year ………………………. 1-5 years ………………………. > 5 years Commodity & other contracts ……………………………. < 1 year ………………………. 1-5 years ………………………. > 5 years HELD FOR TRADING Number of institutions reporting derivatives …………………………… Total assets of institutions reporting derivatives ……………………… Total deposits of institutions reporting derivatives …………………… Trading Revenues: Cash & Derivative Instruments Interest rate ………………………………………………..……………… Foreign exchange ………………………………………………..……… Equity ………………………………………………..…………………… Commodity & other (including credit derivatives) …………………… Total trading revenues ………………………………………………..… -5,658 1,873 211 -6,400 -9,974 1,364 2,005 -92 -1,017 2,260 2,939 1,265 1,020 907 6,131 2,405 1,830 1,732 1,053 7,020 1,151 1,613 1,214 -111 3,866 Share of Revenue Trading revenues to gross revenues (%) ……………………………… Trading revenues to net operating revenues (%) …………………… -7.2 -233.9 1.5 12.6 4.1 27.0 4.9 33.0 3.0 19.6 HELD FOR PURPOSES OTHER THAN TRADING Number of institutions reporting derivatives …………………………… Total assets of institutions reporting derivatives ……………………… Total deposits of institutions reporting derivatives …………………… 959 9,651,581 6,204,217 949 9,300,460 5,923,372 971 8,967,342 5,776,699 969 8,637,459 5,582,898 935 8,604,674 5,589,964 2.6 12.2 11.0 30,489 127,096,117 4,486 16,478,771 347 2,514,894 148 1,072,082 35,470 147,161,864 Derivative Contracts by Underlying Risk Exposure Interest rate ………………………………………………..……………… 2,460,640 2,720,224 2,519,804 2,747,512 2,742,511 -10.3 66 16,952 53,031 2,390,591 Foreign exchange ………………………………………………..……… 131,240 120,808 124,526 119,405 111,928 17.3 0 4 366 130,870 Equity ………………………………………………..…………………… 18,289 16,048 16,417 4,443 4,164 339.2 11 185 11,815 6,279 Commodity & other ………………………………………………..……… 886 687 489 268 223 297.3 0 0 59 826 Total notional amount ………………………………………………..…… 2,611,055 2,857,768 2,661,237 2,871,628 2,858,826 -8.7 77 17,140 65,272 2,528,566 All line items are reported on a quarterly basis. *Include spot foreign exchange contracts. All other references to foreign exchange contracts in which notional values or fair values are reported exclude spot foreign exchange contracts. ** Derivative contracts subject to the risk-based capital requirements for derivatives. *** The reporting of credit losses on derivatives is applicable to all banks filing the FFIEC 031 report form and to those banks filing the FFIEC 041 report form that have $300 million or more in total assets. FDIC QUARTERLY 12 2008, VOLUME 2, NO. 1 Quarterly Banking Profile TABLE VII-A. Servicing, Securitization, and Asset Sales Activities (All FDIC-Insured Commercial Banks and State-Chartered Savings Banks) (dollar figures in millions) 4th Quarter 3rd Quarter 2nd Quarter 1st Quarter 4th Quarter %Change 2007 2007 2007 2007 2006 06:4-07:4 Assets Sold and Securitized with Servicing Retained or with Recourse or Other Seller-Provided Credit Enhancements 124 122 126 126 Number of institutions reporting securitization activities ………………………………………… Outstanding Principal Balance by Asset Type 1-4 family residential loans …………………………………………………………………..…… $1,129,377 $1,111,554 $1,119,076 $1,088,151 Home equity loans ………………………………………………………………………………… 9,353 9,894 10,640 9,339 Credit card receivables ……………………………………………………………………...….… 389,502 379,662 372,481 367,796 Auto loans ……………………………………………………………………………………..…… 9,019 10,433 12,547 14,132 Other consumer loans ……………………………………………………………………....….… 28,542 29,386 27,396 27,737 Commercial and industrial loans ………………………………………………………………… 14,148 15,862 13,193 12,039 All other loans, leases, and other assets* ………………………………………………....…… 193,875 184,941 162,434 150,404 Total securitized and sold ……………………………………………………………………..……. 1,773,817 1,741,732 1,717,767 1,669,598 Maximum Credit Exposure by Asset Type 1-4 family residential loans ………………………………………………………………….....… Home equity loans …………………………………………………………………………...…… Credit card receivables ………………………………………………………………………....… Auto loans ………………………………………………………………………………………..... Other consumer loans ……………………………………………………………………….....… Commercial and industrial loans …………………………………………………………....…… All other loans, leases, and other assets ……………………………………………………..... Total credit exposure ……………………………………………………………………………...… Total unused liquidity commitments provided to institution's own securitizations …….....…… Securitized Loans, Leases, and Other Assets 30-89 Days Past Due (%) 1-4 family residential loans ………………………………………………………………..……… Home equity loans ……………………………………………………………………...….……… Credit card receivables ………………………………………………………………………….... Auto loans ……………………………………………………………………………………......… Other consumer loans ……………………………………………………………………….....… Commercial and industrial loans …………………………………………………………....…… All other loans, leases, and other assets …………………………………………………..…… Total loans, leases, and other assets ………………………………………………………...…… Securitized Loans, Leases, and Other Assets 90 Days or More Past Due (%) 1-4 family residential loans ……………………………………………………………….……… Home equity loans ……………………………………………………………………………....… Credit card receivables ………………………………………………………………………….… Auto loans ………………………………………………………………………………………..… Other consumer loans …………………………………………………………………………..… Commercial and industrial loans ……………………………………………………………….... All other loans, leases, and other assets ……………………………………………………….. Total loans, leases, and other assets ……………………………………………………………... Securitized Loans, Leases, and Other Assets Charged-Off (net, YTD, annualized, %) 1-4 family residential loans ……………………………………………………………………..... Home equity loans …………………………………………………………………………….….. Credit card receivables ………………………………………………………………………….… Auto loans ……………………………………………………………………………………..…… Other consumer loans ………………………………………………………………………….… Commercial and industrial loans ………………………………………………………………… All other loans, leases, and other assets ……………………………………………………..… Total loans, leases, and other assets ……………………………………………………………… Seller's Interests in Institution's Own Securitizations - Carried as Loans Home equity loans ……………………………………………………………………………...… Credit card receivables ………………………………………………………………………….… Commercial and industrial loans ………………………………………………………………… Seller's Interests in Institution's Own Securitizations - Carried as Securities Home equity loans ……………………………………………………………………………...… Credit card receivables ………………………………………………………………………….… Commercial and industrial loans ………………………………………………………………… Less than $100 Million Asset Size Distribution $100 Million $1 Billion to to $1 Billion $10 Billion Greater than $10 Billion 123 0.8 14 49 20 41 $739,041 8,905 362,467 16,263 28,673 10,543 144,582 1,310,475 52.8 5.0 7.5 -44.5 -0.5 34.2 34.1 35.4 $44 0 0 0 0 0 1 45 $326 0 2,939 0 7 39 79 3,389 $9,074 232 11,713 291 0 5,322 681 27,313 $1,119,933 9,120 374,850 8,728 28,536 8,787 193,115 1,743,069 6,891 2,000 19,196 380 1,379 282 3,733 33,860 4,686 6,856 2,336 19,120 426 2,114 399 4,578 35,829 5,095 6,502 2,402 18,711 555 1,768 314 1,053 31,304 5,667 6,047 2,354 17,685 628 1,861 311 1,052 29,937 6,116 6,580 2,332 19,182 724 1,882 348 964 32,013 6,503 4.7 -14.2 0.1 -47.5 -26.7 -19.0 287.2 5.8 -27.9 17 0 0 0 0 0 1 18 0 4 0 167 0 0 0 26 197 0 35 10 601 12 0 71 42 771 0 6,836 1,990 18,428 368 1,379 211 3,663 32,875 4,686 2.7 0.8 2.2 2.5 3.1 1.0 0.1 2.3 2.7 0.7 2.1 2.0 2.8 1.0 0.1 2.3 2.6 0.6 1.9 1.7 2.8 0.5 0.1 2.1 2.1 0.7 1.9 1.5 2.4 0.7 0.1 1.9 3.0 0.7 2.0 1.7 3.0 0.7 0.2 2.4 Blank Blank Blank Blank Blank Blank Blank Blank 2.7 0.0 0.0 0.0 0.0 0.0 0.0 2.6 0.0 0.0 1.2 0.0 0.0 0.0 0.0 1.1 10.3 2.4 1.6 1.1 0.0 2.3 0.2 4.6 2.6 0.8 2.2 2.5 3.1 0.2 0.1 2.2 1.5 0.5 1.9 0.3 2.4 0.9 0.1 1.5 1.2 0.4 1.7 0.2 2.1 0.7 0.1 1.2 1.3 0.3 1.6 0.2 2.1 0.6 0.2 1.2 1.1 0.4 1.8 0.2 2.0 0.6 0.1 1.2 1.2 0.5 1.7 0.3 2.1 0.7 0.2 1.2 Blank Blank Blank Blank Blank Blank Blank Blank 0.3 0.0 0.0 0.0 0.0 0.0 0.0 0.3 0.0 0.0 1.1 0.0 0.0 0.0 1.9 1.0 23.8 1.1 1.3 0.1 0.0 2.0 0.0 8.9 1.4 0.5 1.9 0.4 2.4 0.3 0.1 1.4 0.1 0.2 4.4 1.2 1.3 2.0 0.0 1.1 0.0 0.1 3.3 0.8 1.1 1.3 0.0 0.8 0.0 0.1 2.2 0.5 0.7 0.7 0.0 0.5 0.0 0.1 1.1 0.3 0.4 0.4 0.0 0.3 0.0 0.3 3.8 0.7 1.5 1.3 0.0 1.1 Blank Blank Blank Blank Blank Blank Blank Blank 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 3.3 0.0 0.0 0.0 0.0 2.9 3.1 1.6 3.0 0.5 0.0 4.2 0.0 3.1 0.0 0.2 4.5 1.2 1.3 0.7 0.0 1.0 347 86,748 7,671 494 77,451 6,018 651 73,405 2,843 671 61,569 2,863 869 75,225 2,596 -60.1 15.3 195.5 0 0 0 0 251 0 0 4,699 816 347 81,798 6,855 9 436 2 10 374 6 10 327 9 10 281 1 10 322 5 -10.0 35.4 -60.0 0 0 0 0 62 0 0 374 0 9 0 2 Assets Sold with Recourse and Not Securitized Number of institutions reporting asset sales ……………………………………………………… Outstanding Principal Balance by Asset Type 1-4 family residential loans ………………………………………………………………….....… Home equity, credit card receivables, auto, and other consumer loans ………………..…… Commercial and industrial loans ………………………………………………………………… All other loans, leases, and other assets ………………………………………………..……… Total sold and not securitized ……………………………………………………………………… 757 749 738 731 716 5.7 154 455 103 45 57,554 674 4,985 24,082 87,296 57,407 775 5,302 21,509 84,993 55,156 603 7,708 8,035 71,503 55,719 1,906 8,198 8,103 73,926 55,777 708 6,668 6,981 70,133 3.2 -4.8 -25.2 245.0 24.5 939 1 0 1 942 6,857 60 172 89 7,178 2,719 13 390 419 3,540 47,040 600 4,423 23,573 75,636 Maximum Credit Exposure by Asset Type 1-4 family residential loans ……………………………………………………………………..… Home equity, credit card receivables, auto, and other consumer loans ………..…………… Commercial and industrial loans ………………………………………………………………… All other loans, leases, and other assets …………………………………………………..…… Total credit exposure …………………………………………………………………………...…… 14,746 605 3,650 6,968 25,969 15,866 742 3,671 6,447 26,726 14,539 575 4,453 2,383 21,951 13,826 1,871 4,543 2,428 22,668 13,213 663 4,499 2,530 20,904 11.6 -8.7 -18.9 175.4 24.2 98 1 0 1 100 1,422 6 162 14 1,604 1,834 4 390 107 2,335 11,392 595 3,098 6,845 21,930 Support for Securitization Facilities Sponsored by Other Institutions Number of institutions reporting securitization facilities sponsored by others ………………… Total credit exposure ……………………………………………………………………………...… Total unused liquidity commitments …………………………………………………….........…… 47 2,841 10,314 49 1,477 8,242 50 1,375 14,093 47 1,348 5,827 47 1,135 5,857 0.0 150.3 76.1 24 7 0 12 113 0 4 91 0 7 2,630 10,314 7,715 61,590 121,529 3,611,359 2 0 66 0 0.50 0 0 128 60 1.50 130 0 138 256 2.50 22,094 374,260 2,373 4,691 8.00 Other Assets serviced for others** ………………………………………………………………………… 3,802,194 3,648,511 3,570,284 3,496,744 3,393,204 12.1 Asset-backed commercial paper conduits Credit exposure to conduits sponsored by institutions and others …………………………… 22,226 22,592 22,211 21,404 20,714 7.3 Unused liquidity commitments to conduits sponsored by institutions and others ………...… 374,260 365,850 364,656 327,395 306,435 22.1 2,705 3,635 5,330 3,601 2,162 25.1 Net servicing income (for the quarter) …………………………………………………………...... Net securitization income (for the quarter) …………………………………………………......… 5,007 5,812 5,355 4,964 2,407 108.0 Total credit exposure to Tier 1 capital (%)*** ………………………………………………......… 6.3 6.5 5.6 5.7 5.8 Blank *Line item titled "All other loans and all leases" for quarters prior to March 31, 2006. **The amount of financial assets serviced for others, other than closed-end 1-4 family residential mortgages, is reported when these assets are greater than $10 million. ***Total credit exposure includes the sum of the three line items titled "Total credit exposure" reported above. FDIC QUARTERLY 13 2008, VOLUME 2, NO. 1 TABLE VIII-A. Trust Services (All FDIC-Insured Institutions) All Insured Institutions (dollar figures in millions) Number of institutions reporting ....................................................................... Number of institutions with fiduciary powers .................................................... Commercial banks ........................................................................................ Savings institutions ....................................................................................... Number of institutions exercising fiduciary powers .......................................... Commercial banks ........................................................................................ Savings institutions ....................................................................................... Number of institutions reporting fiduciary activity ............................................. Commercial banks ........................................................................................ Savings institutions ....................................................................................... Fiduciary and related assets - managed assets Personal trust and agency accounts ................................................................ Noninterest-bearing deposits ........................................................................ Interest-bearing deposits ............................................................................... U.S. Treasury and U.S. Government agency obligations ............................. State, county and municipal obligations ........................................................ Money market mutual funds .......................................................................... Other short-term obligations .......................................................................... Other notes and bonds .................................................................................. Common and preferred stocks ...................................................................... Real estate mortgages .................................................................................. Real estate .................................................................................................... Miscellaneous assets .................................................................................... Retirement related trust and agency accounts: Employee benefit - defined contribution ........................................................ Employee benefit - defined benefit ................................................................ Other retirement accounts ............................................................................. Corporate trust and agency accounts .............................................................. Investment management agency accounts ...................................................... Other fiduciary accounts .................................................................................. Total managed fiduciary accounts: Assets ........................................................................................................... Number of accounts ...................................................................................... Fiduciary and related assets - non-managed assets Personal trust and agency accounts ................................................................ Retirement related trust and agency accounts: Employee benefit - defined contribution ........................................................ Employee benefit - defined benefit ................................................................ Other retirement accounts ............................................................................. Corporate trust and agency accounts .............................................................. Other fiduciary accounts .................................................................................. Total non-managed fiduciary accounts: Assets ........................................................................................................... Number of accounts ...................................................................................... Custody and safekeeping accounts: Assets ........................................................................................................... Number of accounts ...................................................................................... Fiduciary and related services income Personal trust and agency accounts ................................................................ Retirement related trust and agency accounts: Employee benefit - defined contribution ........................................................ Employee benefit - defined benefit ................................................................ Other retirement accounts ............................................................................. Corporate trust and agency accounts .............................................................. Investment management agency accounts ...................................................... Other fiduciary accounts .................................................................................. Custody and safekeeping accounts ................................................................. Other fiduciary and related services income .................................................... Total gross fiduciary and related services income ........................................... Less: Expenses ............................................................................................. Less: Net losses from fiduciary and related services .................................... Plus: Intracompany income credits for fiduciary and related services .......... Net fiduciary and related services income ....................................................... Dec 31 % Change Less than 2004 2006-2007 $100 Million 8,976 -1.7 3,440 2,573 -2.3 559 2,369 -2.4 537 204 -0.5 22 1,897 -2.4 356 1,740 -2.5 337 157 -1.3 19 1,820 -2.7 333 1,670 -2.8 314 150 -2.1 19 Asset Size Distribution $100 Million $1 Billion to Greater than to $10 Billion $10 Billion $1 Billion 4,425 549 119 1,431 335 82 1,327 281 68 104 54 14 1,072 283 72 995 237 62 77 46 10 1,015 275 69 943 232 60 72 43 9 Dec 31 2007 8,533 2,407 2,213 194 1,783 1,631 152 1,692 1,549 143 Dec 31 2006 8,680 2,463 2,268 195 1,826 1,672 154 1,739 1,593 146 Dec 31 2005 8,833 2,515 2,312 203 1,866 1,708 158 1,791 1,642 149 801,832 -55 11,573 31,725 67,161 51,290 21,942 25,429 523,469 1,531 34,269 33,474 764,549 -4 9,368 32,866 70,908 38,133 9,566 26,894 514,944 1,604 31,876 27,937 735,821 364 8,012 34,664 73,332 33,640 8,601 27,268 491,075 1,476 29,721 27,520 740,141 553 7,507 34,519 77,554 33,442 7,168 31,964 496,357 1,495 26,812 22,770 4.9 N/M 23.5 -3.5 -5.3 34.5 129.4 -5.4 1.7 -4.6 7.5 19.8 10,663 13 251 551 890 944 32 584 6,080 25 685 609 71,742 115 2,410 4,589 5,810 4,387 420 2,211 41,298 238 4,110 6,131 64,841 54 1,613 5,084 5,394 4,480 254 1,979 38,422 195 3,718 3,649 654,586 -236 7,298 21,501 55,067 41,479 21,236 20,655 437,670 1,073 25,756 23,086 329,048 1,060,203 414,981 25,247 1,592,442 236,787 307,193 1,153,825 309,451 31,457 1,505,170 320,331 226,768 1,067,293 249,466 42,634 1,311,707 266,515 206,460 1,067,158 211,635 27,650 1,287,407 203,554 7.1 -8.1 34.1 -19.7 5.8 -26.1 1,255 1,494 6,625 33 27,091 3,764 92,359 12,672 8,723 1,001 93,013 1,938 11,095 46,179 12,588 2,566 65,178 5,419 224,338 999,857 387,046 21,647 1,407,160 225,666 4,460,539 3,337,630 4,391,975 2,998,573 3,900,205 2,915,478 3,744,006 3,994,184 1.6 11.3 50,926 71,461 281,448 217,422 207,865 194,463 3,920,299 2,854,284 355,027 309,352 286,571 273,147 14.8 2,614 20,560 15,361 316,492 1,824,711 5,333,474 2,097,068 4,427,690 3,367,009 1,779,447 4,542,943 2,121,450 2,961,810 3,170,657 1,525,454 3,567,201 2,107,183 2,567,357 2,580,461 1,325,041 3,415,480 1,538,809 2,155,927 2,447,526 2.5 17.4 -1.1 49.5 6.2 5,815 14,948 2,442 5,227 4,501 490,374 17,384 734,417 12,567 6,515 77,232 75,156 38,757 637,748 12,261 1,251,291 5,225,987 1,321,452 3,772,148 3,343,732 17,404,979 14,885,658 12,634,226 11,155,930 16,425,153 16,039,580 15,695,352 22,042,098 16.9 2.4 35,547 1,281,817 28,764 11,752,525 58,167,932 48,360,083 36,798,168 33,496,968 11,335,508 11,207,692 11,513,512 16,220,035 20.3 1.1 267,264 562,128 934,499 9,031,550 856,514 15,231,101 513,891 4,129,973 840,542 56,125,627 349,862 1,391,968 5,767 5,147 5,244 4,878 12.0 82 374 433 4,877 1,183 1,808 1,034 2,439 4,159 2,156 8,166 2,420 29,292 20,502 360 4,543 12,809 1,305 1,949 871 2,054 3,683 1,440 8,011 1,855 26,142 19,094 155 2,897 9,962 1,187 1,789 753 1,877 3,562 1,350 7,167 1,577 24,781 17,266 190 1,302 8,424 1,173 1,465 710 2,350 3,178 992 5,945 2,431 23,130 16,639 202 1,135 7,417 -9.3 -7.2 18.7 18.7 12.9 49.7 1.9 30.5 12.0 7.4 132.3 56.8 28.6 10 16 36 204 100 4 165 7 633 236 1 1 384 288 101 69 30 407 22 467 116 1,997 1,458 1 29 443 119 87 113 421 279 24 435 91 2,031 1,494 7 1,479 1,981 765 1,603 816 1,784 3,373 2,106 7,099 2,207 24,631 17,313 351 3,035 10,001 Collective investment funds and common trust funds (market value) Domestic equity funds ................................................................................... 448,225 International/global equity funds ................................................................... 206,551 Stock/bond blend funds ................................................................................. 215,849 Taxable bond funds ....................................................................................... 214,145 Municipal bond funds .................................................................................... 8,328 Short term investments/money market funds ................................................ 395,025 Specialty/other funds ..................................................................................... 121,628 Total collective investment funds ..................................................................... 1,609,751 449,079 171,114 217,734 185,398 8,695 352,341 96,902 1,481,262 478,087 129,572 77,526 248,050 60,308 365,759 102,112 1,461,414 482,294 119,084 69,116 243,403 11,127 386,342 93,594 1,404,959 -0.2 20.7 -0.9 15.5 -4.2 12.1 25.5 8.7 6,566 1,171 1,882 943 4 2,655 549 13,770 16,668 3,390 745 46,454 607 3,197 33,703 104,764 7,752 2,041 2,678 2,376 348 161 1,126 16,482 417,238 199,950 210,543 164,372 7,369 389,013 86,249 1,474,734 FDIC QUARTERLY 14 2008, VOLUME 2, NO. 1 Quarterly Banking Profile INSURANCE FUND INDICATORS I I I Insured Deposits Grow by 1.2 Percent in the Fourth Quarter DIF Reserve Ratio Is Unchanged at 1.22 Percent Three Insured Institutions Fail During the Year From September 30 to December 31, total assets of the nation’s 8,533 FDIC-insured commercial banks and savings institutions increased by $331.8 billion (2.6 percent). Total deposits, which increased by $232.8 billion, funded about 70 percent of this asset growth. During the fourth quarter, total domestic deposits grew by 2.5 percent, the highest quarterly percentage increase since the fourth quarter of 2004. Brokered deposits increased by 12.4 percent, the largest quarterly percentage increase since the fourth quarter of 2000 when brokered deposits increased by 13.0 percent. Five institutions accounted for approximately two-thirds of this growth. of 2007, insured deposits increased by 3.4 percent, down from 6.8 percent in 2006. For institutions reporting as of December 31, 2007 and September 30, 2007, insured deposits increased during the fourth quarter at 5,178 institutions (62 percent), decreased at 3,259 institutions (38 percent) and remained unchanged at 46 institutions. The Deposit Insurance Fund (DIF) increased by 1.3 percent ($659 million) during the fourth quarter to $52,413 million. Accrued assessment income added $239 million to the DIF during the fourth quarter. The fund received $138 million from unrealized gains on available for sale securities, and took in $321 million from interest on securities and other revenue, net of operating expenses. The DIF was reduced by $39 million in additional provisions for insurance losses. For the year, the fund balance grew by 4.5 percent, up from 3.2 percent growth in 2006. Domestic time deposits increased by 2.1 percent, while other domestic interest-bearing deposits increased by 1.7 percent and domestic non-interest bearing deposits increased by 5.8 percent. Over the 12 months ending December 31, total domestic deposits increased by 4.2 percent, with domestic interest-bearing deposits rising by 5.7 percent but domestic noninterest-bearing deposits declining by 2.2 percent. The DIF’s reserve ratio equaled 1.22 percent on December 31, 2007, unchanged from the previous quarter. During 2007, the reserve ratio increased by one basis point, from 1.21 percent at year-end 2006. Over the past year, the share of assets funded by domestic deposits declined from 56 percent to 53 percent. By contrast, foreign deposits as a percent of total assets rose during 2007 from 10.1 percent to 11.5 percent, and Federal Home Loan Bank (FHLB) advances’ share of asset funding increased from 5.2 percent to 6.2 percent. In 2007, foreign office deposits increased by 25.8 percent ($308.5 billion) and FHLB advances increased by 30.3 percent ($187.9 billion). Only one FDIC-insured institution failed during the fourth quarter of 2007, a small commercial bank. At the time of failure, this institution had $93 million in assets and an estimated failure cost of $3 million. For all of 2007, three FDIC-insured institutions failed with assets of $2.3 billion and an estimated failure cost of $120 million. These are the first failures since 2004, during which four institutions failed. Estimated insured deposits (including U.S. branches of foreign banks) increased by 1.2 percent during the fourth quarter of 2007, compared to nearly flat growth (0.2 percent increase) for the previous quarter. For all FDIC QUARTERLY Author: Kevin Brown, Sr. Financial Analyst Author: Division of Insurance and Research, FDIC Author: (202) 898-6817 15 2008, VOLUME 2, NO. 1 TABLE I-B. Insurance Fund Balances and Selected Indicators Deposit Insurance Fund (dollar figures in millions) Beginning Fund Balance*…………………………………… 4th Quarter 2007 3rd Quarter 2007 2nd Quarter 2007 1st Quarter 2007 4th Quarter 2006 3rd Quarter 2006 2nd Quarter 2006 1st Quarter 2006 4th Quarter 2005 3rd Quarter 2005 $51,754 $51,227 $50,745 $50,165 $49,992 $49,564 $49,193 $48,597 $48,373 $48,023 20 536 227 -65 3 Changes in Fund Balance: Assessments earned…………………………………………… Interest earned on investment securities…………………… Operating expenses………………………………..…………. Provision for insurance losses………………………………… All other income, net of expenses**………………………… Unrealized gain/(loss) on available-for-sale securities………………………………………....…………. Total fund balance change………………………….....……. 239 585 262 39 -2 170 640 243 132 24 140 748 248 -3 1 94 567 239 -73 4 10 476 248 49 5 10 622 237 -50 1 7 665 242 -6 12 5 478 224 -45 349 13 675 252 -19 4 138 659 68 527 -162 482 81 580 -21 173 -18 428 -77 371 -57 596 -235 224 -47 350 Ending Fund Balance*……………………………………… Percent change from four quarters earlier………………… 52,413 4.48 51,754 3.52 51,227 3.36 50,745 3.15 50,165 3.23 49,992 3.35 49,564 3.21 49,193 3.31 48,597 2.29 48,373 2.94 Reserve Ratio (%)…………………………………………… 1.22 1.22 1.21 1.20 1.21 1.22 1.23 1.23 1.25 1.26 Estimated Insured Deposits ………………………………… 4,293,201 Percent change from four quarters earlier………………… 3.36 4,243,894 3.51 4,234,835 4.81 4,245,148 6.08 4,153,764 6.75 4,100,013 7.02 4,040,353 7.52 4,001,906 8.50 3,890,941 7.42 3,830,950 7.63 Assessment Base Percent change from four quarters earlier………………… 7,052,552 6.94 6,879,633 6.84 6,821,486 6.80 6,801,520 8.43 6,594,750 6.76 6,439,326 6.63 6,386,864 8.64 6,272,505 8.15 6,177,429 8.88 6,038,857 9.47 Number of institutions reporting…………………………… 8,544 8,571 8,625 8,661 8,692 8,755 8,790 8,803 8,846 8,871 Deposit Insurance Fund Balance and Insured Deposits* ($ Millions) DIF Reserve Ratio* Percent of Insured Deposits 1.32 1.32 1.31 1.29 1.28 1.26 1.25 1.23 1.23 6/04 12/04 6/05 12/05 6/06 1.22 1.21 12/06 1.20 1.21 1.22 1.22 6/07 12/07 DIF Balance DIF-Insured Deposits 6/04 46,521 3,531,806 9/04 46,990 3,559,489 12/04 47,507 3,622,068 3/05 47,617 3,688,562 6/05 48,023 3,757,728 9/05 48,373 3,830,950 12/05 48,597 3,890,941 3/06 49,193 4,001,906 6/06 49,564 4,040,353 9/06 49,992 4,100,013 12/06 50,165 4,153,764 3/07 50,745 4,245,148 6/07 9/07 51,227 51,754 4,234,835 4,243,894 12/07 52,413 4,293,201 2005 2004 TABLE II-B. Problem Institutions and Failed/Assisted Institutions (dollar figures in millions) Problem Institutions … Number of institutions………………………………...........................................................……… Total assets……………………............................................................…………………………… Failed/Assisted Institutions Number of institutions………...........................................................……………………………… Total assets……………………...........................................................…………………………… 2007 2006 2003 2002 76 50 52 80 116 136 $22,189 $8,265 $6,607 $28,250 $29,917 $38,927 3 0 0 4 3 11 $2,345 $0 $0 $166 $1,097 $2,558 * Prior to 2006, amounts represent sum of separate BIF and SAIF amounts. ** First Quarter 2006 includes previously escrowed revenue from SAIF-member exit fees. FDIC QUARTERLY 16 2008, VOLUME 2, NO. 1 Quarterly Banking Profile TABLE III-B. Estimated FDIC-Insured Deposits by Type of Institution (dollar figures in millions) December 31, 2007 Number of Institutions Total Assets Domestic Deposits* Est. Insured Deposits Commercial Banks and Savings Institutions FDIC-Insured Commercial Banks …….............................………… FDIC-Supervised ………………………….............................…… OCC-Supervised ………………….............................…………… Federal Reserve-Supervised …….............................…………… 7,282 4,772 1,632 878 11,176,096 1,874,698 7,782,387 1,519,012 5,806,795 1,370,557 3,590,744 845,494 3,426,148 927,470 1,995,866 502,812 FDIC-Insured Savings Institutions …….............................………… OTS-Supervised Savings Institutions …...............................…… FDIC-Supervised State Savings Banks …............................…… 1,251 826 425 1,862,669 1,556,670 305,999 1,104,986 892,592 212,394 860,936 696,835 164,101 Total Commercial Banks and Savings Institutions ……………….............................…………… 8,533 13,038,765 6,911,780 4,287,084 Other FDIC-Insured Institutions U.S. Branches of Foreign Banks …..............................…………… 11 16,614 8,886 6,116 Total FDIC-Insured Institutions …...............................……………. 8,544 13,055,379 6,920,667 4,293,201 * Excludes $1.50 trillion in foreign office deposits, which are uninsured. TABLE IV-B. Distribution of Institutions and Assessment Base Among Risk Categories Quarter Ending September 30, 2007 (dollar figures in billions) Risk Category I - Minimum ………………………………………… I - Middle …………………………………………… I - Middle …………………………………………… I - Maximum ………………………………………… II ……………………………………………………… III …………………………………………………… IV …………………………………………………… Annual Rate in Basis Points 5 5.01- 6.00 6.01- 6.99 7 10 28 43 Number of Institutions Percent of Total Institutions Assessment Base Percent of Total Assessment Base 2,709 3,088 1,422 859 422 64 7 31.6% 36.0% 16.6% 10.0% 4.9% 0.7% 0.1% 3,872 2,078 456 296 163 14 1 56.3% 30.2% 6.6% 4.3% 2.4% 0.2% 0.0% Note: Institutions are categorized based on supervisory ratings, debt ratings and financial data as of September 30, 2007. Rates do not reflect the application of assessment credits. See notes to users for further information on risk categories and rates. FDIC QUARTERLY 17 2008, VOLUME 2, NO. 1 Notes To Users Growth rates represent the percentage change over a 12-month period in totals for institutions in the base period to totals for institutions in the current period. All data are collected and presented based on the location of each reporting institution's main office. Reported data may include assets and liabilities located outside of the reporting institution’s home state. In addition, institutions may relocate across state lines or change their charters, resulting in an inter-regional or inter-industry migration, e.g., institutions can move their home offices between regions, and savings institutions can convert to commercial banks or commercial banks may convert to savings institutions. This publication contains financial data and other information for depository institutions insured by the Federal Deposit Insurance Corporation (FDIC). These notes are an integral part of this publication and provide information regarding the comparability of source data and reporting differences over time. Tables I-A through VIII-A. The information presented in Tables I-A through V-A of the FDIC Quarterly Banking Profile is aggregated for all FDIC-insured Institutions, both commercial banks and savings institutions. Tables VI-A (Derivatives) and VII-A (Servicing, Securitization, and Asset Sales Activities) aggregate information only for insured commercial banks and state-chartered savings banks that file quarterly Call Reports. Table VIII-A Trust Services aggregates Trust asset and income information collected annually from all FDIC-insured institutions. Some tables are arrayed by groups of FDIC-insured institutions based on predominant types of asset concentration, while other tables aggregate institutions by asset size and geographic region. Quarterly and full-year data are provided for selected indicators, including aggregate condition and income data, performance ratios, condition ratios and structural changes, as well as past due, noncurrent and charge-off information for loans outstanding and other assets. ACCOUNTING CHANGES FASB Statement No. 157 Fair Value Measurements issued in September 2006 and FASB Statement No. 159 The Fair Value Option for Financial Assets and Financial Liabilities issued in February 2007 – both are effective in 2008 with early adoption permitted in 2007. FAS 157 defines a fair value measurement framework, while FAS 159 allows banks to elect a fair value option when assets are recognized on the balance sheet and to report certain financial assets and liabilities at fair value with subsequent changes in fair value included in earnings. Existing eligible items can be fair-valued as early as January 2007 under FAS 159, if a bank adopts FAS 157. FASB Statement 158 Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans – issued in September 2006 requires a bank to recognize in 2007 the funded status of its postretirement plans on its balance sheet. An overfunded plan is recognized as an asset and an underfunded plan is recognized as a liability. An adjustment is made to equity as accumulated other comprehensive income (AOCI) upon application of FAS 158 and AOCI is adjusted in subsequent periods as net periodic benefit costs are recognized in earnings. FASB Statement No. 156 Accounting for Servicing of Financial Assets – issued in March 2006 and effective in 2007, requires all separately recognized servicing assets and liabilities to be initially measured at fair value and allows a bank the option to subsequently adjust that value by periodic revaluation and recognition of earnings or by periodic amortization to earnings. Purchased Impaired Loans and Debt Securities – Statement of Position 033, Accounting for Certain Loans or Debt Securities Acquired in a Transfer. The SOP applies to loans and debt securities acquired in fiscal years beginning after December 15, 2004. In general, this Statement of Position applies to “purchased impaired loans and debt securities,” i.e., loans and debt securities that a bank has purchased, including those acquired in a purchase business combination, when it is probable, at the purchase date, that the bank will be unable to collect all contractually required payments receivable. Banks must follow Statement of Position 03-3 for Call Report purposes. The SOP does not apply to the loans that a bank has originated, prohibits “carrying over” or creation of valuation allowances in the initial accounting and any subsequent valuation allowances reflect only those losses incurred by the investor after acquisition. GNMA Buy-back Option – If an issuer of GNMA securities has the option to buy back the loans that collateralize the GNMA securities, when certain delinquency criteria are met, FASB Statement No. 140 requires that loans with this buy-back option must be brought back on the issuer's books as assets. The rebooking of GNMA loans is required regardless of whether the issuer intends to exercise the buyback option. The banking agencies clarified in May 2005 that all GNMA loans that are rebooked because of delinquency should be reported as past due according to their contractual terms. Tables I-B through IV-B. A separate set of tables (Tables I-B through IV-B) provides comparative quarterly data related to the Deposit Insurance Fund (DIF), problem institutions, failed/assisted institutions, estimated FDIC-insured deposits, as well as assessment rate information. Depository institutions that are not insured by the FDIC through the DIF are not included in the FDIC Quarterly Banking Profile. U.S. branches of institutions headquartered in foreign countries and non-deposit trust companies are not included unless otherwise indicated. Efforts are made to obtain financial reports for all active institutions. However, in some cases, final financial reports are not available for institutions that have closed or converted their charters. DATA SOURCES The financial information appearing in this publication is obtained primarily from the Federal Financial Institutions Examination Council (FFIEC) Call Reports and the OTS Thrift Financial Reports submitted by all FDIC-insured depository institutions. This information is stored on and retrieved from the FDIC’s Research Information System (RIS) data base. COMPUTATION METHODOLOGY Certain adjustments are made to the OTS Thrift Financial Reports to provide closer conformance with the reporting and accounting requirements of the FFIEC Call Reports. Parent institutions are required to file consolidated reports, while their subsidiary financial institutions are still required to file separate reports. Data from subsidiary institution reports are included in the Quarterly Banking Profile tables, which can lead to double-counting. No adjustments are made for any double-counting of subsidiary data. All asset and liability figures used in calculating performance ratios represent average amounts for the period (beginning-of-period amount plus end-of-period amount plus any interim periods, divided by the total number of periods). For “pooling-of-interest” mergers, the assets of the acquired institution(s) are included in average assets since the year-to-date income includes the results of all merged institutions. No adjustments are made for “purchase accounting” mergers. FDIC QUARTERLY 18 2008, VOLUME 2, NO. 1 Quarterly Banking Profile FASB Interpretation No. 45 – In November 2002, the FASB issued Interpretation No. 45, Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others. This interpretation clarifies that a guarantor is required to recognize, at the inception of a guarantee (financial standby letters of credit, performance standby letters of credit), a liability for the fair value of the obligation undertaken in issuing the guarantee. Banks apply the initial recognition and measurement provisions of Interpretation No. 45 on a prospective basis to guarantees issued or modified after December 31, 2002, irrespective of the bank’s fiscal year end. A bank’s previous accounting for guarantees issued prior to January 1, 2003, is not revised. FASB Interpretation No. 46 – The FASB issued Interpretation No. 46, Consolidation of Variable Interest Entities, in January 2003 and revised it in December 2003. Generally, banks with variable interests in variable interest entities created after December 31, 2003, must consolidate them. The timing of consolidation varies with certain situations with application as late as 2005. The assets and liabilities of a consolidated variable interest entity are reported on a line-by-line basis according to the asset and liability categories shown on the bank’s balance sheet, as well as related income items. Most small banks are unlikely to have any “variable interests” in variable interest entities. tiveness of the hedge. Derivatives held for purposes other than trading are reported as “other assets” (positive fair values) or “other liabilities” (negative fair values). For a fair value hedge, the gain or loss is recognized in earnings and “effectively” offsets loss or gain on the hedged item attributable to the risk being hedged. Any ineffectiveness of the hedge could result in a net gain or loss on the income statement. Accumulated net gains (losses) on cash flow hedges are recorded on the balance sheet as “accumulated other comprehensive income” and the periodic change in the accumulated net gains (losses) for cash flow hedges is reflected directly in equity as the value of the derivative changes. FASB Statement No. 149, Amendment of Statement 133 on Derivative Instruments and Hedging Activities provides guidance on the circumstances in which a loan commitment must be accounted for as derivative. Under Statement No. 149, loan commitments that relate to the origination of mortgage loans that will be held for sale, commonly referred to as interest rate lock commitments, must be accounted for as derivatives on the balance sheet by the issuer of the commitment. DEFINITIONS (in alphabetical order) All other assets – total cash, balances due from depository institutions, premises, fixed assets, direct investments in real estate, investment in unconsolidated subsidiaries, customers’ liability on acceptances outstanding, assets held in trading accounts, federal funds sold, securities purchased with agreements to resell, fair market value of derivatives, and other assets. All other liabilities – bank's liability on acceptances, limited-life preferred stock, allowance for estimated off-balance-sheet credit losses, fair market value of derivatives, and other liabilities. Assessment base –assessable deposits consist of DIF deposits (deposits insured by the FDIC Deposit Insurance Fund) in banks’ domestic offices with certain adjustments. Assets securitized and sold – total outstanding principal balance of assets securitized and sold with servicing retained or other sellerprovided credit enhancements. Construction and development loans – includes loans for all property types under construction, as well as loans for land acquisition and development. Core capital – common equity capital plus noncumulative perpetual preferred stock plus minority interest in consolidated subsidiaries, less goodwill and other ineligible intangible assets. The amount of eligible intangibles (including servicing rights) included in core capital is limited in accordance with supervisory capital regulations. Cost of funding earning assets – total interest expense paid on deposits and other borrowed money as a percentage of average earning assets. Credit enhancements – techniques whereby a company attempts to reduce the credit risk of its obligations. Credit enhancement may be provided by a third party (external credit enhancement) or by the originator (internal credit enhancement), and more than one type of enhancement may be associated with a given issuance. Deposit Insurance Fund (DIF) – The Bank (BIF) and Savings Association (SAIF) Insurance Funds were merged in 2006 by the Federal Deposit Insurance Reform Act to form the DIF. Derivatives notional amount – The notional or contractual amounts of derivatives represent the level of involvement in the types of derivatives transactions and are not a quantification of market risk or credit risk. Notional amounts represent the amounts used to calculate contractual cash flows to be exchanged. FASB Statement No. 123 (Revised 2004) and Share-Based Payments – requires all entities to recognize compensation expense in an amount equal to the fair value of share-based payments, e.g., stock options and restricted stock, granted to employees. As of January 2006 all banks must adopt FAS 123(R). The compensation cost is typically recognized over the vesting period with a corresponding credit to equity. The recording of the compensation cost also gives rise to a deferred tax asset. Goodwill and intangible assets – FAS 141 terminates the use of pooling-of-interest accounting for business combinations after 2001 and requires purchase accounting. Under FAS 142 amortization of goodwill is eliminated. Only intangible assets other than goodwill are amortized each quarter. In addition companies are required to test for impairment of both goodwill and other intangibles once each fiscal year. The year 2002, the first fiscal year affected by this accounting change, has been designated a transitional year and the amount of initial impairments are to be recorded as extraordinary losses on a “net of tax” basis (and not as noninterest expense). Subsequent annual review of intangibles and goodwill impairment may require additional noninterest expense recognition. FASB Statement No. 147 clarifies that acquisitions of financial institutions (except transactions between two or more mutual enterprises), including branch acquisitions that meet the definition of a business combination, should be accounted for by the purchase method under FASB Statement No. 141. This accounting standard includes transition provisions that apply to unidentifiable intangible assets previously accounted for in accordance with FASB Statement No. 72. If the transaction (such as a branch acquisition) in which an unidentifiable intangible asset arose does not meet the definition of a business combination, this intangible asset is not be reported as “Goodwill” on the Call Report balance sheet. Rather, this unidentifiable intangible asset is reported as “Other intangible assets,” and must continue to be amortized and the amortization expense should be reported in the Call Report income statement. FASB Statement No. 133 Accounting for Derivative Instruments and Hedging Activities – All banks must recognize derivatives as either assets or liabilities on the balance sheet, measured at fair value. A derivative may be specifically designated as a “fair value hedge,” a “cash flow hedge,” or a hedge of a foreign currency exposure. The accounting for changes in the value of a derivative (gains and losses) depends on the intended use of the derivative, its resulting designation, and the effec- FDIC QUARTERLY 19 2008, VOLUME 2, NO. 1 Derivatives credit equivalent amount – the fair value of the derivative plus an additional amount for potential future credit exposure based on the notional amount, the remaining maturity and type of the contract. Derivatives transaction types: Futures and forward contracts – contracts in which the buyer agrees to purchase and the seller agrees to sell, at a specified future date, a specific quantity of an underlying variable or index at a specified price or yield. These contracts exist for a variety of variables or indices, (traditional agricultural or physical commodities, as well as currencies and interest rates). Futures contracts are standardized and are traded on organized exchanges which set limits on counterparty credit exposure. Forward contracts do not have standardized terms and are traded over the counter. Option contracts – contracts in which the buyer acquires the right to buy from or sell to another party some specified amount of an underlying variable or index at a stated price (strike price) during a period or on a specified future date, in return for compensation (such as a fee or premium). The seller is obligated to purchase or sell the variable or index at the discretion of the buyer of the contract. Swaps – obligations between two parties to exchange a series of cash flows at periodic intervals (settlement dates), for a specified period. The cash flows of a swap are either fixed, or determined for each settlement date by multiplying the quantity (notional principal) of the underlying variable or index by specified reference rates or prices. Except for currency swaps, the notional principal is used to calculate each payment but is not exchanged. Goodwill and other intangibles – intangible assets include servicing rights, purchased credit card relationships and other identifiable intangible assets. Goodwill is the excess of the purchase price over the fair market value of the net assets acquired. Loans secured by real estate – includes home equity loans, junior liens secured by 1-4 family residential properties and all other loans secured by real estate. Loans to individuals – includes outstanding credit card balances and other secured and unsecured consumer loans. Long-term assets (5+ years) – loans and debt securities with remaining maturities or repricing intervals of over five years. Maximum credit exposure – the maximum contractual credit exposure remaining under recourse arrangements and other seller-provided credit enhancements provided by the reporting bank to securitizations. Mortgage-backed securities – certificates of participation in pools of residential mortgages and collateralized mortgage obligations issued or guaranteed by government-sponsored or private enterprises. Also, see “Securities”, below. Net charge-offs – total loans and leases charged off (removed from balance sheet because of uncollectibility), less amounts recovered on loans and leases previously charged off. Net interest margin – the difference between interest and dividends earned on interest-bearing assets and interest paid to depositors and other creditors, expressed as a percentage of average earning assets. No adjustments are made for interest income that is tax exempt. Net loans to total assets – loans and lease financing receivables, net of unearned income, allowance and reserves, as a percent of total assets on a consolidated basis. Net operating income – income excluding discretionary transactions such as gains (or losses) on the sale of investment securities and extraordinary items. Income taxes subtracted from operating income have been adjusted to exclude the portion applicable to securities gains (or losses). Noncurrent assets – the sum of loans, leases, debt securities and other assets that are 90 days or more past due, or in nonaccrual status. Noncurrent loans & leases – the sum of loans and leases 90 days or more past due, and loans and leases in nonaccrual status. Number of institutions reporting – the number of institutions that actually filed a financial report. Other borrowed funds – federal funds purchased, securities sold with agreements to repurchase, demand notes issued to the U.S. Treasury, FHLB advances, other borrowed money, mortgage indebtedness, obligations under capitalized leases and trading liabilities, less revaluation losses on assets held in trading accounts. Other real estate owned – primarily foreclosed property. Direct and indirect investments in real estate ventures are excluded. The amount is reflected net of valuation allowances. For institutions that file a Thrift Financial Report (TFR), the valuation allowance subtracted also includes allowances for other repossessed assets. Also, for TFR filers the components of other real estate owned are reported gross of valuation allowances. Percent of institutions with earnings gains – the percent of institutions that increased their net income (or decreased their losses) compared to the same period a year earlier. “Problem” institutions – federal regulators assign a composite rating to each financial institution, based upon an evaluation of financial and operational criteria. The rating is based on a scale of 1 to 5 in ascend- Derivatives underlying risk exposure – the potential exposure characterized by the level of banks’ concentration in particular underlying instruments, in general. Exposure can result from market risk, credit risk and operational risk, as well as, interest rate risk. Domestic deposits to total assets – total domestic office deposits as a percent of total assets on a consolidated basis. Earning assets – all loans and other investments that earn interest or dividend income. Efficiency ratio – Noninterest expense less amortization of intangible assets as a percent of net interest income plus noninterest income. This ratio measures the proportion of net operating revenues that are absorbed by overhead expenses, so that a lower value indicates greater efficiency. Estimated insured deposits – in general, insured deposits are total domestic deposits minus estimated uninsured deposits. Prior to June 30, 2000, the uninsured estimate is calculated as the sum of the excess amounts in accounts over $100,000. Beginning June 30, 2000, the amount of estimated uninsured deposits is adjusted to consider a financial institution's own estimate of uninsured deposits when such an estimate is reported. Beginning in 2006, the uninsured deposits estimate also considers IRA accounts over $250,000. Failed/assisted institutions – an institution fails when regulators take control of the institution, placing the assets and liabilities into a bridge bank, conservatorship, receivership, or another healthy institution. This action may require the FDIC to provide funds to cover losses. An institution is defined as “assisted” when the institution remains open and receives some insurance funds in order to continue operating. FHLB advances – all borrowings by FDIC insured institutions from the Federal Home Loan Bank System (FHLB), as reported by Call Report filers and by TFR filers. FDIC QUARTERLY 20 2008, VOLUME 2, NO. 1 Quarterly Banking Profile assessment rates (in basis points) for each risk category. Supervisory Group A generally includes institutions with CAMELS composite ratings of 1 or 2; Supervisory Group B generally includes institutions with a CAMELS composite rating of 3; and Supervisory Group C generally includes institutions with CAMELS composite ratings of 4 or 5. For purposes of risk-based assessment capital groups, undercapitalized includes institutions that are significantly or critically undercapitalized. Assessment rates are 3 basis points above the base rate schedule. The FDIC may adjust rates up or down by 3 basis points from the base rate schedule without notice and comment, provided that any single adjustment from one quarter to the next cannot move rates more than 3 basis points. For most institutions in Risk Category I, the assessment rate assigned will be based on a combination of financial ratios and CAMELS component ratings. For large institutions in Risk Category I (generally those with at least $10 billion in assets) that have long-term debt issuer ratings, assessment rates will be determined by weighting CAMELS component ratings 50 percent and long-term debt issuer ratings 50 percent. For all large Risk Category I institutions, additional risk factors will be considered to determine whether assessment rates should be adjusted. This additional information includes market data, financial performance measures, considerations of the ability of an institution to withstand financial stress, and loss severity indicators. Any adjustment will be limited to no more than ½ basis point. Beginning in 2007, each institution is assigned a risk-based rate for a quarterly assessment period near the end of the quarter following the assessment period. Payment will generally be due on the 30th day of the last month of the quarter following the assessment period. Supervisory rating changes will be effective for assessment purposes as of the examination transmittal date. For institutions with long-term debt issuer ratings, changes in ratings will be effective for assessment purposes as of the date the change was announced. Risk-weighted assets – assets adjusted for risk-based capital definitions which include on-balance-sheet as well as off-balance-sheet items multiplied by risk-weights that range from zero to 100 percent. A conversion factor is used to assign a balance sheet equivalent amount for selected off-balance-sheet accounts. Securities – excludes securities held in trading accounts. Banks’ securities portfolios consist of securities designated as “held-to-maturity”, which are reported at amortized cost (book value), and securities designated as “available-for-sale”, reported at fair (market) value. Securities gains (losses) – realized gains (losses) on held-to-maturity and available-for-sale securities, before adjustments for income taxes. Thrift Financial Report (TFR) filers also include gains (losses) on the sales of assets held for sale. Seller’s interest in institution’s own securitizations – the reporting bank’s ownership interest in loans and other assets that have been securitized, except an interest that is a form of recourse or other seller-provided credit enhancement. Seller’s interests differ from the securities issued to investors by the securitization structure. The principal amount of a seller’s interest is generally equal to the total principal amount of the pool of assets included in the securitization structure less the principal amount of those assets attributable to investors, i.e., in the form of securities issued to investors. Subchapter S Corporation – A Subchapter S corporation is treated as a pass-through entity, similar to a partnership, for federal income tax purposes. It is generally not subject to any federal income taxes at the ing order of supervisory concern. “Problem” institutions are those institutions with financial, operational, or managerial weaknesses that threaten their continued financial viability. Depending upon the degree of risk and supervisory concern, they are rated either a “4” or “5”. For all insured commercial banks and for insured savings banks for which the FDIC is the primary federal regulator, FDIC composite ratings are used. For all institutions whose primary federal regulator is the OTS, the OTS composite rating is used. Recourse – an arrangement in which a bank retains, in form or in substance, any credit risk directly or indirectly associated with an asset it has sold (in accordance with generally accepted accounting principles) that exceeds a pro rata share of the bank’s claim on the asset. If a bank has no claim on an asset it has sold, then the retention of any credit risk is recourse. Reserves for losses – the allowance for loan and lease losses on a consolidated basis. Restructured loans and leases – loan and lease financing receivables with terms restructured from the original contract. Excludes restructured loans and leases that are not in compliance with the modified terms. Retained earnings – net income less cash dividends on common and preferred stock for the reporting period. Return on assets – net income (including gains or losses on securities and extraordinary items) as a percentage of average total assets. The basic yardstick of bank profitability. Return on equity – net income (including gains or losses on securities and extraordinary items) as a percentage of average total equity capital. Risk-based capital groups – definition: (Percent) Well-capitalized Adequately capitalized Undercapitalized Significantly undercapitalized Critically undercapitalized Total Risk-Based Capital * Tier 1 Risk-Based Capital * Tier 1 Leverage Tangible Equity >10 and >6 and >5 — >8 >6 and and >4 >3 and and >4 >3 — — <6 or <3 or <3 — — and >2 — <2 *As a percentage of risk-weighted assets. Risk Categories and Assessment Rate Schedule – The current risk categories and assessment rate schedule became effective January 1, 2007. Capital ratios and supervisory ratings distinguish one risk category from another. The following table shows the relationship of risk categories (I, II, III, IV) to capital and supervisory groups as well as the Supervisory Group Capital Group 1. Well Capitalized 2. Adequately Capitalized 3. Undercapitalized FDIC QUARTERLY A I 5-7 bps B C II 10 bps III 28 bps III 28 bps IV 43 bps 21 2008, VOLUME 2, NO. 1 Unused loan commitments – includes credit card lines, home equity lines, commitments to make loans for construction, loans secured by commercial real estate, and unused commitments to originate or purchase loans. (Excluded are commitments after June 2003 for originated mortgage loans held for sale, which are accounted for as derivatives on the balance sheet.) Volatile liabilities – the sum of large-denomination time deposits, foreign-office deposits, federal funds purchased, securities sold under agreements to repurchase, and other borrowings. Yield on earning assets – total interest, dividend and fee income earned on loans and investments as a percentage of average earning assets. corporate level. This can have the effect of reducing institutions’ reported taxes and increasing their after-tax earnings. Trust assets – market value, or other reasonably available value of fiduciary and related assets, to include marketable securities, and other financial and physical assets. Common physical assets held in fiduciary accounts include real estate, equipment, collectibles, and household goods. Such fiduciary assets are not included in the assets of the financial institution. Unearned income & contra accounts – unearned income for Call Report filers only. FDIC QUARTERLY 22 2008, VOLUME 2, NO. 1
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