Bank Assets, Loan Portfolios and Performance Ratios

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Regional Economy

By State and Asset Size, 1998

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Loan Portfolio
Performance Ratios
Capital as a Percent of Assets
Ninth District Banks

Loan Portfolio

Loan Categories as a Percent of Total Loans, December 31, 1998*

Area	Commercial & Industrial	Agricultural	Real Estate	Loans to Individuals	Other Loans
Minnesota	19.1	26.1	39.8	12.6	2.3
Montana	21.1	29.0	36.2	12.6	1.1
North Dakota	14.9	52.7	17.8	11.7	3.0
South Dakota	16.1	51.5	18.5	12.7	1.2
Northwestern Wisconsin	16.7	12.4	58.5	10.1	2.3
U.P. Michigan	17.9	0.4	64.5	14.4	2.8

Asset Size	Commercial & Industrial	Agricultural	Real Estate	Loans to Individuals	Other Loans
Over $300 Million	21.7	11.7	43.4	18.0	5.2
Between $150 and $300 Million	24.1	13.2	48.4	11.4	2.9
Between $50 and $149.99 Million	19.1	22.2	44.5	11.8	2.4
Between $25 and 49.99 Million	16.9	34.7	34.6	12.1	1.7
Under $25 Million	16.4	43.6	26.1	12.4	1.5

The distribution of loans was calculated from totals within each area and size category.

Loans
Loans indicate how banks are deploying their funds. Therefore, total loans are accompanied by a relative breakdown of a bank's loans into five categories. These categories are: Commercial and Industrial—loans to businesses. Agricultural—includes both agricultural production and agricultural real estate loans.	Real Estate—loans secured by real estate, except for agricultural real estate. Loans to Individuals—loans for household, family and other personal expenditures. Other Loans

Loans

Loans indicate how banks are deploying their funds. Therefore, total loans are accompanied by a relative breakdown of a bank's loans into five categories. These categories are:

Commercial and Industrial—loans to businesses.

Agricultural—includes both agricultural production and agricultural real estate loans.

Real Estate—loans secured by real estate, except for agricultural real estate.

Loans to Individuals—loans for household, family and other personal expenditures.

Other Loans

Performance Ratios

Averages by Area and Bank Size, December 31, 1998*

Area	Return on Average Assets**	Return on Equity**	Net Interest Margin**	Loans to Deposits	Noncurrent Loans to Total Loans
Minnesota	1.2	12.4	4.8	70.4	0.9
Montana	1.3	12.8	5.3	69.2	1.6
North Dakota	1.1	10.8	4.5	69.4	1.5
South Dakota	1.3	12.0	4.7	72.4	1.5
North- western Wisconsin	1.2	13.0	4.6	75.1	1.0
U.P. Michigan	1.3	11.8	5.0	76.8	1.3
**Annualized

Asset Size	Return on Average Assets**	Return on Equity**	Net Interest Margin**	Loans to Deposits	Noncurrent Loans to Total Loans
Over $300 Million	1.4	17.0	4.6	92.6	0.8
Between $150 and $300 Million	1.4	15.6	4.9	76.5	0.8
Between $50 and $149.99 Million	1.3	13.8	4.8	72.8	1.0
Between $25 and 49.99 Million	1.2	11.4	4.7	67.8	1.3
Under $25 Million	1.0	9.3	4.8	66.6	1.3
**Annualized

*The averages are the arithmetic mean of the ratios for banks within each area and size category.

Performance Measures

Profitability	Lending and Loan Quantity
Return on Average Assets—a bank's net income divided by its assets; it indicates how well management is using a bank's assets. Return on Equity—a bank's net income divided by shareholders' equity; it tells what a bank is earning on its shareholders' investment. Net Interest Margin—the spread between a bank's interest income and its interest expense; it is roughly analogous to a business' profit margin.	Loan-to-Deposit Ratio—the percent of its deposits a bank is lending; it is a measure of bank liquidity, i.e., indicates a bank's potential to expand lending. Noncurrent Loans to Total Loans—noncurrent loans are loans and leases past due 90 days or more, plus nonaccrual loans and leases; it is an indicator of loan quality.

Profitability

Lending and Loan Quantity

Return on Average Assets—a bank's net income divided by its assets; it indicates how well management is using a bank's assets.

Return on Equity—a bank's net income divided by shareholders' equity; it tells what a bank is earning on its shareholders' investment.

Net Interest Margin—the spread between a bank's interest income and its interest expense; it is roughly analogous to a business' profit margin.

Loan-to-Deposit Ratio—the percent of its deposits a bank is lending; it is a measure of bank liquidity, i.e., indicates a bank's potential to expand lending.

Noncurrent Loans to Total Loans—noncurrent loans are loans and leases past due 90 days or more, plus nonaccrual loans and leases; it is an indicator of loan quality.

Capital as a Percent of Assets

Averages by Area and Bank Size, December 31, 1998*

Area	Percent	Asset Size	Percent
Minnesota	10.1	Over $300 Million	8.1
Montana	10.1	Between $150 and $300 Million	9.0
North Dakota	10.4	Between $50 and $149.99 Million	9.5
South Dakota	11.7	Between $25 and $49.99 Million	10.2
Northwestern Wisconsin	9.6	Under $25 Million	12.2
U.P. Michigan	11.1

*Averages are the arithmetic mean of the ratios for banks within each area and size category.

Capital
Capital, shareholders' equity in a bank, is the difference between total assets and total liabilities, and it serves as a "shock absorber" to soak up losses in bank loans and other assets.

Capital to Asset Ratio
A bank's capital divided by its assets; generally a bank with a higher capital ratio is better protected against losses than a bank with a lower ratio.

Ninth District Banks*

December 31, 1998*

Area	# of Banks	Asset Size	# of Banks
Minnesota	510	Over $300 Million	47
Montana	89	Between $150 and $300 Million	66
North Dakota	114	Between $50 and $149.99 Million	296
South Dakota	94	Between $25 and $49.99 Million	290
Northwestern Wisconsin	89	Under $25 Million	225
U.P. Michigan	28

*Includes all insured commercial banks except those operating primarily as clearing centers for credit card transactions and other special-purpose banks.