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FDIC Banking Review

Table 7.
Multinomial Logit Regressions of Determinants of Bank State: Still a Problem versus Failure
Estimation Period in Years)
Explanatory Variables 1990 1991 1992 1993 1993-94 1993-95 1993-96 1993-97 1994-98 1995-99 1996-00 1997-01 1998-02
Intercept
Constant -1.7037 9.8229*** -5.7298 -8.1433 3.4994 1.9090 2.3718 2.9545 11.8183 -4.7010 2.4569 -0.1438 -1.3300
Capital
Tangible Equity for PCA 0.6653 0.9255 0.6366 -0.0180 -0.1213 0.0157 0.0210 0.0161 1.4656 0.2476 0.0092 0.0247 0.0209
BHC Capital Injections 1.8868 -0.2906 0.5581 0.8628 0.4019 0.2479 0.2982 0.3084 -3.3388 -0.8366 -0.3956 -0.6834 -0.6538*
External Capital Injections -0.2729 0.1045 5.0410** 0.4656 0.9132 1.4138 1.4588 1.4872 -0.9185 -0.3014 -0.1564 -0.1621 -0.1645
Asset Quality
Loans Past Due 30 to 89 Days -0.1508* -0.1852* -0.0386 -0.6301 -0.2901 -0.0618 -0.0480 -0.0389 0.6652* 0.3108 0.5140 0.1504 0.1100
Loans Past Due 90 Days or More -0.1451 -0.0449 -0.2691 -0.1211 0.0590 -0.0202 -0.0798 -0.0852 -0.6682 -0.2518 -0.1519 -0.0492 0.0091
Nonaccrual Loans and Leases -0.0503 -0.0609 -0.2043 -0.5441 -0.4911*** -0.4661*** -0.5049*** -0.5101*** -2.9075*** -0.5721 -0.3620 -0.2440 -0.2381
Other Real Estate Owned -0.1520* -0.0992 0.3269 0.5932 0.5444** 0.5269** 0.5422** 0.5437** 7.8727 0.7603 0.1889 0.0840 -0.0439
Allowance for Loan Losses 0.2190 0.4678** -0.1398 2.0740 0.6592 0.3662 0.4775 0.4219 3.8584 0.5901 0.8449 0.7692 0.8030
Management
Efficiency Ratio -0.0094 -0.0479** -0.0088 0.0608 -0.0183 -0.0160 -0.0218 -0.0298 -0.0504 0.0616 0.0153 0.0351 0.0417
Earnings
Total Interest Income 0.5102 -1.4084** 0.8538 2.3853 -0.2317 -0.2204 -0.1554 -0.2602 -3.2794 0.3022 0.3374 0.6819 0.9719
Total Noninterest Income 0.0929 -1.6561*** 0.4092 2.3166* 0.4836 0.2710 0.2199 0.1216 -2.5602 0.6202 0.2145 0.5437 0.6399
Total Interest Expense -0.4149 0.7310 -0.8402 -1.6448 0.4186 0.0461 -0.0415 0.0889 -0.4817 -0.5840 -0.6594 -1.1102 -1.3588
Loan-loss Provision -0.5443* -0.2876 0.0509 -0.8631 -0.5969 -0.4833 -0.5775* -0.5975* 0.4569 -0.4709 -0.8459 -0.6286 -0.3183
Loan Charge-A5offs 0.5898* 0.2622 -0.6566* 0.8309* 0.5432 0.6234 0.5602 0.5720 1.3316 0.6531 0.6585 0.5533 0.3056
Expenses on Premises -0.0152 1.0657 -1.8408 -1.8289 -0.4222 -0.9661 -0.7504 -0.6864 -1.6630 -1.7840 -2.0767 -3.3064* -3.3969**
Salaries -0.4521 1.5279*** 0.6316 -1.4041 0.2488 0.3225 0.2618 0.3786 8.4899 -0.3599 0.0343 -0.2674 -0.2008
Other Noninterest Expense 0.1244 0.8622** -0.4144 -3.9178** -1.0867* -0.6549 -0.5648 -0.4626 0.1029 -1.0150 -0.5520 -0.6832* -0.9796
Liquidity
Volatile Liabilities -0.0006 0.0166 0.0404 -0.0821 -0.0456 -0.0061 0.0126 0.0192 -0.3160* -0.0456 -0.0169 -0.0090 -0.0073
Loans Plus Securities >= Five years 0.0273 0.0089 0.0877** 0.0966 0.1024* 0.1027** 0.0997** 0.1050** 0.1040 0.0777 0.0213 0.0394 0.0348
Log Likelihood -584.9 -662.5 -561.8 -328.8 -505.8 -597.7 -660.9 -708.4 -416.7 -339.3 -315.9 -348.5 -410.6
Number of Observations 866 897 713 413 607 717 781 843 495 377 341 375 428
Akaike Information Criteria 1289.8 1445.0 1243.6 777.6 1131.6 1315.4 1441.8 1536.8 953.4 798.5 751.7 816.9 941.3
Pseudo R squared 0.090 0.222 0.170 0.195 0.162 0.159 0.144 0.145 0.172 0.121 0.102 0.103 0.078
Significance at 1%, 5% and 10% levels are indicated by ***, ** and * asterisks, repectively.



Last Updated 1/19/2006 Questions, Suggestions & Requests