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FDIC Banking Review

Table 5.
Multinomial Logit Regressions of Determinants of Bank State: Recovery versus Failure
(Estimation Period in Years)
Explanatory Variables 1990 1991 1992 1993 199394 199395 199396 199397 199498 199599 199600 199701 199802
Intercept
Constant -0.2388 10.6388*** -2.0548 -2.8325 8.4024* 7.0800* 6.2905 6.0942 14.2305 -2.8352 3.9788 1.0819 -0.6638
Capital
Tangible Equity for PCA 0.7743*** 1.0350*** 0.7071*** -0.1248 -0.1827 -0.0345 -0.0198 -0.0262 1.4338 0.2043 -0.0802 -0.0156 -0.0120
BHC Capital Injections 2.0621 -0.3816 0.6065 0.5490 0.4402 0.3137 0.3806 0.3978 -3.1364 -0.6126 -0.3481 -0.6839* -0.6238
External Capital Injections 0.0021 0.1636 5.1764** 0.8219 1.1397 1.5649 1.5940 1.6146 -0.9101 -0.3444* -0.2561 -0.2861** -0.2477
Asset Quality
Loans Past Due 30 to 89 Days -0.4142*** -0.4417*** -0.2429 -0.8305** -0.4773** -0.2567 -0.1913 -0.1730 0.5548 0.3001 0.5276 0.1184 0.0400
Loans Past Due 90 Days or More -0.4630*** -0.1805 -0.5600 -0.3232 -0.1968 -0.3677** -0.4260*** -0.4530*** -1.0422** -0.5484*** -0.3320 -0.1901 0.0021
Nonaccrual Loans and Leases -0.2163** -0.3689*** -0.4007** -0.7762* -0.6210*** -0.5803*** -0.6002*** -0.6283*** -2.9354** -0.6012** -0.3506 -0.2224 -0.1628
Other Real Estate Owned -0.3847*** -0.2984*** 0.1820 0.3759 0.3007 0.2900 0.3299 0.3245 7.6096** 0.6112 0.0660 -0.0690 -0.1354
Allowance for Loan Losses 0.3333 0.7585*** 0.1987 2.5538** 0.9456* 0.7284 0.7687* 0.7911* 4.1672 0.8971 1.0031 1.0392 0.9083
Management
Efficiency Ratio -0.0010 -0.0218 -0.0233 0.0277 -0.0398 -0.0406 -0.0328 -0.0341 -0.0417 0.0685 0.0308 0.0411 0.0498
Earnings
Total Interest Income 1.0295 -0.9335 0.6710 2.3293 -0.3460 -0.3550 -0.1461 -0.1235 -3.0691 0.4429 0.4718 0.6600 1.0897
Total Noninterest Income 0.6360 -0.6387 0.3575 2.2171* 0.4048 0.1514 0.2814 0.2917 -2.3035 0.7560 0.4635 0.5670 0.7607
Total Interest Expense -1.2585* -0.0224 -0.6493 -1.2851 0.7541 0.3780 0.0680 0.0577 -0.7468 -0.9387 -1.0633 -1.3890* -1.6172
Loan-loss Provision -0.7479*** -0.6765*** -0.1868 -1.2186* -0.9301** -0.8185** -0.9011** -0.9159** 0.1979 -0.5587 -0.8741 -0.6199 -0.3175
Loan Charge-offs 0.7248*** 0.6950*** -0.4833 0.8751 0.6614 0.7422 0.7013* 0.6955** 1.5349 0.6323 0.6174 0.4337 0.2000
Expenses on Premises -0.3109 -0.3120 -2.5638 -1.7553 -0.6163 -0.9336 -1.0243 -0.9938 -2.3193 -2.3415 -2.7488* -3.4456** -3.7522**
Salaries -1.4292** 0.5001 0.9138 -1.6762 -0.0150 0.1143 -0.0836 -0.1369 7.9328 -0.6335 -0.3216 -0.3277 -0.2640
Other Noninterest Expense -0.3044 0.0733 -0.4493 -3.4496** -0.7108 -0.3225 -0.4617 -0.4250 -0.0248 -1.1180 -0.7435* -0.7250 -1.2015
Liquidity
Volatile Liabilities -0.0130 0.0180 0.0191 -0.0726 -0.0456 -0.0072 0.0087 0.0117 -0.3340* -0.0723* -0.0434 -0.0387 -0.0349
Loans Plus Securities >= Five years 0.0225 0.0033 0.0730 0.0743 0.0807 0.0792 0.0798 0.0856 0.0863 0.0708 0.0208 0.0473 0.0345
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