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FDIC Banking Review

Table 6.
Multinomial Logit Regressions of Determinants of Bank State: Merger versus Failure
(Estimation Period in Years)
Explanatory Variables 1990 1991 1992 1993 199394 199395 199396 199397 199498 199599 199600 199701 199802
Intercept
Constant -4.4684 9.6836** -7.5929 -5.191 4.203 4.6942 4.5547 4.7692 11.3291 -5.1144 0.9346 -0.6199 -1.9189
Capital
Tangible Equity for PCA 0.5301*** 0.8500*** 0.7454*** -0.0461 -0.1382 -0.0093 -0.0002 -0.0191 1.4089 0.2249 -0.0238 -0.0080 -0.0014
BHC Capital Injections 2.1647 -0.1048 0.3075 1.0384 0.7004 0.5830 0.5993 0.5579 -3.1430 -0.8561 -0.5000 -0.7831* -0.5443
External Capital Injections -0.9151 -0.0810 5.0893** 0.8027 0.9729 1.3522 1.3519 1.3907 -1.6622** -1.2036** -0.5297* -0.4764* -0.4560*
Asset Quality
Loans Past Due 30 to 89 Days -0.6823*** -0.4077** -0.2239 -0.8464** -0.4781** -0.1863 -0.2035 -0.1915 0.6182 0.3477 0.5696 0.2731 0.2128
Loans Past Due 90 Days or More -0.3236 -0.0706 -0.5440 -0.1931 -0.2134 -0.5354** -0.5049** -0.5198** -0.9865** -0.3893* -0.2086 -0.1001 0.0566
Nonaccrual Loans and Leases -0.2397 -0.4158*** -0.3294** -0.7045 -0.6407*** -0.5988*** -0.6019*** -0.6018*** -2.9516** -0.4764* -0.1760 -0.0955 -0.1115
Other Real Estate Owned -0.1902* -0.4054*** 0.2594 0.3367 0.3322 0.2715 0.3054 0.3055 7.6746** 0.5882 0.0078 -0.0945 -0.1525
Allowance for Loan Losses 0.3356 0.8715*** 0.3666 2.6342** 1.2752** 0.9467** 0.9844** 0.9958* 4.3713 0.5819 0.7722 0.8808 0.8598
Management
Efficiency Ratio 0.0094 -0.0345 -0.0171 0.0437 -0.0179 -0.0297 -0.0320 -0.0379 -0.0522 0.0580 0.0218 0.0396 0.0435
Earnings
Total Interest Income 1.1992 -1.5633** 0.5040 2.2421 -0.1898 -0.5105 -0.3677 -0.3640 -3.3443 0.2597 0.5499 0.6946 0.9715
Total Noninterest Income 0.7799 -1.4107** 0.2819 2.5038** 0.5521 0.1408 0.1259 0.0759 -2.6277 0.6042 0.4134 0.6291 0.6470
Total Interest Expense -0.9474 0.7870 -0.4657 -0.8863 0.7604 0.6581 0.4352 0.4075 -0.3228 -0.5881 -0.7982 -1.1075 -1.3550
Loan-loss Provision 0.1164 -0.1086 0.0177*** -1.0359 -0.6691 -0.5882 -0.6731** -0.7569** 0.2790 -0.6447 -0.7495 -0.5020 -0.2115
Loan Charge-offs -0.0145 0.0398 -0.7365** 0.8755 0.3109 0.3865 0.3321 0.3975 1.0550 0.7349 0.5245 0.3932 0.1833
Expenses on Premises -0.8320 1.1644 -1.5325 -1.7446 -0.2103 -0.4991 -0.4863 -0.3517 -1.2111 -1.3686 -1.4539 -2.0358 -2.7002
Salaries -1.7712* 1.4012* 0.8435 -1.5131 -0.0220 0.2606 0.1441 0.1638 8.1622 -0.6658 -0.5979 -0.7600 -0.4629
Other Noninterest Expense -0.2371* 0.6104** -0.0030** -4.1409 -1.3090 -0.4806 -0.4177 -0.3441 0.2520 -0.8389 -0.6434 -0.8411 -1.0175
Liquidity
Volatile Liabilities -0.0085 -0.0177 0.0025 -0.1507* -0.1159 -0.0679 -0.0431 -0.0379 -0.3553** -0.0813* -0.0253 -0.0431 -0.0287
Loans Plus Securities >= Five years 0.0159 0.0091 0.0927** 0.0593 0.0729 0.0791 0.0805 0.0855* 0.1157 0.0861 0.0125 0.0277 0.0228
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