Profits and Balance Sheet Developments at U.S. Commercial Banks in 2007
Figure 32. Reserves for loan and lease losses, 1990-2007. Data plotted as curves. Three panels. In the top panel, reserves as a percentage of total loans and leases begins in 1990 at about 2.5 percent, rises to about 2.7 percent by 1992, falls smoothly to about 1.7 percent in 2000, edges up over the next two years to about 1.9 percent, and remains at that level in 2003 before declining to about 1.2 percent by 2006. It rises to about 1.4 percent in 2007. In the middle panel, reserves as a percentage of net charge-offs begins in 1990 at about 190 percent, rises to about 480 percent by 1994, generally declines to about 190 percent by 2002, rises on balance over the next three years to around 300 percent by 2006, and then falls to around 220 percent by 2007. In the bottom panel, reserves as a percentage of delinquent loans begins in 1990 at about 50 percent, rises to about 85 percent by 1995, declines gradually to a little less than 80 percent in 1999, and then drops to about 65 percent by year-end 2001. It returns to about 85 percent by 2004 but then declines over the next three years to about 55 percent in 2007.
Note: The data are as of year-end. For definitions of delinquencies and net charge-offs, see the note for figure 24.