The year 2002 brought a variety of challenges to New York's commercial banking industry. Continued economic weakness, a deterioration in credit quality, and increased expenses relating to contingency planning, security concerns, and augmented anti-money laundering enforcement were among the factors faced by bank management and regulators.
Borrower defaults, large and small, grew during the year throughout the United States. For all insured New York State-chartered commercial banks, the ratio of non-current loans to total loans increased from 1.82% to 2.57%, while charge-offs as a percentage of total loans rose by 41 basis points to 1.22%. These factors and an increased demand on resources in a slowly recovering economy had a negative effect on earnings. The aggregate return on average assets for all insured New York State-chartered commercial banks dropped to .47% in 2002 from .71% in 2001.
As these challenges have been met, the industry remains sound and prepared to move ahead as economic improvement occurs. All New York State-chartered commercial banks remain well capitalized. In fact, the sector's Tier I capital to risk weighted assets for all insured New York State-chartered commercial banks increased from 9.89% to 10.04% during 2002. Total assets in the sector increased by nearly 11% to $967 billion. Significantly, with assets of $622 billion, JPMorgan Chase Bank remains the largest bank in the United States and the holding company is the nation's second largest banking institution.