are real benefits to be had from interstate banking, researchers seemed to
have found them mainly in greater public convenience and broader bank
service menus, not necessarily in lower costs and greater efficiency in utilizing the nation's scarce resources.
The rate of return on a bank's total assets equals the ratio of its net income
after taxes and all other operating expenses divided by its total assets. Thus, asset
returns measure the efficiency with which the management and staff of a bank can
convert its total resources (assets) into net earnings.
Interest income and fees earned on loans represent the largest source of revenue
for most banks, averaging close to 70 percent of total operating revenues across the U.S. banking industry in recent years. Loan-loss provision is an annual noncash operating expense that appears on a bank's income statement. As banks come to expect
greater loan losses, the provision for loan losses is increased and added to the bank's
bad-debt reserve, which appears on the balance sheet and is usually referred to as the
allowance for loan losses.
Questia, a part of Gale, Cengage Learning. www.questia.com
Book title: Banking across State Lines:Public and Private Consequences.
Contributors: Peter S. Rose - Author.
Publisher: Quorum Books.
Place of publication: Westport, CT.
Publication year: 1997.
Page number: 116.
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