Right Column

Important Notices

December 21, 2007

DFI Quarterly Report - Third Quarter 2007

Quarterly Report (Excel) Third Quarter 2007

Introduction

Every quarter we will present summary statistics of each of the classes of financial institutions that we license with a one-year comparison. The intention of the Quarterly Report is to show at a glance significant changes on the balance sheets and reports of income of DFI licensees. We invite readers to review the Financial Statistics page on our website, and the financial data published by the Federal Reserve Bank, Federal Deposit Insurance Corporation and the National Credit Union Administration.

--------------------------------------------------------------------------------

Commercial Banks

For the one-year period ending September 30, 2007, the number of state-chartered banks increased by 7.8% to 207 at the close of the third quarter 2007, compared to192 in the same quarter one year ago. Assets were up from $203.6 billion to $217.3 billion, an increase of $13.7 billion, or 6.7% over the same period, while loans were up 8.9%, from $141.8 billion to $154.3 billion, Total equity capital was up 8.8%, from $25.5 billion to $27.7 billion at the close of the quarter.

Deposit growth did not keep pace with loans, increasing just 3.2% to $153.2 billion, which caused the loan to deposit ratio to increase to 100.8% from 95.6% at the close of the third quarter 2006, while net income was off $24.3 million or 1.2% compared to one year ago. The net interest margin was down from 3.80 to 3.60%, constricted by the tightening credit market and increased cost of funds. Return on assets, return on equity and reserve coverage of noncurrent loans decreased, as noncurrent loans increased 60.1% from $651.9 million to $1.0 billion.

--------------------------------------------------------------------------------

Industrial Banks

Once again, financial statistics for industrial banks were significantly impacted by the results of a single subprime lender. Total loans, total assets, total deposits and total capital experienced double-digit declines from September 30 one year ago. Assets were down 25.5% from $17.7 billion to $13.2 billion while loans declined 48.4%, from $15.7 billion to $8.1 billion. Total equity capital was down by half, from $2.2 billion to $1.1 billion, while the number of industrial banks decreased by two, from 15 to 13.

Deposits were down 16% from $13.5 billion to $11.4 billion which caused the loan-to-deposit ratio to decrease from 115.8% to 71.2%. Net income went from $162.6 million one year ago to a net loss of $744.3 million, while noncurrent loans increased from $187.4 million to $250.4 million, an increase of 33.7%. Other real estate owned increased by more than three times, going from $6.9 million to $28.1 million over the same period.

--------------------------------------------------------------------------------

Credit Unions

Credit unions experienced modest growth in total assets, total loans, total shares and total capital over the year ended September 30. Assets, at $70.8 billion were up 4.0% from the $68.1 billion reported as of September 30, 2007. Loans were up 3.6% from $49.7 billion to $51.4 billion while shares were up 3.6% from $57.5 billion to $59.6 billion. Capital was up 5.7%, from $7.2 billion to $7.6 billion. The allowance for loan losses was up 17.4% from $307.8 million to $361.5 million. The number of credit unions decreased by five, from 204 to 199 a change of 2.5%.

Interest margins narrowed from 4.18 at the end of the third quarter 2006 to 4.03 at the close of the same period in 2007, while the provision for loan losses almost doubled, going from $147.7 million in the third quarter 2006 to $282.8 million in the same period of 2007. This put a crimp in net income, which went from $452.5 million to $268.0 million, a decrease of $184.5 million or 40.8%. Delinquent loans were up 74.3% over the period, from $206.5 million to $360.0 million an increase of $153.5 million.

--------------------------------------------------------------------------------

Foreign Banks

State-chartered offices of foreign banking organizations experienced growth in total assets, total loans and total deposits during the year ended September 30, 2007. Total assets were up 10.6% from $16.3 billion to $18.0 billion while loans at $15.1 billion were up 20.2% from $12.6 billion at the close of the third quarter 2006. Deposits were $8.9 billion as of September 30, 2007 an increase of 8.9% from the $8.2 billion reported as of September 30, 2006. The number of foreign banking organizations with state-chartered offices in California remained constant at thirty-six.

--------------------------------------------------------------------------------

Trust Companies and Departments

Total corporate assets of trust companies at the close of the third quarter 2007 were up $76.8 million, or 11.5% from the $668.7 million a year previous. While total income from fiduciary activities was up 3% from $616.5 million to $635.2 million over the same period, net income was off 19.5%, from $98.7 million at the close of the second quarter 2006 to $79.4 million, caused in part by a 27.7% hike in salary and employee benefit costs and a decrease of 93.3% in other income from the same period one year ago. Total fiduciary assets at state-chartered banks and trust companies increased 7.4% from $362.4 billion to $389.3 billion. The number of trust companies went from 11 to ten, and the number of state-chartered banks with trust powers went from 20 to 19 during the period.