Consolidations and acquisitions transformed Oregon's banking system from one characterized by a large number of local banks into one dominated by two large chains—the US National Bank of Oregon and Wells Fargo.
In all, the state had 39 insured banks in 2002, with total assets of $22.9 billion. Thirty-one of these banks were state-chartered. By 1996, the Resolution Trust Corporation had resolved three institutions at a cost of $393 million.
As of 2002, a disproportionate share of Oregon's insured banks held high concentrations of commercial real estate (CRE) loans, especially in the high-risk construction and development (C and D) sectors. At that time, the demand for commercial real estate had declined, challenging the credit quality of many banks.
Although steep interest rate cuts by the Federal Reserve in 2001/02 initially hampered net interest margins (NIMs) (the difference between the lower rates offered to savers and the higher rates charged on loans), banks' funding costs declined dramatically during 2002, which contributed to improved NIMs.