As of 2002, Minnesota had 488 insured banks; the total assets of the state's insured banks in 2002 were over $108.8 billion. Three-hundred forty-five of those banks were state-chartered.
As of 2002, many insured banks headquartered in Minnesota relied upon commercial real estate (CRE) loans, and a soft real estate market negatively affected banks' credit quality. Community banks (those with less than $1 billion in assets) experienced declining net interest margins (NIMs) (the difference between the lower rates offered to savers and the higher rates charged on loans) in the 1990s and into the 2000s, due to increasing loan and funding competition. The lowering of interest rates by the Federal Reserve in 2001/02 caused fluctuations in NIMs, but did not signal an end to the long-term downward trend of NIMs.