New York City is the major US banking center. Banking is one of the state's leading industries, ranking first in the US. As of 2002, New York's 212 insured banks held total assets of about $1.58 trillion, and New York led the nation in both assets and deposits.
In 2002, New York's large insured banks (those with assets over $10 billion) reported increases in past-due loan ratios. A deterioration in the corporate lending sector occurred, largely due to exposure to the telecommunications and airline industries. Although smaller community banks (those with assets less than $1 billion) also reported weak credit quality, the average loan delinquency rate was lower than that for large banks.
The Federal Reserve in 2001/02 lowered long-term interest rates to near historic lows, leading to a decline in asset yields. Although short-term interest rates also declined, banks' funding costs were already near historic lows and did not have room to decline further. Therefore, the net interest margin (NIM) (the difference between the lower rates offered to savers and the higher rates charged on loans) was projected to be limited in 2003.
New York has a higher percentage of residential mortgage lenders than the rest of the nation, and its median ratio of long-term assets-to-average earning assets remains above that of the nation.