ABSTRACT
In evaluating the condition of federally insured depositories, it is important to look beyond industry averages and to scrutinize accounting techniques that are often used by deteriorating depositories to obscure troubles. The primary reasons are that the risk to the desposit-insurance system generally comes from the poorly performing institutions within the industry, and these institutions have the greatest incentives to use historical, or book-value, accounting techniques to cover up market-value deterioration.
