Banking's Top Performers

By Michael, Nancy | ABA Banking Journal, June 2000 | Go to article overview

Banking's Top Performers


Michael, Nancy, ABA Banking Journal


Banks get little respect from the market, but the best of the big banks posted impressive returns on equity, despite shrinking net interest margins

The stage was set for outstanding performance across the banking industry in 1999, and the industry didn't disappoint. The booming economy, soaring stock market, high levels of consumer confidence, low unemployment, and quiet inflation combined to benefit the financial services industry, and most banking companies recorded sharp increases in profits in 1999.

All was not sunshine, however. Because of upward movement of interest rates, investors essentially ignored the extraordinary financial performance of banks last year. While the Dow Jones Industrial Average and the S&P 500 increased 25% and 20% respectively, the American Banker Stock Index of 225 banks fell almost 10% during the year. In addition, competition in financial services continued to intensify, and the industry's net interest margins fell to new lows. On balance, as the accompanying tables clearly show, banks overcame the effects of the negatives and racked up a very strong year.

Part I of the eighth annual ABA Banking Journal Performance Rankings takes a look at large banks and bank holding companies to gain some insight into the factors contributing to their financial performance over the past year. Part II of the rankings, which will appear next month, will highlight top performing community banks and investigate the trends that have led to their success.

Selection criteria

This year's study focused on publicly held banks and bank holding companies with over $1 billion in assets as of Dec. 31, 1999. A total of 228 institutions qualified under that criterion. Institutions were ranked by return on average equity for 1999. In instances where the reported ROE was the same for two or more institutions, 1999 return on average assets was used as a secondary ranking criterion. The 100 institutions with the highest ROE were selected as the industry's top performers.

Nonpublic banking institutions were not included in the analysis. A large number of these institutions with more than $1 billion in assets are limited purpose subsidiaries of larger institutions--for example, the credit card captive of a department store chain.

Data was obtained from Sheshunoff Information Services as of December 1999 and from Securities and Exchange Commission filings.

Movers and shakers

Although asset size did not correlate to a high ROE, the industry assets represented by the top 100 performers saw a huge jump in 1999 with the addition of Citigroup, Wells Fargo, J.P. Morgan, and Bank of America. These four institutions accounted for assets of over $1.8 trillion dollars. Smaller institutions were also amply represented in the group, as demonstrated by another notable newcomer: Peoples Bancshares (Mass.), which leapt into the number six spot with an ROE of 24.82% and assets just over the billion-dollar cutoff. Several of last year's top performers failed to make the grade this time around. Fleet, AmSouth, and Zions experienced large declines in net income due to merger-related charges. UnionBanCal fell from the rankings due to an $85 million restructuring charge in the third quarter. Eight of the 30 institutions to drop from the rankings this year were acquired in 1999.

The biggest movers on the up side were Silicon Valley Bancshares, up from 95th in last year's rankings to 15th this year, and National City Corp., up 66 places to a rank of 11. In the other direction, Summit Bancorp fell from 40th to 86th, due to nonrecurring charges for business line realignment and an increase in its loan loss provision, and CVB Financial Corp. dropped from 26th place to the 55th spot due to merger costs.

Raising the bar

Last year, the industry's ROE surged forward, with significant increases for many institutions. The median 1999 ROE of the 228 publicly traded institutions eligible for ranking was 14. …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA 8, MLA 7, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Note: primary sources have slightly different requirements for citation. Please see these guidelines for more information.

Cited article

Banking's Top Performers
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen
Items saved from this article
  • Highlights & Notes
  • Citations
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA 8, MLA 7, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Search by... Author
    Show... All Results Primary Sources Peer-reviewed

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.