Skip Header

Federal Deposit
Insurance Corporation

Each depositor insured to at least $250,000 per insured bank

Home > About FDIC > Publications & Documents > Discontinued Publications

Twenty-Five Largest Banking Companies

4th Quarter 2001

  • Nonperforming assets grow faster than reserves and equity.
  • Overall earnings still stable despite troubled economy -- net interest income growth offsets higher loss provisions.
  • Problems insufficient to forestall market capitalization rise.
  • Net Income of the 25 Largest Banking Companies. The chart depicts the amount of net income (expressed in $Billions) earned by the Twenty-Five Largest Banking Companies during the most recent and previous four quarters.D Nonperforming Assets of the 25 Largest Banking Companies.  The chart depicts the amount of nonperforming assets (expressed in $Billions) held  by the Twenty Five Largest Banking Companies during the most recent and previous four quarters.D
    *Source: SNL Data Source *Source: SNL Data Source

    The top 25 banking companies close the books on 2001.

    With the fourth quarter earnings announcements of the top 25 banking companies now complete, a picture emerges of the impact of a turbulent 2001. Credit quality concerns took center stage. Equally noteworthy -- and a testament to both the size and scope of these companies and the effects of eleven cuts in short-term interest rates -- was the relative stability of earnings despite the adversity plaguing the broader economy.

    In March 2001, six months before the events of September 11, the U.S. economy ended its record-breaking ten-year long expansion. The onset of recession was accompanied by stock market volatility1, record corporate bankruptcy volume and a marked spike in layoff announcements and unemployment.

    Two major events in the fourth quarter placed further strains on credit quality. On December 2, Enron Corporation announced that it had filed for bankruptcy protection under Chapter 11. With this action, the energy company became the largest U.S. corporate bankruptcy case on record. On the same day, the country of Argentina froze bank deposits and announced its inability to meet mandated fiscal targets set by the International Monetary Fund (IMF). A few days later, the IMF announced suspension of a $1.2 billion loan payment to the distressed country.

    The FDIC has assembled information from fourth quarter public data releases compiled by SNL Data Source for the 25 Largest banking companies to obtain an early look at the performance of these firms. Highlights are summarized in the narrative below. In addition, attached tables contain financial data and a merger chronology for each of the 25 Largest. Summary indicators for the group are presented on page 9.

    Credit quality continues to weaken.

    The impact of a weak economy, exacerbated by Enron and Argentina, was evident as the recent pattern of deteriorating asset quality accelerated during the fourth quarter. Net charge-offs rose sharply; the 25 Largest charged-off $8.8 billion in bad loans during the quarter, up 30 percent from $6.8 billion in the third quarter. Even with the stepped-up pace of loss recognition, nonperforming assets continued to increase, rising by $2.9 billion (9 percent).

    Growth in loss provisions continued to outstrip the rise in credit losses, as revenue strength allowed many banks to boost their reserve levels while still growing their earnings. The 25 Largest set aside almost $11 billion in provisions during the fourth quarter, an increase of $2.7 billion (32.1 percent) from the third quarter. The increase was broad-based; only four companies reported lower quarterly provisions in the fourth quarter. Fourth-quarter provisions exceeded charge-offs by almost $2.2 billion, and loan-loss reserves of the 25 Largest increased by $2.3 billion (5.1 percent). This increase boosted the group's ratio of reserves to gross loans from 2.0 percent to 2.1 percent during the quarter, but the ratio of reserves to nonperforming assets declined from 143 percent to 138 percent. For the year, reserves are up by $5.9 billion, as provisions of $30.4 billion exceeded net charge-offs of $25.7 billion. The continued rise in nonperforming assets makes further increases in loss provisions likely in the near term.

    Capital ratios remain stable.

    Equity capital of the 25 Largest declined by $3.8 billion (1.0 percent) in the fourth quarter, but their combined assets dropped by $124.4 billion (2.6 percent). As a result, the group's equity capital ratio improved from 7.70 percent to 7.82 percent. Regulatory capital ratios showed resilience at most of the 20 companies that reported all of their regulatory capital ratios in the fourth quarter.

    Net interest income growth cushions impact of rising loss provisions.

    Net income for the fourth quarter of the 25 Largest rose by $1.2 billion (11.8 percent) vs. the third quarter. Quarter-to-quarter net income growth resulted in ROA increasing by 8 basis points in the quarter. However, for all of 2001, net income was down for the year by 9.5 percent. Behind this average, yearly earnings results range widely for the group -- with net income falling at only 11 of the 25 companies.

    In December, the Federal Reserve lowered the federal funds rate for the 11th time during 2001, to 1.75 percent, its lowest point in 40 years. Since the 25 Largest companies typically derive much of their funding from short term liabilities, most were able to enjoy a lower cost of money while their interest income yields remained fairly stable. This effect contributed to a net interest income increase of $2.6 billion (up 7.3 percent) in the fourth quarter. Since the fourth quarter of 2000, net interest income for the 25 Largest has increased by almost $ 4 billion, or 11.7 percent.

    Over the quarter, the composite net interest margin (NIM) increased by 19 basis points. Only two companies reported a drop in NIM; the declines were one basis point and 17 basis points. Margins at three companies remained the same and they widened at the other 20. In general, the net interest income boost to earnings cushioned the effect of the continuing climb in loss provisions described earlier.

    Aggregate Core ROA slips as securities sales and other non-recurring items bolster the bottom line at some institutions.

    While ROA increased over the fourth quarter by eight basis points (vs. the third quarter), Core ROA2 - which excludes securities gains and extraordinary items - fell by two basis points this quarter. This is the third quarter in a row that Core ROA declined.

    In the fourth quarter, earnings pictures for the 25 Largest companies varied widely. Although aggregate ROA was up compared to the third quarter, eight companies (ten if extraordinary gains are excluded) suffered declines. Conversely, although Core ROA was down slightly, ten companies posted gains. Some 17 companies posted gains on securities transactions and two reported extraordinary gains. One of these experienced an extraordinary gain in excess of its quarterly net income. For all of the 25 Largest taken together, effects of securities sales and extraordinary gains at some institutions approximately offset corresponding losses at others. As a result, fourth quarter Core ROA, at 1.00 percent, compares closely with 0.98 percent for conventional ROA Market capitalization rises.

    The fourth quarter earnings increase of $1.2 billion caused the aggregate return on equity (ROE) of the 25 Largest companies to increase by 86 basis points (from 11.65 to 12.51 percent). Earnings-per-share figures for nine of the 25 companies exceeded Wall Street's consensus expectations; seven fell short and nine came in as expected.

    Against the backdrop of a very volatile stock market, the majority of the 25 Largest recorded gains in their stock prices during the fourth quarter. Overall, the composite price per share at the end of the fourth quarter was up by over $50 (4.5 percent). Price gains were seen by 16 companies in the last quarter, with one having an increase in excess of 20 percent and six others having increases of ten percent or more. Price losses occurred for nine firms, with none of these dropping by more than six percent. These results are in sharp contrast to those for the third quarter, when 22 companies suffered price losses, with eight down by more than ten percent.

    Market capitalization improved for the 25 Largest in line with broad stock market trends. During the fourth quarter, the group gained by 8.8 percent, which compares with other market indices. Over the quarter, the Dow Jones Industrial Average rose 13 percent, the S&P 500 increased ten percent and the SNL Securities Index of publicly traded banking companies was up by eight percent.

    Merger activity remains slack.

    Eight merger announcements made in the fourth quarter by the 25 largest companies indicated targeted assets of about $7 billion. The largest acquisition is Wells Fargo's plan to take on 117 branches (located in seven states) of Marquette Financial Company. That sale, announced on October 5, includes the majority of Marquette's retail bank holdings. The deal includes $5.6 billion of assets and $4 billion of deposits. According to the company, prior to the sale, it is one of the largest privately owned financial services organizations in the U. S.

    The two largest of the remaining seven acquisitions announced during the quarter involve BB&T Corporation. On November 8, BB&T announced simultaneous deals to acquire both AREA Bancshares (at a transaction value of $449 million) and Mid-America Bancorp ($372 million). Both of the holding companies to be acquired are located in Kentucky. No previously-announced significant mergers were completed during the fourth quarter.

    This report only includes organizations primarily involved in commercial banking for which timely information is available. The bank subsidiaries of these 25 companies hold approximately 62 percent of the commercial banking industry's total assets. Excluded from this report are: foreign owned companies, some diversified financial service companies, thrift companies that concentrate on mortgage lending and nonbank financial services companies. Further details are presented on page 8.

    Notes to Users

    The Division of Research and Statistics prepared this report. In addition to providing data on individual companies, the aggregate results provide an early indication of the commercial banking industry's overall performance in the most recent quarter.

    The report is based on data from SNL Securities' DataSource3 , as well as information from public sources, including press releases and media accounts. We thank the late Jim McFadyen, originator of the 25 Largest and Geri Bonebrake, who provided design expertise.

    The report covers the 25 largest banking companies for which timely quarterly results are available. Some large foreign-owned companies are excluded because comparable information on these companies generally is not available until later regulatory filings. Large banks owned by diversified financial services companies where non-banking business activities predominate are also excluded. Large thrift companies also are not covered by this report. Please see page eight for a list of large insured banks and thrifts that are not affiliated with in the 25 Largest banking companies.

    Comparison with Regulatory Data:
    This report contains consolidated information published by the largest bank holding companies, including their bank and nonbank subsidiaries. Thus, the 25 Largest reflects the combined activities of FDIC-insured banks and related subsidiaries, such as insurance companies and securities firms. Regulatory data - primarily Call Reports - does not include information on nonbank subsidiaries, unless they are owned directly by an FDIC-insured bank.

    Preliminary Data:
    The earnings announcements on which this report is based are preliminary, and companies have some flexibility as to content and format not available to them in later, more detailed regulatory filings with the SEC and the banking agencies.

    Prior Period Comparisons:
    Caution should be exercised when comparing results between different periods because acquisitions or accounting changes may distort comparability. Efforts have been made to adjust prior periods appropriately, when possible.

    Data table for the 25 Largest
    This is a table of the source data for the 25 Largest.

    Agency Disclaimers:
    Use of the information in this report is subject to the following disclaimers.

    The views expressed herein are those of the authors and may not reflect the official positions of the FDIC. The FDIC does not endorse any of the financial institutions discussed in this report for any purpose.

    The FDIC has taken reasonable measures to ensure that the information and data presented in this report is accurate and current. However, the FDIC makes no express or implied warranty regarding such information or data, and hereby expressly disclaims all legal liability and responsibility to persons or entities who use this report, based on their reliance on any information or data that is available in this report.

    The content of this report is not designed or intended to provide authoritative financial, accounting, investment, legal, regulatory or other professional advice which may be reasonably relied on by its readers. If expert assistance in these areas is required, the service of qualified professionals should be sought.

    Reference to any specific commercial product, process, or service by trade name, trademark, manufacture, or otherwise does not constitute an endorsement, a recommendation, or a favoring by the FDIC or the United States government.

    This general disclaimer is in addition to, and not in lieu of, any other disclaimers found in this report. In addition, the terms of this disclaimer extend to the FDIC, its directors, officers and employees.


    Chau Nguyen
    (202) 898-7373

    J.R. Bauer
    (202) 898-6813

    (202) 898-7222 (fax)


    * This document is based on publicly available information provided by the companies it covers. It is intended for informational purposes only. It does not represent official policy or supervisory guidance from the FDIC.

    1 "Large and Small Companies Exhibit Diverging Bankruptcy Trends," FDIC's FYI: An Update on Emerging Issues in Banking, January 31, 2002

    2 SNL securities computes this item as an approximate measure of sustainable net income.

    3 Data excerpted from SNL DataSource is subject to copyright and trade secret protection and may not be reproduced or redistributed without license from SNL Securities LC.

    Last Updated 06/20/2017 Questions, Suggestions & Requests

    Skip Footer back to content