Bank Profitability Declines to Lowest Level in Four Years According to Weiss Ratings.

Business Editors

PALM BEACH GARDENS, Fla.--(BUSINESS WIRE)--Oct. 23, 2000

The U.S. banking industry's return on assets (ROA), a common measure of bank profitability, dropped to its lowest level in four years, according to Weiss Ratings, Inc., a leading bank rating agency.

For the first half of 2000, the industry reported an annualized ROA of 1.15% compared to an ROA of 1.32% in 1999. The following table illustrates the industry's recent ROA trend.

    1995     1.13%
    1996     1.15%
    1997     1.24%
    1998     1.2%
    1999     1.32%
    2000     1.15% (first half of the year)

      Three key factors contributed to the industry's decline in
profitability: a shrinking net interest margin, higher provisions for
future loan losses, and a $1.6 billion loss on the sale of securities.
Institutions reporting the largest year-to-year decline in net income
include:

                                      Weiss   Net Income/Loss ($Mil)
                                      Safety  ----------------------
                                      Rating  1st Half 1st Half
                                               2000     1999    Change
-- First Union NB   Charlotte, N.C.     C+    1,392    1,302    -2,694
-- First USA
    Bank NA         Wilmington, Del.    B      -295      284      -579
-- Bank One NA      Indianapolis, Ind.  C+       12      309      -296
-- Bank One NA      Columbus, Ohio      C+     -215       78      -293

      Weiss Safety Rating: A = Excellent; B = Good; C = Fair; D = Weak;
E = Very Weak

      "This sudden drop in bank profitability in the first six months of
2000 is especially worrisome considering the industry actually enjoyed
a record profit during the first quarter," commented Martin Weiss,
Ph.D., chairman of Weiss Ratings. "Earlier, we reported on the rising
level of nonperforming commercial loans. This decline in profitability
is yet another sign that the banking industry's good fortunes have
peaked. Expect more declines in the months ahead."

          Non-performing commercial loans continue to surge,
                       rising 30% in six months

      Through the first six months of 2000, nonperforming commercial and
industrial loans rose $3.1 billion, or 30.0%, to $13.6 billion. This
increase came on the heels of a 36.5% surge in 1999, and a 34.9% rise
in 1998.
      Institutions recently impacted by problem commercial loans
include:
                                      Weiss   Nonperforming Commercial
                                      Safety        Loans ($Mil)
                                      Rating
-- Insouth Bk of                              6/30/00  6/30/99  Change
     Brownsville   Brownsville, Tenn.  D-      5,465     244     5,221
-- Universal Bank  Orange, Cal.        D+      4,757       0     4,757
-- Liberty NB      Ada, Ohio           D+      5,114     392     4,722
-- Pacific NB      Miami, Fla.         D       6,672   2,451     4,221

      In evaluating the nation's 10,105 commercial banks, savings banks,
and savings and loans, Weiss Ratings recently issued the following
notable upgrades:

-- Bankers Trust Co.           New York, N.Y.       from D+ to C+
-- California B&TC             San Diego, Calif.    from C+ to B-
-- Manufacturers & Traders TC  Buffalo, N.Y.        from C+ to B-

Notable downgrades include:

-- Advanta NB                  Wilmington, Del.     from B+ to D+
-- Bay View Bk NA              San Mateo, Calif.    from C- to D+
-- Wilmington Trust Co.        Wilmington, Del.     from B- to C+

The Weiss ratings are based on an analysis of an institution's capitalization, asset quality, earnings, liquidity, and stability. The latter category combines a series of factors including five- year trends, asset size and growth, strength of affiliate companies, and risk diversification.

Weiss issues safety ratings on over 16,000 financial institutions, including banks and thrifts, securities brokers, insurers, and HMOs. Weiss also rates the risk-adjusted performance of more than 10,000 stock, bond, and money market mutual funds. It is the only major rating agency that receives no compensation from the companies it rates. Revenues are derived strictly from sales of its products to consumers, businesses, and libraries.

Consumers needing more information on the financial safety of a specific company may purchase a rating or analysis directly from Weiss for as little as $15 by calling 1-800-289-9222. For more information, visit the Weiss Ratings web site at www.weissratings.com.

Note to editors: National and state-specific tables of banks and thrifts receiving the highest and lowest Weiss Safety Ratings are available.