Banking Industry Profits Exceed $22 Billion In First Quarter, Setting New Record, According to Weiss Ratings.

Business Editors

PALM BEACH GARDENS, Fla.--(BUSINESS WIRE)--July 31, 2000

The nation's 10,157 commercial banks, savings banks, and savings and loans posted a record quarterly profit of $22.5 billion in the first quarter of 2000, according to Weiss Ratings, Inc., a leading bank rating agency.

Favorable economic conditions lifted the industry's profits $1.8 billion, or 8.9%, over those of the first quarter 1999 and $326 million, or 1.5%, over the previous record quarterly profit set in the third quarter of 1999.

Institutions showing the largest year-to-year increase in net income include:

                                        Weiss   Net Income/Loss ($Mil)
                                                ----------------------
                                        Safety    1st Q  1st Q
                                        Rating    2000    1999  Change
                                        ------    -----  -----  ------

-- Citibank NA         New York, N.Y.     B-      1,590    793    797

-- Mellon Bank NA      Pittsburgh, Pa.    B         189    -55    244

-- First Union NB      Charlotte, N.C.    B-        808    569    239

-- Key Bank USA NA     Cleveland, Ohio    B         252     18    233

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

"The banking industry continues to reap the benefits of the unprecedented economic expansion," commented Martin Weiss, Ph.D., chairman of Weiss Ratings. "Unfortunately this record prosperity has also resulted in a good deal of complacency. We're seeing a number of institutions increase their exposure to interest rate risks and credit risks, both of which will likely return to haunt them."

Nonperforming commercial and industrial loans on the rise

Nonperforming commercial and industrial loans jumped $1.4 billion, or 13.3%, during the first quarter to $11.8 billion. This increase came on the heels of a 36.5% surge in 1999, following a 34.9% rise in 1998.

Institutions with the largest increase in nonperforming commercial loans include:

                                                      Nonperforming
                                             Weiss   Commercial Loans
                                                           ($Mil)
                                                     ----------------
                                             Safety  1st Q 1st Q
                                             Rating  2000  1999 Change
                                             ------  ----- ----- -----

-- First Union NB         Charlotte, N.C.      B-     532   410   122

-- Wells Fargo Bank NA    San Francisco, Cal.  B-     216   150    66

-- Morgan Guaranty Tr Co  New York, N.Y.       C+     115    52    63

-- Fleet Bank NA          Jersey City, N.J.    B-      87    38    49

Interest rate risk increases as banks extend loan maturities

Despite the rising trend in interest rates, banks are committing to longer-term loans carrying fixed rates -- a cause for concern should interest rates continue to rise. Loans maturing or repricing in five years or more comprised 20.9% of the industry's loans outstanding at March 31, 2000, up from 20.4% at year-end 1999 and 17.8% in 1998.

"Overall, the banking industry is still doing quite well," added Dr. Weiss. "However, with the increase in nonperforming loans and longer loan maturities, we're now seeing the nicks in the armor begin to appear."

Dr. Weiss advises consumers to periodically check the safety of their financial institution by consulting the company's Weiss Safety Rating. Large institutions currently receiving the highest grades include:

                                                           Weiss
                                                           Safety
                                                           Rating
                                                           ------

-- Capitol Federal Savings Bk      Topeka, Kan.               A

-- Hudson City Savings Bank        Paramus, N.J.              A+

-- Sanwa Bank California           San Francisco, Cal.        A-

      Banks receiving Weiss' lowest rating include:

                                                           Weiss
                                                           Safety
                                                           Rating
                                                           ------

-- First Professional Bank NA      Santa Monica, Cal.         E-

-- United Credit NB                Sioux Falls, S.D.          E-

-- Unity Bank                      Clinton, N.J.              E-

A more extensive list of banks and thrifts receiving low ratings is available on the Weiss Ratings web site at www.weissratings.com; safety ratings on individual banks and thrifts are available for as little as $15 by calling 800/289-9222. The Weiss Safety Ratings are also available at many public libraries.

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 the public.

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