Banks Set $22.8 Billion Record Profit in First Quarter 2001 Reports Weiss; Loan Charge-Offs and Nonperforming Loans Outpacing Last Year.

Business Editors

PALM BEACH GARDENS, Fla.--(BUSINESS WIRE)--July 23, 2001

The nation's 9,821 commercial banks, savings banks, and savings and loans posted a record quarterly profit of $22.8 billion in the first quarter of 2001, according to Weiss Ratings, Inc., a leading bank rating agency.

Industry profits were up $300 million, or one percent, over the previous record quarterly profit of $22.5 billion set in the first quarter of 2000.

In analyzing the industry's record profitability, however, Weiss noted that profits were inflated by $1.2 billion in nonrecurring gains from the sale of securities during the quarter, compared to a $601 million loss from the sale of securities in the first quarter of 2000.

Excluding these securities transactions, industry profits for the first quarter amounted to $21.6 billion, a 6.9% decline from the adjusted $23.1 billion recorded in the same period a year ago.

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

                                    Net Income/Loss ($Mil)
                                    ----------------------
                             Weiss                        1st Q 2001
                             Safety  1st Q  1st Q         Securities
                             Rating  2001   2000  Change  Gain ($Mil)
                             ------  ----   ----  ------  -----------
--  Wells Fargo Bank NA
    San Francisco, Calif.      B-   1,264   235   1,029        46

--  Chase Manhattan Bank
    New York, N.Y.             C+   1,248   921     327       350

--  Chase Manhattan Bk USA
    Newark, Del.               C      224    29     196       146

--  Bank One NA
    Chicago, Ill.              D+     268    82     186         2

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

      "The decline in interest rates over the past year boosted the
market value of fixed income securities, enabling banks to
window-dress their earnings for the time being," commented Martin D.
Weiss, Ph.D., chairman of Weiss Ratings. "But over the long term, that
strategy will backfire as banks are forced to reinvest the proceeds in
lower-yielding instruments."

      Loan Charge-offs Show Dramatic Increase

      The banking industry's net loan charge-offs increased to $7.4
billion during the first quarter of 2001, a 38.0% increase over the
$5.4 billion in charge-offs registered in the first quarter of 2000.
The trend toward higher charge-offs was fairly widespread, with 47% of
the industry registering an increase. Institutions showing the largest
year-over-year increase in net charge-offs include:

                                        Loan Net Charge-offs ($Mil)
                                        ---------------------------
                             Weiss
                             Safety      1st Q     1st Q
                             Rating      2001      2000     Change
                             ------      ----      ----     ------

--  Bank of America NA
    Charlotte, N.C.             B-       635       323       312

--  Firstar Bank NA
    Cincinnati, Ohio            B-       194        27       167

--  Bank One NA
    Chicago, Ill.               D+       186        51       134

--  US Bank NA
    Minneapolis, Minn.          B        260       136       124

      "This jump in loan charge-offs is a natural consequence of the
rise in nonperforming loans we've been reporting since early 2000,"
commented Dr. Weiss. "With nonperforming loans continuing to grow,
especially in the commercial sector, we expect charge-offs to
accelerate well into 2002."

      Weakening Commercial Sector Spells Trouble for Banks

      Led by a 9.5% jump in nonperforming commercial loans, total
nonperforming loans grew by 7.3% during the first three months of
2000, compared to a 3.8% increase in the year-earlier quarter, and a
rise of only 2.9% in all of 1999. The industry now holds $52.4 billion
in nonperforming loans, up $3.6 billion from the $48.8 billion level
recorded at year-end 2000.
      As a result, nonperforming loans accounted for 8.3% of the
industry's capital and reserves at March 31, the highest level in six
years, as illustrated below:

         Nonperforming Loans as a % of Core Capital & Reserves

                           1995     8.63%
                           1996     7.99%
                           1997     7.26%
                           1998     7.05%
                           1999     6.71%
                           2000     7.89%
                     March 2001     8.30%

      Notable Upgrades and Downgrades

      In evaluating the nation's 9,821commercial banks, savings banks,
and savings and loans, Weiss Ratings recently issued the following
notable upgrades:

--  Harris T&SB               Chicago, Ill.             from C+ to B-

--  Providian Bk              Salt Lake City, Utah      from C+ to B-

--  Household Bk Nevada NA    Las Vegas, Nev.           from B to A-

      Notable downgrades include:

--  Union Bk of CA NA         San Francisco, Calif.     from A- to B+

--  Merrill Lynch B&TC        Plainsboro, N.J.          from B- to C+

--  American NB&TC            Chicago, Ill.             from B- to C+

Weiss safety ratings on more than 15,000 financial institutions are available for as little as $7.95 through the Weiss Ratings web site at www.WeissRatings.com or starting at $15 by phone [phone].

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