Banks Set New Record, Earning $28 Billion in Second Quarter, According to Weiss Ratings; Nonperforming Loans Rise Further, Deepening Long-term Concerns for Industry.

Business Editors

PALM BEACH GARDENS, Fla.--(BUSINESS WIRE)--Oct. 14, 2002

The U.S. banking industry reported a record $27.7 billion profit in the second quarter of 2002, representing a $2.3 billion, or 9.1 percent, increase over the previous record of $25.4 billion earned in the first quarter, according to Weiss Ratings, Inc., the nation's leading independent provider of ratings and analyses of financial services companies, mutual funds, and stocks.

Year-to-date, this brings the industry's profit for the first half of the year to $53 billion, a 17.3 percent increase over the $45.2 billion recorded in the first half of 2001. Institutions showing the largest year-over-year increase in net income include:

                                       Net Income/Loss ($Mil)
                               Weiss
                               Safety  June 30, June 30,          %
                               Rating    2002     2001  Change  Change
                                        -----    -----  ------  ------
Citibank NA   New York, N.Y.     B-     3,463    2,447   1,016   41.5
US Bank NA    Cincinnati, Ohio   B-     1,520      597     923  154.6
Wachovia
 Bank NA      Charlotte, N.C.    C+     1,844    1,115     729   65.4
Bank of
 America NA   Charlotte, N.C.    B-     4,114    3,450     664   19.2
Washington
 Mutual       Stockton, Calif.   C+     1,727    1,217     510   41.9

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

Record low interest rates continued to boost the industry's net interest margin, which rose to 3.59 percent, the highest level since 1999, according to Weiss. In addition, banks and thrifts cashed in on rising bond prices for $1.6 billion in income during the first six months of the year.

"The rash of big name corporate bankruptcies has hurt a few vulnerable institutions recently, but most banks are not yet feeling the pain from the economic downturn," commented David Lackey, president of Weiss Ratings, Inc. "Interest rates can't go down much further though, and the big buildup in problem loans indicates the party's almost over."

Nonperforming loans climbed to 1.36 percent of all loans outstanding at June 30, 2002, the highest level since 1993, as shown in the following chart:

               Nonperforming Loans as a % of Total Loans

                              1993 2.01%
                              1994 1.34
                              1995 1.21
                              1996 1.08
                              1997 0.98
                              1998 0.95
                              1999 0.91
                              2000 1.05
                              2001 1.31
                              2002 1.36

Troubled commercial loans drove the increase, rising 27.7 percent from mid-year 2001 to mid-year 2002. As a result, total nonperforming loans for the industry reached $65.8 billion at the end of the second quarter, an 18.7 percent increase over the $55.4 billion in nonperforming loans reported one year earlier.

Institutions showing the largest year-over-year increase in total nonperforming loans include:

                                       Nonperforming Loans ($Mil)
                                Weiss
                               Safety  June 30, June 30,           %
                               Rating    2002     2001   Change Change
                                        -----    -----   ------ ------
Citibank NA   New York, N.Y.     B-     8,322    4,826   3,496   72.4
Fleet NB      Providence, R.I.   C+     3,302    1,850   1,452   78.5
JP Morgan
 Chase        New York, N.Y.     C      2,994    1,807   1,187   65.7
Bank One NA   Chicago, Ill.      C+     2,388    1,278   1,110   86.9
Washington
 Mutual       Stockton, Calif.   C+     1,845    1,066     779   73.1

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

Notable Upgrades and Downgrades

In evaluating the nation's 9,465 commercial banks, savings banks, and savings and loans, Weiss Ratings issued the following notable upgrades:

PFF Bank & Trust                Pomona, Calif.      from B+ to A-
Chevy Chase Bank FSB            Chevy Chase, Md.    from D+ to C-
Treasury Bank NA                Alexandria, Va.     from D to C-

    Notable downgrades include:

Citizens Bank of MA             Boston, Mass.       from B- to C+
Fleet NB                        Providence, R.I.    from B- to C+
Travelers Bank & Trust FSB      Newark, Del.        from B- to C+

Weiss issues safety ratings on more than 15,000 financial institutions, including banks and thrifts, HMOs, life and health insurers, Blue Cross Blue Shield plans, property and casualty insurers, and securities brokers. Weiss also rates the risk-adjusted performance of more than 11,000 mutual funds and 9,000 stocks. Weiss Ratings is the only major rating agency that receives no compensation from the companies it rates.

Consumers can purchase a rating and summary analysis for as little as $7.95 through www.WeissRatings.com, or starting at $15 by calling 800-289-9222.

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