The Federal Reserve publishes a quarterly list of the top 50 largest US banks, ranked by deposits and assets. Several groups, including the Investigative Reporting Workshop at American University, take that list and compare banks using other criteria, such as troubled assets.
This can give a great indication to the banking customer, investor, etc. as to how well a bank is performing and whether there is need to worry about the safety of deposits. If you have a $100,000 certificate of deposit or IRA deposit at a bank, you'd like to know it will be safe in its growth.
Top 10 Largest US Banks
Using the two lists, let's look at the top ten biggest US banks and then at their percentage (ratio) of troubled assets versus their deposits on hand.
The top ten banks by deposit are:
1. Bank of America Corp
2. JPMorgan Chase & Co
3. Citigroup Inc
4. Wells Fargo & Co
5. HSBC North America Holdings
6. US Bancorp
7. SunTrust Banks
8. Capital One Financial
9.BB&T Corp
10.State Street Corp
I removed the financial holdings corps that do not run banks, such as MetLife and Tannus, and kept only the actual banks for the biggest US banks list. That is to tie in with the information below.
Banks With Largest Percentage of Troubled Assets
1.Citicorp (44.2)
2.SunTrust Bank (41.2)
3.National City (40.3)
4.Wachovia Bank (40.3)
5.Compass (36.0)
6.Regions (33.3)
7.Bank of America (32.6)
8.Sovereign (32.0)
9.JPMorgan Chase (31.0)
10.Wells Fargo (11.1)
Although it shouldn't be on the list, I included Wells Fargo because they are the new owner of Wachovia, though their assets have not been entirely combined as of yet. Much of the Wachovia number will be sold off when bankruptcy completes, so the entire 40.3% will not be absorbed into Wells Fargo, which is otherwise doing well compared to its peers.
Comparing the two lists, you can see that the largest banks often lead the way in troubled assets too. Big does not mean safe unless you believe in the “too big to fail” joke that is oft repeated.
Every bank has troubled assets, of course. It's the nature of the business. It's how those assets are managed and whether you're comfortable investing in a bank with a large ratio of them that is the moral of this story.
Do you bank with any of these banks? If so, please share in the comments your experiences with that bank? Would you recommend them to your friends?
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