ABA Banking Journal 5/08 - (Page 34)
25 big banks the top Top Performers Part 1: Banks with assets over $3 billion 2007 began as the best of times and ended as the worst of times. Yet the top performers still managed to excel. Here’s how they did it Banking’s I t’s seems long ago now, but the first quarter of 2007 was a very strong one for banks. After that, things quickly began unraveling, and banks and thrifts faced significant obstacles throughout the rest of the year. Many institutions were adversely affected, even though only a handful of them were directly involved in what turned out to be the last straw of a credit boom—subprime lending. Despite the Federal Reserve’s aggressive rate cutting in the second half, the cost of funds remained high, resulting in further By Vanessa Mambrino, senior associate, Capital Performance Group LLC, Washington, D.C. The firm provides advisory, planning, analytic, and project management support to the financial services industry. 34 MAY 2008/ABA BANKING JOURNAL margin compression at most banks. Many subprime and nontraditional mortgages began to turn sour, affecting both credit quality and the ability of banks to access the secondary markets. As borrowers defaulted on more and more mortgage loans, institutions of all sizes found themselves forced to take large writedowns or increase their provisions. These conditions led to the first bank failures since 2004 and caused institutions that had previously appeared among our top performers—Citigroup, First Horizon National, IndyMac Bancorp, and National City to name a few—to drop to the bottom of our rankings. By the fourth quarter, the FDIC was reporting that the earnings of insured institutions were the lowest they had been since 2002. The performance of this year’s top 25 public and top 10 private or foreign-owned banks and thrifts is all the more impreswww.ababj.com/subscribe.html
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