Saturday, May 19, 2012

Largest USA Banks Ratings: Capital One & U.S. Bancorp Tops, Goldman Sachs Last

The Largest USA Banks have reported first quarter 2012 financial results. In the prior post, I reviewed the market cap of the American mega banks. In this post I rate them. There was little change from the prior quarterly ratings. There is one downgrade, Morgan Stanley drops from D- to F-. There are no upgrades.

Above Average Capital One and U.S. Bancorp are the leaders at A, followed by PNC Financial Services and Wells Fargo at A-. These 4 banks have moved positively beyond the 2008 financial crisis. Bank of New York Mellon is a respectable B+. Bank of America is next, perhaps a surprise to some, with a ranking of C+. Despite the negative media hype, capital is strong. However, return on assets is inadequate. Bank of America financial performance has been extraordinarily volatile and the ranking could move up or down in the next QE June 2012.

Below Average JPMorgan Chase follows at D, despite CEO Jamie Dimon's trumpeting of the JPM "fortress balance sheet" of $2+ trillion. However, financial position and performance are adequate. Next is Citigroup at D-, just below the median rating of D. Morgan Stanley dropped from D- to F-. Trailing the field is the once mighty Goldman Sachs at a dismal G+. Capital is questionable. The Average Rating for the 9 Largest USA Banks is C for this quarter, above the median score of D in the overall rating system.

Rating, Bank, Change
A    Capital One
A    U.S. Bancorp
A-   PNC Financial Services
A-   Wells Fargo
B+  BNY Mellon
C+  Bank of America
D    JPMorgan Chase
D-   Citigroup
F-   Morgan Stanley (down from D-)
G+  Goldman Sachs
C    Average

Largest USA Banks Rankings The Largest 10 USA banks ratings are presented below in a percentage format. The ratings range from A+ (100%) to G- (0%).

Based on fundamental analysis of both financial position and performance on a short-term and long-term basis, the largest 9 USA banks rankings have been updated with a composite score. There is no subjectivity involved from quarter to quarter, just objective data. The ratings are the result of the output from a model, with March 31, 2012 financial statement data input.

The score can range from a high of A+ to a low of G-, a total of 21 tiers. The median score is D in this rating system. The average score varies each quarter.

Financial position strength, notably the capital ratio, is weighted more than financial performance. Therefore, the rating is primarily a gauge of financial position, balance sheet strength, which indicates the ability of the bank to withstand a downturn in financial performance from either internal or external events. The rating is secondarily a gauge of financial performance, both short-term and long-term. A measure of financial safety and soundness, not future financial performance, is the predominate intent of the ratings.


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