Called a ‘David Among the Goliaths’ : Republic N.Y. Bank Is Ranked No. 1--Study
Last year was difficult for banks, especially money-center giants, but there were gems in the industry and a “David among the Goliaths” managed to shine brightest of all.
Republic New York, a specialty bank, “nestled among some of the largest banking organizations in the United States,” ranked first last year among 35 bank holding companies tracked by Salomon Bros. that represent more than half of bank assets in the nation.
Salomon ranked the 35 on five criteria: profitability, credit quality, capital, productivity and liquidity.
Psychological Concerns
“In the past three years, a combination of adverse fundamental events and psychological concerns have repeatedly tested the resilience of the banking system,” said Thomas H. Hanley, Salomon senior vice president who wrote the report ranking each institution in each category.
Hanley said, “1984 was particularly noteworthy as investors and depositors had to cope with the rescue of Continental Illinois, rumors about other financial institutions and unrelenting reports about imminent defaults by certain developing-country borrowers.”
J. P. Morgan & Co., which ranked third for the second year, and Bankers Trust New York, tenth, were the only New York giants in the top 10 in Salomon’s study.
Bankers Trust ranking was a first, because of “measurable accomplishments” in profitability, productivity and selected measures of liquidity.
Among other large money-center banks, Manufacturers Hanover, Marine Midland Banks, Chase Manhattan, Citicorp, all of New York; First Chicago, BankAmerica, First Interstate Bancorp, Wells Fargo & Co. and Security Pacific, all of California, remained in the bottom third of the rankings.
Wachovia Corp. of Winston-Salem, N.C. ranked second overall, followed by Morgan, PNC Financial, Pittsburgh; CoreStates Financial, Philadelphia; Fleet Financial Group, Providence, R.I.; AmeriTrust, Cleveland; Banc One, Columbus, Ohio, and Texas Commerce Bancshares, Houston.
Banc One joined Salomon’s 35 banks for the first time, replacing Continental Illinois, which was “temporarily” dropped.
Reported a Loss
Texas Commerce reported a loss in the first quarter, but Hanley said “management has maintained that the worst was seen during the period and its credibility remains high on Wall Street.”
Hanley noted that Pennsylvania was well represented in the top finishers and, along with Ohio, “remains a very attractive state for banking.”
In individual category rankings, midwestern “tortoise” banks and southeastern banks paced the field in profitability. Salomon called AmeriTrust’s 34.6% earnings gain a “rags to riches story” and said it ran a close race with Sun Banks, Orlando, Fla., in profits.
Credit quality remained a “thorny issue,” Salomon said. Wachovia headed the credit quality roster, having both the lowest ratios of net credit losses and non-performing assets. Morgan was in second place while overall top finisher Republic captured third.
The report said Republic, “truly a David among the Goliaths in banking, has been well served by its distinctive marketing strategy.” Salomon said its “exemplary” productivity, liquidity and credit quality ratios appear to position it well for disinflation and re-regulation.
“Another way of putting it is that Republic, unlike many banks, is not driven by the credit side--size for the sake of it,” Hanley said. “They concentrate on fees and commissions in a number of areas such as precious metals, foreign exchange and bond trading.”
